NO.072

SUPER SURCHARGE ABOLISHED, AGAINST THE WISHES OF LABOR

Legislation to abolish the superannuation surcharge passed the Senate today.

Although this measure was announced in the Budget on 10 May the Labor Party

has managed to use its majority in the Senate to prevent the abolition up until

today.

The abolition of the surcharge will simplify the operation of the superannuation

system, boost the superannuation savings of affected individuals, and provide

incentives for individuals to make additional voluntary superannuation savings.

It also builds on previous changes introduced by this government aimed at assisting

Australians to achieve greater financial self-reliance for their retirement.

The surcharge was introduced in 1996 to help deal with the massive Budget deficit

– the Beazley Black Hole. Now that the Government has paid off most of

Labor’s debt legacy, it is appropriate to abolish this measure which was

never designed to be permanent.

Labor’s stance on the super surcharge has been a mass of self-contradictory

positions. Labor opposed its introduction, then opposed reducing it, and now

opposes abolishing it.

The legislation to abolish the surcharge complements the significant boost

to superannuation savings announced last year. The Government expanded the co-contribution

scheme to significantly enhance the incentives for low and middle income employees

to contribute to superannuation, at a cost of $2.3 billion over four years.

At the same time, the Government announced a plan to reduce the superannuation

surcharge rates. The Government also undertook at the last election to reduce

further the maximum surcharge rates. The Government has now exceeded its election

commitment by abolishing the superannuation surcharge with effect from 1July2005.

CANBERRA

10 August 2005