Greg Hunt

Federal Member for Flinders | Minister for Health

Local Media

3AW Drive - Interview with Tom Elliott

Tuesday, 6 September 2016

E&OE…

Topics: Superannuation, Sam Dastyari, political donations, Islamic State

TOM ELLIOTT:
Okay, our next guest is the Minister for Science and Innovation. Greg Hunt, good afternoon.

GREG HUNT:
And good afternoon, Tom.

TOM ELLIOTT:
Now, there's three things I want to ask you about: superannuation, political donations, and Islamic State. Let's start with superannuation. What are you and your cabinet colleagues cooking up as a new superannuation policy?

GREG HUNT:
Sure, so the Treasurer's releasing a paper tomorrow. It's essentially our policy at the election. He's been consulting broadly, he's foreshadowed that in terms of the $1.6 million threshold beyond which if you have assets over and above that there will be a movement from zero to 15 per cent tax, so still incredibly generous.

TOM ELLIOTT:
Is that on money put in or earnings in the fund above a certain level?

GREG HUNT:
So, it's on the value of the assets.

TOM ELLIOTT:
Right.

GREG HUNT:
That are within the fund and therefore, you are taxed on any asset income or income which comes from those assets above the $1.6 million level.

TOM ELLIOTT:
Alright, so if I have $1.7 million in my super fund and, obviously, you could say, well, one-seventeenth of whatever I earn from them comes from that $100,000 above $1.6 million, I'll be one-seventeenth of the income will be taxed at 15 per cent?

GREG HUNT:
So, let's make it an easy example. Let's say somebody, just to put a round figure, has $2 million of assets and let's just say, make it easy, they’re earning 5 per cent, so that's $100,000. The first $80,000 is tax free, the next $20,000 will be taxed at 15 per cent.

TOM ELLIOTT:
Okay, alright. What other changes are you thinking about?

GREG HUNT:
The second one which has been outlined is in terms of the concessional contributions. That means that when you put your money into superannuation and you get relief on that that will now drop from $35,000 if you're over 50 or $30,000 if you're under 50, to $25,000.

TOM ELLIOTT:
So, you actually want to make it less attractive for people to put money into super?

GREG HUNT:
No, look, the goal here is very clear: to make sure that the tax benefits of superannuation are provided to those that need it to give them a very generous lifetime outcome, to help them in their retirement, but to be fair in terms of the overall budget. Because, you rightly and I rightly talk about the overall budget all of the time so it's always a balance to make sure we have fairness and a sustainable budget.

TOM ELLIOTT:
But I'll tell you the problem here. Actually, I'm an example of someone who I have planned my affairs based on the old rules. I do not have enough money in superannuation because I've invested in businesses and my house and whatever, I actually don't have nearly as much in super as what someone my age should have.
Okay? Now, what I'd been planning to do was do a couple of big lump sum transfers into super, you know, down the track and it's going to get very hard for me to do this now because I've planned my affairs based on the old rules and now the rules have changed and so I'm, to be honest, saying well maybe I shouldn't use super at all and I suspect I'm not alone in this because, for example, in the last financial year, voluntary contributions into super apparently fell 16.5 per cent.
Now, I think this is a reaction changing the rules. Is that fair on someone? I mean, I don't expect any sympathy, but is that fair on someone like me that I've planned my affairs to put money into super later in my life and now it's going to be harder for me to do that?

GREG HUNT:
Well, I think what you'll find is $1.6 million is not a cap on what you can have in your superannuation account, that's simply the asset base upon which you get no tax at all. So, a 15 per cent…

TOM ELLIOTT:
Can you still put lump sums in? Like, you used to be able to put in $180,000 a year or you could put it all together and put in $540,000, for three years’ worth, in one year.

GREG HUNT:
Sure, that remains the position.

TOM ELLIOTT:
That remains. And is that still tax preferred?

