15 September 2016
Transcript - #2016056, 2016

Interview with Patricia Karvelas, RN Drive

SUBJECTS: Superannuation

PATRICIA KARVELAS:

Kelly O’Dwyer welcome back to Drive.

KELLY O’DWYER:

Great to be with you Patricia.

PATRICIA KARVELAS:

The Prime Minister said during the election that the superannuation policy would not be changed. He said it was absolutely ironclad. There is a clear case of a broken election promise.

KELLY O’DWYER:

Well we promised that we would deliver on the Budget announcement and as part of that delivery, we said that we would consult very broadly with stakeholders on the implementation of the legislation. We’ve been doing that, we’ve been discussing the policy and we have made a modification to one aspect of it to improve it to make it fairer, to make it more flexible, and to ensure that the system will be sustainable going forward.

PATRICIA KARVELAS:

But you stood by the $500,000 lifetime non-concessional cap every single day of the election. You said you’d not change it, you were asked, not just you but all of the economic ministers, the Prime Minister too, repeatedly, almost every single day of the election campaign. The backbench objections were loud and clear throughout the campaign, but you stood firm. Now you’re changing the policy.

KELLY O’DWYER:

No we’re making a modification to the policy.

PATRICIA KARVELAS:

It’s different numbers. It’s entirely different.

KELLY O’DWYER:

Well the intention’s still absolutely the same. The change that we’re making is we’re no longer proceeding with the non-concessional $500,000 lifetime cap, which means after-tax contributions that people make to their superannuation. We’re instead saying that the current annual caps that apply will reduce the ceiling on that from $180,000 to $100,000, and we’ll have an eligibility requirement for that that says if you’ve got less than $1.6 million in your superannuation and you have an aspiration to get to $1.6 million, which is the transfer balance cap, you will be able to get there by making after-tax contributions. We think that that delivers on the same policy intent. We also think that it ensures that those people who have an aspiration to get to that transfer balance cap have the tools in which to do that.

PATRICIA KARVELAS:

$100,000 is a huge amount of money. Your new regime still favours the rich, doesn’t it? It’s hardly a crackdown on the rich.

KELLY O’DWYER:

What it does is it allows people who would like to be able to contribute to their superannuation to be able to do so up until the point that they reach the $1.6 million transfer balance cap for after-tax contributions. They can still make concessional contributions beyond that. But the $1.6 million is relevant because when you get to $1.6 million, you can transfer that into a retirement phase account and the earnings on that are entirely tax-free. A lot of people aspire to actually get to that. Not many people, in all truth and honesty, actually get there, but the aspiration is there for people and we don’t want to put a handbrake on people’s aspiration. As a Liberal Party member and as a Liberal Party minister I can say to you that aspiration is in our very DNA. So we are delivering on the commitment that we made in the Budget to reform the superannuation system to make sure that it is better targeted but also to give people the tools to save for their retirement.

PATRICIA KARVELAS:

 

With the benefit of hindsight, do you think you should have been more frank with the Australian people during the election campaign and said well, we are likely to do more than just tinkering because this is a fundamental altering of the policy?

KELLY O’DWYER:

 

It’s a modification Patricia, I mean we’ve still kept our commitments for the flexibility elements of our package where people who might have taken time out of the workforce for parental responsibility reasons or because they’re caring for an elderly relative. We’re allowing them to be able to catch up on their concessional contributions on a rolling five year basis starting from 1 July 2018. We are doing that because we believe it’s very, very important that people who might have not been able to take full advantage of their concessional cap in one year, but who might have capacity in following year or even within that five year period, to be able to have the opportunity to make that contribution.

PATRICIA KARVELAS:

 

But on the question of being frank with the Australian people, every single day of the election campaign there was a debate about this policy. The Australian people on July 2 went into the polling booth knowing about this policy and knowing exactly the figure – $500,000. Everybody knew it. It was publicly available throughout the whole eight week election campaign. You’ve changed that, it’s a broken promise.

KELLY O’DWYER:

 

Look Patricia, I mean, we can continue to have this debate but I am telling you –

PATRICIA KARVELAS:

I don’t know if it’s a debate, it’s a change isn’t it?

KELLY O’DWYER:

From our perspective, it is most certainly a change. It’s a modification to our policy, there is no question of that. We’ve been very upfront about that, but we’ve also been very upfront to say that we would consult on the implementation of the measures which we have been doing. That was also a commitment we made to the Australian people. The Labor Party said before the election that the Australian people would have to wait until after the election to actually discover what their superannuation policy was. They have changed their policy on many occasions despite giving commitments that they were not going to make further changes. They hold that out as a great virtue. We think that where you listen to the Australian people on issues that concern them, that is what a prudent, responsible government ought to do and that is what we have done.

PATRICIA KARVELAS:

But so far you’ve only negotiated with your own side. This isn’t you negotiating across the aisle, across the Parliament yet. You haven’t even done that yet, this is just you dealing with your angry backbench.

KELLY O’DWYER:

We have spoken to Chris Bowen and the Labor Party. We have cleared away any impediment that they have publicly said existed. There is no reason now for Labor to block supporting these changes. In fact the industry stakeholders who we have been consulting with have all come out today, and every single one of them has come out and they have said to the Labor Party, do not block these reforms, get on with it. Get on with it. The Australian people want the government to be able to govern and deliver the reform package that was announced, support them in doing that. These are modifications that clearly meet their requirements, they should now give it their full support.

