David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Link to this | Hansard source

My question is to Senator Cormann as the Minister representing the Minister for Revenue and Financial Services. Given expected investment returns, your policy to increase tax on Australians with super balances over $1.6 million is more punitive than Labor's policy to increase tax on earnings over $75,000. Is the government seeking to outdo Labor at taking other people's money? Do you agree that fewer people will ever reach a super balance of $1.6 million because of your policy to impose marginal tax rates on post-tax contributions over $500,000 since 2007 and to increase tax on annual contributions over $25,000? Do you accept that your attack on the hard work, thrift and caution of Australians who save to avoid reliance on the pension represents class warfare and a betrayal of Liberal values?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

In relation to those latter questions, no, I do not accept that. And I also do not accept that the policy the government has put forward in the budget to make tax concessions for superannuation fairer, more sustainable and more fit for purpose is more stringent than Labor's when it comes to the $1.6 million cap. What I would do in the first instance is refer the honourable senator to Labor's own policy document released in, I think, April 2015, where their case study actually pointed to the fact that the $75,000 earnings cap that you refer to actually would apply, by their modelling, to balances of $1.5 million or more.

There are a range of other features that make our approach better. Firstly, earnings in savings of up to $1.6 million would continue to be completely tax free. In relation to earnings from savings above $1.6 million, there would be a concessional tax of 15 per cent applied. That $1.6 million threshold is indexed; the $75,000 is not. You are able, under our policy, to actually retain your earnings and save in your income-tax-free account—under Labor you are not—which means that you are actually able to grow that pie.

Furthermore, under Labor's approach, the unindexed $75,000 earnings amount would attract a 15 per cent tax. In years where you have a 10 per cent return, which actually has happened in years gone by, balances of $750,000 and above would actually be captured by that, whereas under our policy it is absolutely impossible for that to happen. We provide much more certainty to people.

On a more general point, the structural challenge we have is that a growing proportion of income generated in Australia is completely income tax free. That is not sustainable. It means that other Australians have to pay more tax in order to pay for the services provided by government. (Time expired)

Stephen Parry (President) Share this | Link to this | Hansard source

Senator Leyonhjelm, a supplementary question.

David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Link to this | Hansard source

Your tax take is 22 per cent of GDP and rising. How can your reaction to this be an increase in the taxation of retirement savings? Australia's trillion-dollar superannuation pool is a national treasure that is financing Australian business and infrastructure. Why are you attacking high super balances rather than cheering them on?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

As I have indicated, the government's reforms are designed to ensure that tax concessions made available in the context of superannuation are fair, sustainable and fit for purpose. The purpose of superannuation tax concessions producing a lower tax rate or no tax rate—under certain circumstances—is to encourage people to save, to generate an income in retirement that replaces or supplements the age pension. It was never meant to be a tax effective wealth accumulation or estate-planning vehicle. What we are doing is making sure that, at the higher wealth and higher income end, people pay a more appropriate share of tax. If you have a situation where a growing amount of income generated in Australia, in particular at the higher wealth and higher income end, is generated completely tax free, it means that every other family has to pay more tax to pay for the goods and services provided by government— (Time expired)

Stephen Parry (President) Share this | Link to this | Hansard source

Senator Leyonhjelm, a final supplementary question.

David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Link to this | Hansard source

No other country in the world imposes high marginal tax rates on retirement savings accounts because, if they did, no-one would save in those accounts. Why then do you persist in calling Australia's taxation of superannuation 'concessional'? Should not personal tax rates of 37 per cent and 45 per cent be seen as a national disgrace rather than as a benchmark for all taxation?

Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Link to this | Hansard source

I do not know how to describe a zero per cent tax rate as anything other than highly concessional. Obviously if you generate income and you pay zero per cent tax, that is the ultimate concession. When you have got a growing proportion of Australians at the higher wealth and higher income end that pay absolutely no tax on the income they generate then that means that every other Australian working for a living and saving and investing pays more tax than they might otherwise have to in order to cover the same level of expenditure. What we are seeking to do—and it is not just taxes at the higher end—is reform the superannuation tax arrangements as a whole, including providing better flexibility for low- and middle-income earners, and provide better flexibility, for example, for women, who might have disrupted work patterns, to enable them to come play catch-up when it comes to saving for their retirement using previously underutilised or unutilised concessional contribution caps and the like, providing something— (Time expired)

Katy Gallagher (ACT, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister representing the Prime Minister, Senator Brandis. On 3 June, when asked whether the government's superannuation policy as set out in the 3 May budget would change following the election, the Prime Minister said, 'It is absolutely ironclad.' Does the Prime Minister stand by this commitment?

