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Politicians big winners out of tax, superannuation changes.



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Australian Democrats Press Releases

Senator John Cherry Democrats Senator for Queensland Australian Democrats spokesperson for Superannuation

Dated: 12 May 2005

Press Release Number: 05/244 Portfolio: Superannuation Related: Treasury

Politicians big winners out of tax, superannuation changes

Politicians are big winners out of the tax and superannuation changes announced in the 2005 Budget, with benefits of up to $18,000 flowing from tax cuts and the superannuation surcharge abolition, the Australian Democrats have revealed.

Democrats Superannuation spokesperson and retiring Senator John Cherry, said that would be good news to his successor, Senator-elect Barnaby Joyce, who complained on the weekend that politicians were underpaid.

"This Budget will leave Mr Joyce and the other 37 new senators and members elected at the 2004 poll $4800 a year better off - $3590 in tax cuts on a parliamentarian's $106,770 salary and $1200 because of the abolition of the Superannuation Surcharge on their 9% super.

"But parliamentarians elected prior to 2004 are probably the biggest beneficiaries in Australia of the abolition of the superannuation surcharge. For those elected after 1998 and not yet eligible for a pension, the abolition of the surcharge will leave them around $3500 better off a year.

"And for those who have completed the eight years necessary to qualify for a pension, they will be between $8,000 and $15,000 a year better off because of the demise of the surcharge, because the public contribution to their superannuation can be as much as their salary itself. *

"Adding in the tax cuts, the Budget leaves parliamentarians up to $18,000 a year better off.

"It is hard to justify politicians being up to $350 a week better off as a result of this Budget when workers on average wages are getting a benefit of just $6 a week.

"But I'm sure the changes will make the Treasurer very popular with the backbenchers. It is the 90% of voters who miss out on the big tax cuts in this Budget who will be feeling short changed," he said.

*Technical note: Because the parliamentary scheme is a defined benefit fund based on years of service, the employer contribution can only be calculated when an MP retires. For example, an MP elected in 1996 who retired at the next election in 2007 would be entitled to a pension of 57.5% of salary (approx $61,000). The public subsidy to sustain this equates to around $96,000 for every year of service, a notional annual surcharge amount of around $12,000 a year.