SKY News AM Agenda

E&OE

KIERAN GILBERT:

I’m joined by the Social Services Minister Scott Morrison to discuss reforming your portfolio. I’m going to get to that other issue in a moment Mr Morrison in a moment and get your thoughts on it, but I do want to first of all start with the developments on the pension. Can you talk us through just what’s going to happen here? 172,000 pensioners to actually be better off despite the taper rate being reduced?

MINISTER MORRISON:

Well that’s right. What we are doing on the pension is making sure there is fairer access for a more sustainable pension. That means we are lifting the level of assets you can have; when you are on a modest level of assets that means there will be 172,000 pensioners who will be better off to the tune of around $30 a fortnight when this comes into effect in January of 2017, so they will be better off. Then what we are doing is we’re pulling back on the higher level of assets that you can hold to get a part pension and that means that if you are currently a couple who owns your own home and you have over a million dollars in additional assets then no longer will you be able to access a part pension; you will be a fully self-funding retiree.

GILBERT:

And from what point will people start to receive the part pension in terms of assets in addition to the family home.

MINISTER MORRISON:

For a couple it’s $823, 000 in January of 2017 and that’s if you own your own home. There will be other rates that apply to non-home owners and others and they’re all set out in today’s Daily Telegraph.

GILBERT:

Now in terms of the issue I guess on those missing out you’ve said that there are 172,000 better off but there are going to be several hundred thousand with reduced payments as well as those who miss out altogether?

MINISTER MORRISON:

Well that’s right but what we are doing is we’re reversing, getting rid of the proposal that was in last year’s Budget which would have seen a slower rate of growth in the pension for all pensioners and pension related benefit recipients, now that’s around 4.1 million Australians. That proposal isn’t going forward at all and what that will be replaced by is this measure which will see a better pension for those on low and modest levels of assets. Now let’s not forget that the average level of assets held in addition to the family home by pensioners is around $100, 000 odd for those who haven’t got a superannuation plan and $200,000 for those who do. So the overwhelming majority of pensioners will fall into this category of receiving the pension. But for those on higher levels of assets well we are saying then that is a level of assets where you will be able to be a fully self-funded retiree but one thing we won’t do is what the Labor Party is going to do. That is they are going to tax superannuants on the nest egg and the income that they are drawing down in their retirement. It’s important if we are going to reduce eligibility for the pension which is a welfare payment for those who need it that you give full support to those who are funding their own retirement by not hitting them with a tax sledgehammer which is what Labor wants to do.

GILBERT:

So never, never ever on that front? That’s not something the Government would consider, because it’s been certainly something that’s been discussed as an area of very lucrative exemptions?

MINISTER MORRISON:

Well no they’re not lucrative exemptions. What they are is people who have saved for their own retirement, who’ve put their own money away and are drawing down to support themselves and not drawing down on a pension. Now if we are going to say go out there and support yourself we aren’t going to hit them with a tax sledgehammer which is what Labor wants to do. Because Labor thinks that actually taxing someone on the income that they have earned for their retirement is the same as giving someone a payment on welfare and they are not the same thing. They are not the same thing and we don’t believe they are the same thing. We would rather people who have saved for their retirement be able to keep that money so they can live well in their retirement but it doesn’t mean that you’re going to use the welfare system as an incentive scheme for superannuation, that’s not what it’s for.

GILBERT:

Well I guess one of the criticisms, Minister, is that the Labor Party would be changing it mid-stream on superannuants but can’t you be accused of doing the same thing for say pensioners who thought that they would have the support of a part pension, maybe spent a little more than they otherwise would and now they lose it?

MINISTER MORRISON:

Well no because the pension is not a superannuation scheme. The pension is a welfare payment for those who need it and we need to ensure increasingly that welfare is based on need not on a sense of entitlement. You don’t use the welfare scheme as an incentive scheme; you use it to help people in need. The tax scheme is where you put the incentive and that’s where you provide the incentive for people to be able to save for their retirement which is what the Howard/Costello Government did. I mean what they want to do on superannuation now Labor is to compel businesses to pay higher superannuation guarantee levies which are basically the same as a tax for those businesses and then they want to punish superannuants who put their money away when they are in retirement and tax them more. Now we just don’t think that’s the right to go ahead, sure there will be loopholes, that need to be closed but those loopholes shouldn’t be defined as the rule which justifies just a massive broadening of the tax base on superannuants which is what Labor wants to do.

GILBERT:

Speaking of these loopholes what about the former public servants – senior public servants – able to generate a very healthy superannuation, but then also tap into the age pension are you going to crack down on that? Can you talk us through how many individuals are concerned there?

MINISTER MORRISON:

Well there are 48,000 people we understand are involved in this practice and effectively they are flying under the radar on the income test for the pension. They are doing that by being able to – currently under a loophole in the tax law where you can claim a lower level of income even though you are getting a higher level of income because of the way your pension in the defined benefits scheme was set up. Now I need to be very clear, it’s quite a targeted group we are looking at. If you are in a retail type fund which is along those lines they are not affected. I should also stress that two thirds of the people in these funds aren’t over rorting in this area. There will be a 10 per cent cap on what can be reduced for your income when it comes to assessing the pension. It is about closing off a loophole there were some unintended consequences of some legislation back in 2007 and that’s been brought to my attention and we are tidying that up. Together these two measures which we are announcing today will bring $3 billion or thereabouts to the Budget over the forward estimates, and that’s necessary. If you are going to take something off the table which I said, if we are going to take the CPI indexation off the table, you have got to put something on and that’s what we have done.

GILBERT:

Finally, two of your Cabinet colleagues have told me that if this Budget is a failure that Joe Hockey has got to be replaced as Treasurer. Further to that, Nikki Savva reports this morning that Scott Buchholz had told the Prime Minister the same thing. Based on feedback he has had from your colleagues, I guess the backbench colleagues more to the point with Scott Buchholz, but what do you say to that view heading into Mr Hockey’s second Budget?

MINISTER MORRISON:

Look I just think this is more Canberra gossip which I am not terribly interested in. I’m interested, as I know all my colleagues are, and the Prime Minister, and the Treasurer, in getting a fairer more sustainable pension and that’s what we are focused on. I mean this is just gossip frankly Kieran and I am not engaging in that. I think the Treasurer has pulled together an excellent Budget together with his colleagues and it will be an incremental improvement to surplus over time, it will be responsible, it will be fair. I think this is what we have all been working together on. It’s been a very strong team effort and he has my strong support. Because this is a big job. Every Budget is important, every Budget is important and this one no less because we are still dealing with the fiscal larceny of the Labor Party which continues unabated. Bill Shorten has had two ideas this year. They are all taxes to expand the welfare base and just keep shovelling money out the door and that’s not the Treasurer’s view, I think that’s the way forward.

GILBERT:

But you say its gossip, but Scott Buchholz on the record to Nikki Savva this morning made it pretty clear?

MINISTER MORRISON:

Well look I just think its Canberra insider nonsense. This is Sky Agenda not Who Weekly. So I’m not interested in talking about gossip.

GILBERT:

Ok, thanks for your time this morning we will chat to you soon.

MINISTER MORRISON:

Thanks Kieran.