Dana Wortley (SA, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Assistant Treasurer, Senator Sherry. Can the Assistant Treasurer inform the Senate of the government’s plans to deliver improvements to the retirement savings of Australians, along with a fairer distribution of superannuation tax concessions? Will these reforms be substantial and will they be able to ensure that more Australians will be able to enjoy the comfortable retirement they deserve? Also, how have key stakeholders reacted to this announcement?

Nick Sherry (Tasmania, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

As part of the package of tax reforms that were announced last week to make the tax system fairer and simpler, there will be a number of significant improvements to the Australian superannuation system. Firstly, there will be a gradual increase in the superannuation guarantee from nine to 12 per cent starting on 1 July 2013. Secondly, there will be a new superannuation concession of up to $500 for some 3.5 million low-income earners who currently receive no tax concession on their compulsory superannuation contributions. In fact, there is a group of people who, because of the compulsory nature of superannuation, pay a 15 per cent contributions tax when some of them pay effectively no income tax, and this is manifestly unfair. Thirdly, we will be extending the $50,000 superannuation contribution cap for those over 50 with balances below half a million dollars from 1 July 2012.

The increase in the superannuation guarantee will benefit 8.4 million Australians. It will mean an 18-year-old entering the workforce will have an extra $200,000 in retirement income. For someone now aged 30 they will have an extra $108,000 and for a person aged 40 they will have some $57,000 extra at retirement. These measures will also boost the total pool of superannuation savings by some $85 billion over 10 years. The superannuation industry and the financial sector have strongly supported these improvements in the individual retirement savings of Australians. (Time expired)

Dana Wortley (SA, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. How do these measures help address the challenges of an ageing population as set out in the Intergenerational report 2010 and what other benefits would result from the government’s proposed superannuation reforms?

Nick Sherry (Tasmania, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

The 2010 Intergenerational report identified that between now and 2050 the number of people aged 65 to 84 years will more than double, the number of people aged over 85 will more than quadruple and nearly one-quarter of the population will be aged 65 and over compared to about 13 per cent today. Obviously, their personal retirement income is of critical importance in supporting them during their retirement years. This means that there will be only 2.7 people of traditional working age for every person aged 65 and over compared with five today. This is a huge shift in the ageing population. So the historic reforms that I have referred to in respect of superannuation will deliver a significant boost to the retirement incomes of the vast majority of Australians. (Time expired)

Dana Wortley (SA, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a further supplementary question. Is the Assistant Treasurer aware of any risks to the government’s responsible and forward-looking strategy to boost the retirement savings of Australians? What is the risk and who poses it?

Nick Sherry (Tasmania, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

As I mentioned in my answer to the first question, these reforms to superannuation are part of a package of tax reforms. The package of tax reforms also includes a cut to the company tax rate, from 30 per cent to 28 per cent, and additional relief and simplification through a $5,000 instant asset write-off for small business. Those reforms, together with the very significant superannuation changes that I have outlined to the chamber, are part of a package. The way in which this package is funded is by the resource superannuation tax that is being introduced.

Cory Bernardi (SA, Liberal Party, Shadow Parliamentary Secretary Assisting the Leader of the Opposition) Share this | Link to this | Hansard source

Senator Bernardi interjecting—

Nick Sherry (Tasmania, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

If you bother to look at the costings in the document, Senator Bernardi, this is what the new resource superannuation profits tax is for. It is to boost superannuation, it is to cut company tax— (Time expired)