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Wednesday, 24 August 1983
Page: 165


Mr CADMAN —My question is addressed to the Treasurer. How many pensioner beneficiaries will lose their entitlements with the introduction of an assets test? How many will lose their pensioner health benefit card? Will the Government now scrap its new superannuation tax as the assets test removes any chance of what the Treasurer terms 'double dipping'?


Mr KEATING —The honourable gentleman does not seem to have comprehended that the principal reason for addressing the superannuation changes was the discriminatory tax treatment which favoured those persons who were taking lump sums versus those who were taking superannuation pensions. Somebody who joined a superannuation fund on employment day one--


Mr Peacock —Double dipping, you said.


Mr KEATING —Of course. At the time I also said that it would have a beneficial impact on the question of double dipping, which indeed it will have. But the principal factor is the addressing of the tax treatment. Let us take as an example two people who join a fund, go through their working lives and retire on the same day. One elects to take a superannuation pension and the other elects to take a lump sum payment. One is taxed on the basis of 5 per cent of the income and the other is taxed fully on the income. In other words, the person taking the superannuation pension would be taxed at about the standard rate of 30 per cent, whereas the person taking the lump sum payment would be taxed at a rate somewhere between 1.5 per cent and 3 per cent, depending on that person's marginal tax rate. In that respect the Government has addressed the equity questions relating to lump sum superannuation payments and has proposed a rate and basis of taxation which I believe is very fair. It has no element of retrospectivity about it. It will apply to a slow accrual of benefits from 30 June this year. Persons over 55 years of age will be taxed at a rate of 15 per cent on the first $50,000 and thereafter at the standard rate of 30 per cent. I have made those things clear in Press statements.

As far as the other element of the honourable gentleman's question is concerned , because of the action taken by his Government in 1976 in unwinding the assets test, the Commonwealth now has no basis of information about the assets of pensioners. In the course of the collection of information under the assets test the Commonwealth will be in a position to make that assessment. The Prime Minister has already indicated the generosity of the test and the way in which it will apply. It is a test to which no reasonable Australian can take exception .