Senator FAULKNER —My question is directed to the Assistant Treasurer. In the light of the minister's complete inability to answer my question yesterday regarding whether superannuants will be worse off under the proposed tax arrangements, I ask: can the minister now confirm that a self-funded retiree who receives between $30,000 and $40,000 per annum will not be eligible for either the aged persons savings bonus or the self-funded retiree supplementary bonus, worth $3,000? I also refer the minister to fact sheet A337 of the tax package. Can the minister explain how the government's proposed new 15 per cent tax on the underlying income of allocated pensions and annuities will actually operate, and what effect it will have on the long-term retirement incomes of those self-funded retirees with these private pensions?

Senator KEMP (Assistant Treasurer) —Senator Faulkner, your question on self-funded retirees was answered yesterday. I suggest you go back to the Hansard , and you will find that that question was very clearly answered. We pointed out the income tests which are available for the aged person savings bonus and we pointed out the possible effects of other elements of the tax package on self-funded retirees.

Senator Conroy —You haven't got a clue, have you?

Senator KEMP —Well let me make it very clear—I am delighted the question was asked, again, by Senator Faulkner—that in the Labor Party tax package there was nothing for self-funded retirees. No tax cuts available for self-funded retirees; tax cuts available for those in the work force.

Senator Cook —That is not true.

Senator KEMP —Senator Cook, if you do not agree with that, you get up after question time and attempt to correct me.

Senator Cook —I'll tell the truth, you can tell the lies.

Senator KEMP —We'll see about that. But there was one major effect on self-funded retirees.

Senator Faulkner —Madam President, I raise a point of order. However interesting this may be, I asked Senator Kemp a question about the government's approach in relation to self-funded retirees earning between $30,000 and $40,000 per annum. I also asked him to explain the government's proposed 15 per cent tax on underlying income of allocated pensions and annuities. It is a very clear question and I ask you, Madam President, if you would direct him to answer the question asked.

The PRESIDENT —I cannot direct him to answer it in a way that you might want, Senator. I can only see that his answer is relevant to the matter that you have raised. But I am certainly mindful of the question, and Senator Kemp should be also.

Senator KEMP —Madam President, the question in relation to self-funded retirees and the benefits that they get out of the tax package was explained very carefully yesterday. The income test in relation to the aged persons supplementary benefit was also carefully explained yesterday. What is the point of answering questions, Senator Faulkner, when you absolutely refuse to read them? I am pointing out that self-funded retirees will note that they got nothing out of the Labor Party tax package except the capital gains tax. They de-grandfathered the pre-1985 assets. That is what the Labor Party attempted to give to self-funded retirees. Labor's real concern for self-funded retirees will come in a vote later today. One of the groups in the community pushing as hard as they could for the health rebate were the self-funded retirees. They are the people that are waiting for the Labor Party to recognise that an election commitment was made, which this government is attempting to deliver. One of the non-government parties which is going to attempt to block this particular item—well, we shall see—is the Labor Party if they stick with their stated position. So don't you get up here and attempt to lecture us-

Senator Cook —Don't you lecture us.

Senator KEMP —Don't you attempt to lecture us with your polices on self-funded retirees.

The PRESIDENT —Senator Kemp, you should direct your remarks to the chair.

Senator Cook —Don't you lecture us, you little upstart!

The PRESIDENT —Senator Cook, stop shouting.

Senator KEMP —They are an absolute disgrace. The other issue was the impact on the recipients of allocated pensions and annuities. Let me make it absolutely clear that, during the election campaign, there was an attempt by the Labor Party to run a scare campaign on that. A variety of changes were made in this area, and no-one accepted the Labor Party's scare campaign on this particular matter.

Under the reforms outlined in our new tax system, from the 2000-01 income year the income of the underlying annuity and pension business of life insurance and superannuation funds would be assessable, and deductions would be allowed for the interest component of the pension payments and associated expenses. The effect of this is that any net profit derived by the life insurance or superannuation fund on an annuity or pension business would now be taxed. The proposal in the new tax system that we are bringing in will not change the tax treatment of allocated pensions or annuity recipients. (Time expired)

Senator FAULKNER —Madam President, I ask a supplementary question. Yesterday and today I have asked the minister about private pensioners receiving between $30,000 and $40,000 per annum. I ask the minister whether his dismissive answers both yesterday and today to this question actually change if he knows that his own ministerial colleague, Mr Ruddock, wrote to a constituent of both his and mine saying:

Please understand that I truly appreciate your financial position in that you fall between categories.

My supplementary question is: do these privately funded retirees fall between categories, and isn't the result of them doing so that they will be fully liable for the GST on all their expenditure and they will have little or no compensatory measures applying to them? Was that deliberate on the part of the government or was it a design fault?

Senator KEMP (Assistant Treasurer) —This is a leader of a party that attempted to penalise, above all, self-funded retirees in its tax package in the last election. One reason you lost that election was the punitive tax that you attempted to impose on self-funded retirees.

Senator Faulkner —Madam President, I raise a point of order. My question related to private pensioners earning between $30,000 and $40,000 per year. I asked Senator Kemp whether this is a deliberate policy on behalf of the government or whether it was a design fault. The question is about, quite clearly, a certain category of private pensioners and superannuants. I ask you to direct him to answer it. Admit what is going on, Senator Kemp. Own up!

Senator KEMP —Madam President, on the point of order: that was clearly no point of order. Senator Faulkner asked me about the impact of the tax package on self-funded retirees. I have outlined that yesterday in some detail and the benefits that people who are receiving over $30,000 a year could receive. What Senator Faulkner is sensitive about is that I am talking about the Labor Party policy on self-funded retirees.

The PRESIDENT —Order! I draw your attention to the specific question that was asked by Senator Faulkner. Address yourself to that, Senator Kemp.

Senator KEMP —I have outlined in detail that self-funded retirees will receive a large number of benefits under the tax package. Many will receive the benefits of the income tax cuts that we have proposed. Many will benefit from the refundable franking credits that we have proposed. Many will presumably benefit from the health insurance rebate, which we are trying to get through this Senate over the opposition of the Labor Party. The point I am making is that this was the group that tried to impose a penalty tax on self-funded retirees. (Time expired)