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Transcript of press conference: Treasury Place, Melbourne: Thursday 24 March 2005: superannuation, GST.



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Press Conference Treasury Place, Melbourne

Thursday, 24 March 2005 12.00 noon

SUBJECTS: Superannuation, GST

TREASURER:

Starting on Easter Monday the Australian Government will be unveiling a national advertising campaign to promote co-contribution to superannuation.

In the past if you were an eligible person and you made a contribution into superannuation the Government would match it dollar for dollar. In last year’s Budget we announced that the Government will now match for each dollar for eligible people with a $1.50 contribution into their superannuation.

The original measure, last year, gave more than half a million Australians an additional payment into superannuation. We want to increase that number and we want to make the contribution more generous. For people earning $28,000 a year, they can get a co-contribution from the Government of up to $1,500. The co-contribution amount phases down and is still available up until an income of $58,000. So for people earning between $28,000 and $58,000 they are eligible to receive $1.50 contribution from the Government for a dollar they put into their superannuation. And it is weighted so that people at the lower end of the income scale are eligible to put more in and to receive more benefits.

This is an exciting programme which is designed to build savings for people who are worried about their retirement income. The profile that we have is that the people who have taken this up in the past, in the most numbers, tend to be women and women who are approaching retirement, and women who are approaching retirement on lower incomes who haven’t put money aside throughout their working career but want that opportunity before they retire to increase their savings income.

You will have seen advertisements of the original scheme which was dollar for dollar. That scheme has been improved. It is now $1.50 for a dollar. These advertisements will be going to air over the Easter period.

Ad runs

The Australian Government Super Co-contribution is now even bigger and better. It’s increased so now Australians who earn under $58,000 could be eligible and the Government contribution is even greater. For every dollar you contribute the Government contributes as much as $1.50 - up to $1,500 a year. Now more working Australians can give their super an extra helping hand. For improved super co-contribution details call 13 10 20 or visit our website. Authorised by the Australian Government Canberra.

And to mark this new scheme for a dollar contribution the Australian Government now makes $1.50 in a matching contribution. Any questions - on superannuation first?

JOURNALIST:

Do companies have to provide any (inaudible)?

TREASURER:

No. It is a scheme by which if you are an eligible person between that income range of $28,000, well sorry, under $58,000 - you don’t have to be at $28,000 - if you are in that income range up to $58,000 then if you make a dollar contribution to your superannuation the Government will match it with $1.50. So you put in a dollar but $2.50 is credited to your superannuation. You are eligible to put $1,000 in which will credit $2,500 to your superannuation up to $28,000 and then it phases down. And the scheme ends for people over $58,000.

JOURNALIST:

Any estimate on how much it will cost over coming years?

TREASURER:

Oh yes, we announced in the Budget that this will be a very, very significant cost - depending of course on the number of people that take it up - and of course the more people that take it up the more it will cost but the more there will be in savings.

JOURNALIST:

So it could be a million dollars it could be a billion dollars you really don’t have a…?

TREASURER:

Oh no we put our estimates out in the Budget but I am doing whatever I can to attract as many people into this scheme.

JOURNALIST:

Do you think that land tax should be abolished all together?

TREASURER:

Well, in Victoria, I would observe that land tax has increased exponentially over recent years. The reason for that of course is that land values have gone up. The Government hasn’t cut the rates, so I would say that you can tell in Victoria that business are bleeding over land tax and I believe that the Victorian Government should very carefully consider those land taxes.

JOURNALIST:

Mr Costello on the, at the moment we have got rising inflation concerns in the United States that impact on commodity prices and the Australian dollar. Do you see any impact or threat to the Australian economy from things internationally at the moment?

TREASURER:

Well the rising oil price will be a difficulty for Australia and you are seeing at the petrol bowser people have to pay exorbitant prices. Prices which I don’t like and I am sure motorists don’t like. But if we are able to prevent the spread of those price rises into the general economy we will be able to make sure that there isn’t a general inflationary response. There will be an inflationary response for petrol prices but it is making sure that that doesn’t move its way into the general economy through businesses. And if we are able to do that then our economy would be stronger.

JOURNALIST:

On the States and GST agreement - the States yesterday were warning that if the Federal Government walks away from the Agreement that they will blame the Federal Government for cuts to services. Are you ready for that?

TREASURER:

The Federal Government won’t walk away from the Agreement. The Federal Government wants that Agreement to be honoured. Let me make this clear - the Federal Government will not walk away from the Agreement. The Agreement says that the States will eliminate nine taxes. We want that Agreement to be observed. And if the States eliminate those taxes the Agreement will be observed. Now the critical question here is are the States going to walk out of the Agreement? A refusal to eliminate the taxes which have been slated for elimination in response to the GST, if that were done by the States, would amount to the States walking out of the Agreement. Let me be very clear about this point.

JOURNALIST:

But they say the Agreement says review not eliminate.

TREASURER:

Everybody in Australia knows when the GST was introduced it was introduced to eliminate other taxes. Everybody in Australia knows that. We campaigned on it all around Australia and now the time has come for the elimination of those other taxes. The States say we will keep the GST and the other taxes, that isn’t the system. The GST replaces the other taxes. They know it, we know it, the people of Australia know it. Nobody said to the people of Australia when the GST is introduced we will be keeping those other taxes as well. Not Mr Brumby, not Mr Bracks, nobody. What the people of Australia were told was when the GST comes in those other taxes would be eliminated. And to the States I say, keep the Agreement.

JOURNALIST:

If the Agreement were to come to an end for whatever reason wouldn’t that you know give the Commonwealth a unilateral power to put up the rate of the GST as well as cut grants to the States?

TREASURER:

I am not looking for a moment at the possibility of this Agreement coming to an end. Because if the agreement came to an end that would mean that those other taxes weren’t abolished. We want those other taxes abolished. We want the agreement to stand. This Agreement has to be honoured. It was negotiated in 1999. This shouldn’t come as any surprise to anybody. This was negotiated six years ago. It has been on the

record all the way through. The States have known since 1999 that this was coming in 2005. It is no surprise to anybody.

JOURNALIST:

Is there any flexibility on what taxes are abolished? Are they ones that you have specified or will the States come back with alternatives?

TREASURER:

No they’re the ones that we agreed - the nine that we agreed - the nine that were part of the policy. The only argument is timing and sequencing. There is no argument that they have to be eliminated. That is the whole essence of the agreement. Okay.

JOURNALIST:

If the States hold their ground and you withhold GST that situation can’t continue so obviously something has to give…?

TREASURER:

Well I have laid down the timetable for the elimination of these taxes. The States said that they would like time to think about it. And so we have given them time to think about it. But there is no argument about the elimination of these taxes. The question is the timing and the sequencing. Thank you all.

JOURNALIST:

On another matter - has the Government been in communication with the Indonesian Government about the Victorian prisoner being taken over to…?

TREASURER:

You would have to ask the Attorney-General in relation to that. Thank you very much.

© Commonwealth of Australia 2000