George Brandis (Queensland, Liberal Party, Attorney-General) Share this | Link to this | Hansard source

The fact is that we were re-elected on a set of policies by the Australian people. We were re-elected on those policies, and we will put those policies to this chamber, and we will be looking to you. But if the Australian Labor party will not cooperate, will not respect the will of the Australian people, then we will look to the crossbench. We come into this chamber with an ambition to do what is best for the Australian people on all the tasks but most particularly the task of budget repair because this is a new parliament. This is a new parliament with a government returned with a mandate to give effect to the commitments it made during the election.

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

It is the same old government. You have got no mandate.

George Brandis (Queensland, Liberal Party, Attorney-General) Share this | Link to this | Hansard source

If you—as your colleague, Senator Cameron, keeps interjecting—refuse to accept that the government was re-elected and therefore has a mandate, we do look—

Stephen Parry (President) Share this | Link to this | Hansard source

Order! A point of order, Senator Dastyari.

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

My point of order goes to relevance. There was only one clear question—that was, whether or not it is absolutely ironclad and whether or not the Prime Minister stands by that commitment. A minute has already passed and the minister has made no attempt to answer the question.

Stephen Parry (President) Share this | Link to this | Hansard source

Thank you, Senator Dastyari. I will remind the Attorney-General of the question.

George Brandis (Queensland, Liberal Party, Attorney-General) Share this | Link to this | Hansard source

Thank you, Mr President. I will, of course, abide your ruling and I will come directly to the question of superannuation. The government's reforms to the superannuation system will make the system more flexible and sustainable. It will help more Australians be self-sufficient in their retirement. It is a fair system, as the Minister for Finance, Senator Cormann, outlined in his answer to the previous question from Senator Leyonhjelm. We know, Senator Gallagher, that you have announced that you will oppose the government's plan to adjust the superannuation system to fit modern work patterns. That reduction of the government's flexibility measures will see up to one million Australians—mostly women, carers, contractors and older Australians—worse off. That is your vision, Senator Gallagher. (Time expired)

Stephen Parry (President) Share this | Link to this | Hansard source

Senator Gallagher, a supplementary question.

Katy Gallagher (ACT, Australian Labor Party) Share this | Link to this | Hansard source

Since the budget, we have had numerous caps on non-concessional lifetime contributions floated, including the Treasurer's $500,000 cap, a $750,000 cap and a $1 million cap floated by George Christensen on Twitter. And, this week, it was reported that the Prime Minister was considering dropping the cap altogether. What exactly is the government's policy and how is this consistent with the Prime Minister's ironclad guarantee?

George Brandis (Queensland, Liberal Party, Attorney-General) Share this | Link to this | Hansard source

Senator Gallagher, you really must avoid relying upon unsourced gossip you read in newspapers as the basis of your attacks upon the government. The government announced some measures in relation to the superannuation system in the budget. Those measures were clear. It took those measures to the election. It was re-elected on those measures. That is the government's policy, Senator Gallagher.

Stephen Parry (President) Share this | Link to this | Hansard source

Senator Gallagher, a final supplementary question.

Katy Gallagher (ACT, Australian Labor Party) Share this | Link to this | Hansard source

Under this Prime Minister, we have had an economic plan for an increase to the GST, double taxation by the states, a percentage floor on GST distributions and, now, four different proposals for lifetime superannuation caps. Is this the type of economic leadership Mr Turnbull had in mind when he deposed Mr Abbott?

George Brandis (Queensland, Liberal Party, Attorney-General) Share this | Link to this | Hansard source

There you go again, Senator Gallagher. Every single proposition you asserted in your question was wrong; every single one. So let us go through them, Senator Gallagher. First of all, you assert the government proposed to increase the GST. The government has never proposed to increase the GST. The Labor Premier of South Australia, Mr Weatherill, recommended an increase in the GST. So did Mr Mike Baird, by the way. The government has never proposed an increase in the GST. You assert that the government proposed double taxation. Wrong again, Senator Gallagher. That has never been proposed by this government. And now you say, based on unsourced newspaper gossip, that we are proposing four different caps when only one set of proposals has ever been announced—and that, Senator Gallagher, is the government's policy.