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Finance Minister explains what he meant about abolishing 15 per cent tax on superannuation; says media misinterpreted his comments.



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This transcript has been prepared by a source external to the Department of the Parliamentary Library.

 

It may not have been checked against the broadcast or in any other way. Freedom from error, omissions or misunderstandings cannot be guaranteed.

 

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PM

 

Monday 23 January 2006

Finance Minister explains what he meant about abolishing 15 per cent tax on superannuation; says media misinterpreted his comments

 

MARK COLVIN: The Federal Finance Minister Nick Minchin has back-pedalled on the question of when the Government should cut the 15 per cent tax on superannuation contributions. 

 

Senator Minchin believes cutting the tax on super would be a much better option than another round of income tax cuts, because it would avoid pushing up interest rates.  

 

In a speech to the Young Liberals yesterday, that was something the Finance Minister regarded as a possibility in this budget. 

 

NICK MINCHIN: I think it is possible for us to contemplate the abolition of this tax, whether it's in this budget or down the track. But I do think it's one that has to be on the Government's agenda. 

 

MARK COLVIN: What a difference a day makes. Senator Minchin has now changed his tune. 

 

He says he won't be arguing for the tax to be cut in the next Federal budget. Rather, it's a measure to be considered for the long term. 

 

The Finance Minister spoke to Peta Donald in Canberra. 

 

NICK MINCHIN: What I was saying to the Young Liberals yesterday, to which I think the media has grossly overreacted, is that it is wrong to think that the Government is sitting on some great pile of money that it can give away in tax, in income tax cuts. I think the federal budget surplus, while appropriate and responsible, is not one that suggests we can start throwing money around.  

 

There is always a risk with undue expenditures or income tax cuts that you overheat the economy, and lead to interest rate pressures.  

 

PETA DONALD: So would you like to see the tax on super cut in this budget, or not? 

 

NICK MINCHIN: Not suggesting that at all, and what I was really saying in the speech was that there is far less room to the Government to move on, in relation to fiscal policy, than many are suggesting, and that we must be very careful not to put upward pressure on interest rates. 

 

What I was flagging was that to the extent that people want to talk about tax, over the medium to longer term, we should, I think as a nation, consider the way in which we tax savings, because the long term national interest is in enhancing the savings of this country, and that we do need to talk about that subject. 

 

I was certainly not flagging any Government decision or likely decision in relation to this budget. 

 

PETA DONALD: Nonetheless, in this budget the Government will have a pretty big budget surplus to play with. Will you go into the budget deliberations and the preparations for the budget arguing that the super tax should be cut this time around? 

 

NICK MINCHIN: No, I won't be. I don't think the Government has as much room to move as some others do in relation to fiscal policy. I do think we do need to be very careful about running the risk of stimulation of the economy to the point where we just cause interest rates to rise. I think we've got to be very careful of that. 

 

All I was flagging was that I think there, it's worthy of the nation to consider in the medium to long term how we tax savings, including superannuation.  

 

PETA DONALD: You do sound like you're back-pedalling on this Senator Minchin. Have you been contacted by any of your colleagues today who've suggested you should clarify your position? 

 

NICK MINCHIN: I'm not back-pedalling. I'm responding to what I think was a misinterpretation of my remarks in my speech yesterday. 

 

PETA DONALD: Have you been contacted about them by your colleagues? 

 

NICK MINCHIN: Oh, I talk to my colleagues all the time. I've had a number of calls from a number of people saying good on you Nick, this question of how we tax savings and the nation's need for additional private sector savings is a very important issue. 

 

PETA DONALD: And have you spoken to the Treasurer Peter Costello today? 

 

NICK MINCHIN: I talk to Peter probably most days. 

 

PETA DONALD: And today? 

 

NICK MINCHIN: I suspect we've had a conversation today, and we spoke yesterday, and I spoke to him last week, and I no doubt I'll speak to him again tomorrow. 

 

PETA DONALD: And what did he have to say today about your proposal on getting rid of the super tax? 

 

NICK MINCHIN: I don't discuss in public my private conversations with the Prime Minister, Treasurer, or any other senior member of the Government. 

 

PETA DONALD: Okay. Well Senator Minchin, it now looks like the Prime Minister is shaping up for quite a major reshuffle of Cabinet and you're reportedly happy enough to stay on in finance. Is that correct? 

 

NICK MINCHIN: I … yes, that's correct. 

 

PETA DONALD: Have you been told you'll definitely be staying on in that position? 

 

NICK MINCHIN: No, the Prime Minister has not made any announcement about changes to the ministry. And if you want to ask what changes might be made, you'll need to ask him. I've just said quite honestly and openly that I enjoy this portfolio, and I hope that the Prime Minister would allow me to continue the work I'm doing in this portfolio, because there's some very big challenges in it.  

 

MARK COLVIN: The Finance Minister Senator Nick Minchin, talking to Peta Donald in Canberra.