GREG HUNT:
Well it has exactly that situation where you can put the money in. If it's after you've already paid tax on it as an income item, you can put that in. That's known as a non-concessional contribution.
You're not able to get it and then it to be tax free at the point of income. However, you put it in there and then it's treated like all other superannuation so there are enormous tax advantages still to superannuation.
It's only about making sure that when you look across the whole of the economy, two things happen: one is that we're able to live within our means as a country in terms of the budget; secondly, we're also helping those that are far less well-off with support and so two million Australians will benefit.

TOM ELLIOTT:
Well is there anything else changing? So, you've got total size of super funds with zero tax is $1.6 million, concessional contributions annually fall from $30,000 or $35,000 down to $25,000. Are there any other major changes?

GREG HUNT:
The Treasurer's consulting currently in terms of what's called the non-concessional lifetime contribution, this has been the $500,000 figure. He's consulting, he said today that that won't be part of the draft legislation tomorrow because he hasn't finished his consultation, so there's a little bit of a way to travel on that.

TOM ELLIOTT:
So, but there will be something on that. Okay, could we throw something else into the mix?

GREG HUNT:
And I do understand absolutely the concerns that many people have raised and that's precisely why we are consulting on that.

TOM ELLIOTT:
Could we throw something else into the mix? Could we also include in the changes to super some sort of guarantee that there won't be any more changes for at least a decade?

GREG HUNT:
Well, we've said that during the life of this Parliament, this is it. We're not proposing any substantive changes to the operations of superannuation.

TOM ELLIOTT:
But, of course, if you lose the election and Labor gets in, they could change the rules again.

GREG HUNT:
I guess one Parliament can't bind a future Parliament but what we've done is make it clear that we took something to the election and that was because basically we have to make sure that two things occur. The budget is on a path to being back in surplus, which is a fundamental intergenerational responsibility.

TOM ELLIOTT:
Are we still looking at that happening by, what, 2021?

GREG HUNT:
It's five-year process, absolutely.

TOM ELLIOTT:
Five year process.

GREG HUNT:
And then the second thing is that for those low-income earners, those who are not as well-off, they are in a position to have a better superannuation account, so over 2 million people will benefit from these changes.

TOM ELLIOTT:
How much this new system of super versus the old rules, how much money will the Government raise?

GREG HUNT:
So, the net outcome, so when you take what you raise and what you pay out, there's a net outcome of $3 billion over the four years of what's called the forward estimates so the Federal Government budgets in four years.

TOM ELLIOTT:
So it's three quarters of a billion dollars a year.

GREG HUNT:
Yeah, that's approximately right.

TOM ELLIOTT:
Approximately right. Okay, because, again, there's a lot of people I know who are saying I don't trust super anymore, I'm going to increase the size of the family home, I'm going to rebuild, I'm going to buy a bigger house because houses remain you know, family homes remain tax free.
It just seems to me that this fiddling with the rules, I get what you're trying to do with the budget, but it drives people into other unproductive forms of investment like just making the family home bigger simply because it's tax free and I just wonder whether anybody in Canberra sort of gets it.

GREG HUNT:
Yeah, sure. Absolutely, but let me go back to that example of somebody who hypothetically had $2 million in superannuation. They'll go from having an income of the first $80,000 tax free to the first $80,000 being tax free. The next $20,000 would have been at zero tax, now it will be at 15 per cent.

TOM ELLIOTT:
But I know, that's the numbers.

GREG HUNT:
So it's a $3000 bill on $100,000 income and that's a pretty generous arrangement and it'll still be generous.

TOM ELLIOTT:
Yeah, I get that. No, no, it is Mr Hunt, but the problem is the precedent it sets every time you make a change is it just says to people the ground is going to keep shifting. Alright, I can't trust this system because the rules keep changing and that's why some sort of guarantee that, you know, maybe both sides guarantee no more changes for at least a decade.

