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

My question is to the Minister representing the Treasurer, Senator Cormann. In your budget you proposed various tax increases. You proposed to increase tax on super by nearly $3 billion by 2020. Your backbenchers objected, including George Christensen, who threatened to cross the floor. You then revised your plan so as to increase tax on super by more than $3 billion by 2020. Your backbenchers were elated. George Christensen even called a press conference to declare he was 100 per cent supportive of the revised plan. Does your party room support increased taxation or do they just have difficulties adding up?

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

I thank Senator Leyonhjelm for his question. The coalition government always supports lowering the overall tax burden in the economy where that is possible. Indeed, this morning the Senate voted to reduce the tax burden for 3.1 million hardworking Australians on average full-time wages. Incidentally, the net effect of decisions taken by the government in the 2016-17 budget is a reduction in the overall tax burden in the economy by about $1.2 billion over the forward estimates. This is clearly spelled out on page 6 of statement 4 in Budget Paper No. 1. As highlighted in the budget documents, when you exclude tax integrity measures, the 2016-17 budget reduced the tax burden by around $1.9 billion over the forward estimates.

The government did put forward in the 2016-17 budget a set of reforms to make our superannuation tax arrangements fairer and more sustainable, and in relation to less than 10 per cent of that overall package, after consultation and after feedback, in particular from Liberal and National members and senators, the government made some adjustments—in relation to less than 10 per cent of that original package. We believe that the package that is now on the table—no longer proceeding with the $500,000 lifetime non-concessional cap but instead reducing the non-concessional cap per year from $180,000 down to $100,000 from 1 July 2017—makes the superannuation tax arrangements even fairer, more flexible and more sustainable. These changes better support the aspiration of Australians to be self-sufficient in retirement.

Of course, the government does not shy away from ensuring that the cost of making these adjustments is fully offset so that the effect is not a detraction from the budget bottom line. Therefore we will not proceed with the budget measure to harmonise contribution rules for those— (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

In your 2015 budget you proposed a 32 per cent tax on working holiday-makers from the first dollar earned. Your backbenchers objected. You then announced a revised working holiday-maker reform package plan that collects even more revenue. Your backbenchers were elated. Do your party room support increased taxation or do they just have difficulty adding up?

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

As I have indicated before, not only does the government always support lowering the overall tax burden in the economy where that is possible; that is also our track record, in particular if you look at the most recent budget, where the net effect of policy decisions on the revenue side of the budget is a reduction in the overall tax burden on the economy. But of course that does not mean that we do not pursue reforms to improve the tax mix to ensure that the tax system is more growth friendly and also fairer and more sustainable.

We did put forward a set of proposals in relation to working holiday-makers in 2015. There were some concerns raised in relation to the original measures. The government listened to industry and stakeholder concerns and also, very carefully, to the strong representations of Liberal and National members and senators on how the proposed reforms could be improved in a way that does not detract from the budget bottom line, and that is what we have done. (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

Minister, your new package also imposes a 95 per cent tax grab on the super of departing working holiday-makers. Minister, why not be consistent and make it 100 per cent? Your party room backbenchers will be elated!

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

This measure was part of the package to offset changes that the government has made to the working holiday-maker measure that I have previously outlined. The withdrawal from superannuation is required to occur before the departing Australia superannuation payment tax can be assessed. Ensuring that the departing Australia superannuation payment tax is not 100 per cent provides an incentive for working holiday-makers to withdraw superannuation, rather than it simply becoming unclaimed superannuation and returned to government in full after a number of years. This is good for the government and it is also good for working holiday-makers.