GREG HUNT:
Well I would ask the Labor Party to match what we're saying. We've made the one set of changes, we took them to the election, and there's consultation on the final element at the moment. Genuine as in we're really listening, we heard the message, we get what people are saying on the $500,000 lifetime non-concessional contributions, so we hear that and we are responding.

TOM ELLIOTT:
Alright, 9690 0693, 13 13 32. Calls for Greg Hunt, the Minister for Science and Innovation at 5:18pm.

[Commercial break]

Before we go to calls, Mr Hunt, political donations are obviously in the spotlight. Now I know that Labor Senator Sam Dastyari is under fire because he appeared to ask for what amounts to a personal gift from a Chinese company to reimburse some travel expenses. But are we going to see some changes to the rules about political donations in general?

GREG HUNT:
Well, the first thing is that you've got ‘Shanghai Sam’ as he's now known, or ‘Junior’ as Bill Shorten calls his Leader of Opposition Business in the Senate. Junior, who would believe that? Who took cash from a Chinese company to pay a personal bill owed to the Parliament. It's unique, in my knowledge. I'm not aware of anything comparable to that, and you've got to say why would he ask someone to do that?

TOM ELLIOTT:
Well, there's plenty of examples of politicians rorting expenses. Maybe not exactly in that form, but.

GREG HUNT:
Cash from a Chinese company that he asked for and that they actually paid. Why would he ask for? Why would they pay? And why does Mr Shorten think that this doesn't matter?

TOM ELLIOTT:
Okay. But the general issue about donations that come from companies, from unions, from foreigners. Are we going to see some changes about the rules?

GREG HUNT:
Look, I have always said that if Mr Shorten wants to give up the rivers of gold that come from the unions, then there is a basis for discussion.

TOM ELLIOTT:
Is that likely?

GREG HUNT:
I've said that on many occasions.

TOM ELLIOTT:
Is that likely?

GREG HUNT:
The ball's in Mr Shorten's court, but right now the ball is also in his court. Does he really think that it's not just cash, not just cash from China, but cash from China for comment is an acceptable standard in the Parliament of Australia?
We do not. And I heard Junior Dastyari today give his response, and I was willing to give him the benefit of the doubt, but frankly having heard it, he should go.

TOM ELLIOTT:
Yes, I agree. It was less than convincing, and in the old days when ministerial responsibility was part of the code of Canberra, he would have resigned by now. These days, not so sure.
Tom, good afternoon.

CALLER TOM:
Good afternoon Tom. Good afternoon Minister.

GREG HUNT:
Hi Tom.

CALLER TOM:
Just a quick question. There's a perception out there in the community that Parliamentarians are exempt from a lot of issues. Are they going to be exempt from these proposed super changes?

TOM ELLIOTT:
That's a very good question. If super is going to be taxed a little higher for Joe Public, for all of us, is your superannuation going to have its taxation status changed Mr Hunt?

GREG HUNT:
Yes, this applies to everybody.

TOM ELLIOTT:
It does?

GREG HUNT:
It does.

TOM ELLIOTT:
Does it apply to those politicians who were elected pre-2004 who get the guaranteed pensions when they leave politics?

GREG HUNT:
Yes it does.

TOM ELLIOTT:
It does?

GREG HUNT:
It does. There are new rules for defined benefit schemes, as they are called and they're pretty tough.

TOM ELLIOTT:
Dave, go ahead.

CALLER DAVE:
I was just wondering. When the global financial crisis hit I lost twelve grand in capital out of my superannuation policy, I'm not able to claim that as a loss. Are you guys going to guarantee any capital losses if you're going to be taxing superannuation?

GREG HUNT:
Dave asks, I think, a very important question. This is the single most important area that the Treasurer is consulting on. Let me say this Dave, we have heard absolutely how important this is, and the Treasurer is releasing his paper tomorrow but the point you raised I think has been the most important, the most significantly raised and the one on which you're most likely to see recognition…

TOM ELLIOTT:
So without telling us exactly what the Treasurer is going to say tomorrow, there will be some recognition that if we have a downturn in global markets, which occurs from time to time it's not as regular as clockwork but it is regular, there will be some account taken for that when you're setting asset limits and taxation rates and so forth?

GREG HUNT:
I think Dave's made a very good point.

TOM ELLIOTT:
Yes, but will Scott Morrison make a good point about it?

GREG HUNT:
I understand. I won't pre-empt but let me say right around the Cabinet table everyone has heard exactly what Dave is saying, and frankly members of different political parties have made the same point, so there is a lot of sympathy on that.

TOM ELLIOTT:
Peter, good afternoon.

CALLER PETER:
Hi Tom, hi Minister. I've got a couple of points here to raise with you. The first one I find annoying is I put money into superannuation over my entire working life, and I was promised by the Liberal Government that upon retirement my money would be tax free, and I went without paying the house off, went without access to my funds, and I'm on the verge of retiring now, and there's a proposed tax of 15 per cent to come in.
While it's only a small amount, what concerns me is now that there's a tax imposed, will the government now start moving up the rate of tax?

TOM ELLIOTT:
That's what I worry about Peter. This idea that once you establish that we can have a concessional rate of tax at 15 per cent that down the track someone will say 15 per cent is too low, let's make it 20 per cent, 20 per cent is still lower than 45 per cent and you've set a precedent here. Minister?

GREG HUNT:
There are no proposals to change and we've actually made the commitment that for the life of this Parliament that is it.
The deep context here, and I understand Peter's point, is we have to manage the Budget. This is a significant contribution to the Budget but it still means that people such as yourself Peter, given the example if you have less than $1.6m in assets then you'll continue to pay zero tax, you'll continue to pay zero tax if you have over $1.6m on the income from the first $1.6 million, and then you pay 15 per cent on only the things above that.
That's a pretty significant outcome, it still means there are enormous incentives to have your retirement savings in superannuation.

TOM ELLIOTT:
Peter, thank you for the call.
Minister on a separate issue, the Islamic State, in English today has made some pretty direct threats against Australia.
They've said kill the kaffirs whether you find them in Bankstown or Brunswick or Bondi, kill them at the MCG, kill them at the SCG, kill them at the Opera House. Should we be more concerned today than what we were yesterday?

GREG HUNT:
They are serious claims and serious threats, but the best advice we have is that there's no new threat out of this.
Having said that, last week we announced that we will be changing the Commonwealth Criminal Code so it's absolutely clear that our forces overseas can target ISIS or Daesh or whatever you want to call them, fighters that aren't just posing an immediate threat.
We are part of a global response, and frankly if Australian people go over to try to join Daesh they are likely to be killed.

TOM ELLIOTT:
Sorry, but I think what Islamic State wants to happen, they want local Muslims who have not gone over to Syria or Iraq to fight, ones who are right here, they are calling on them to start launching lone wolf attacks. Is there anything we can do about that?

 GREG HUNT:
Policing, intelligence, security and vigilance, and also don't change your Australian way of life. For me, what's my response to this? I'm damn well going to the MCG this Friday night – that's my response.

TOM ELLIOTT:
Good to hear. Greg Hunt, Minister for Science and Innovation. He'll be back in two weeks' time

(ENDS)

Greg on Facebook

Stay Up-to-Date

Stay up to date with the latest electorate and portfolio information by signing up to Greg's enewsletter.

Subscribe

Greg on Twitter

Contact

Electorate Office
Shop 4/184 Salmon Street Hastings Vic 3915

Postal address
PO Box 274 Hastings Vic 3915

Phone: (03) 5979 3188
Email Greg

 

Ministerial office:
PO Box 6022
Parliament House
Canberra ACT 2600

Phone: (02) 6277 7220
Fax: (02) 6273 4146
© Greg Hunt MP 2016 | Authorised by Greg Hunt MP, Shop 4/184 Salmon Street Hastings Vic 3915
Privacy Policy & Disclaimer | Accessibility | Login | Website Design by DSIS