PATRICIA KARVELAS:

So are all Coalition policies flexible?

KELLY O’DWYER:

We will always listen to the feedback of the Australian people. John Howard, when he was Prime Minister, was very clear that where the Australian people speak with a strong voice on particular issues, prudent and sensible Government should listen –

 

PATRICIA KARVELAS:

So what’s your next policy?

KELLY O’DWYER:

Malcolm Turnbull is very much in that mould as Prime Minister. He runs a very collegiate Cabinet, we have a very good working relationship with the Party Room that comes up with a multitude of various different ideas because we’ve got a Party Room that’s based on people who have a range of experiences.

PATRICIA KARVELAS:

So should we expect your next policy back down or shift at least, alteration, to be the backpacker tax?

KELLY O’DWYER:

What I would say to you on that particular point, Patricia, is that we know that in rural and regional areas, there are significant issues and have been for some time, with rural producers being able to have their fruit being picked, to make sure that they can get the vegetables out of the ground and the fruit picked and into supermarkets and exported overseas. They have real problems with the rural workforce. One element of this problem that has been articulated is that this particular change to the taxation arrangements that would require backpackers to pay the same amount of tax that non-residents pay, that that would have an impact on the rural workforce. We have said that we will consider that but we know that there are broader issues with the rural workforce and that is an issue that we’re working through. We are working through these issues in terms of visa requirements. We’re looking at this issue very carefully because with our Free Trade Agreements, with our incredible ability to produce clean and green products that can be exported overseas, we want to make sure that we take full advantage of those fantastic Free Trade Agreements that we as a Government have put in place with South Korea, with Japan, and now with China and that we hope to put in place with the European Union, with the UK after Brexit and also with countries like Indonesia and India.

PATRICIA KARVELAS:

Peta Credlin says the Prime Minister may allow a conscience vote on same sex marriage if the plebiscite legislation fails, if it’s blocked. Is that an option if the plebiscite becomes dead and impossible? Is that the kind of tinkering with policy that you’d work with?

KELLY O’DWYER:

Well I didn’t realise Patricia that you commentated on other commentators but…

 

PATRICIA KARVELAS:

I’m not commentating on her I’m quoting her and putting it to you.

KELLY O’DWYER:

Well you know you might as well put a question to me about Andrew Bolt or anybody else.

PATRICIA KARVELAS:

Well she was the Chief of Staff to the former Prime Minister so, Andrew Bolt wasn’t.

KELLY O’DWYER:

The point I would make in response to that is that we are entirely committed to a public vote on the matter of changing the Marriage Act –

PATRICIA KARVELAS:

You are but if it fails like it looks like it will –

KELLY O’DWYER:

I am a very strong supporter of a change to the Marriage Act. I’ve said it on your program many times that I will be a strong and vocal advocate for a change. There are other members of my Party Room who hold a different view but what we all agree on, we all agree, that the commitment that we made before the election that we would put this to the Australian people must be honoured. We have got legislation now that can deliver on that commitment, it’s in the Parliament, there is a date that has been set, 11 February, and the Labor Party is now playing politics on this.

PATRICIA KARVELAS:

If they continue to, let’s describe it that way I’m not going to contest that, let’s say it’s going to get blocked.

KELLY O’DWYER:

Well I’m not going to get into hypotheticals though.

PATRICIA KARVELAS:

It’s not hypothetical, it looks like it really might happen, that it will be blocked.

KELLY O’DWYER:

Well the Labor Party haven’t actually indicated their position and I think it is incumbent upon them to explain why it is that they are blocking the Australian people from having a say on this very important issue. And let me say this, I think they hold the Australian people in absolute contempt in blocking this. They have used all manner of words to denigrate the Australian people in not being able to have a respectful debate, well I hold a very different view, I think the Australian people can be trusted to have a very sensible debate on this issue, I think people should be able to have views on this issue that are heartfelt.

PATRICIA KARVELAS:

If the legislation does fail, may that – we’re talking about compromise, this is why it’s interesting, you’re talking about compromise with super, we’ve talked about compromise with the backpacker tax, this is the next area where you may need to compromise, are you prepared, if it fails, to look at other options.

KELLY O’DWYER:

Well Patricia, I’m very happy to come on your program, and I’m very happy to discuss this, once that issue has been resolved, but what I would say to you is that we don’t want this to fail, we want the Labor party to honour what the Australian people told them through the election.

PATRICIA KARVELAS:

But it may be a political reality.

KELLY O’DWYER:

Well, again, I would just say to you, it’s a hypothetical at this point, the Labor Party, Bill Shorten needs to exercise some leadership in his party, he needs to demonstrate that he is the sort of person who can listen to the Australian people, he needs to take a leaf out of our book on this.

PATRICIA KARVELAS:

Okay, but you say that there should be flexibility with policies, effectively we’ve seen this with super today, you were upfront about that, there has been a change to what we saw was put to the election.

KELLY O’DWYER:

There has definitely been a modification on one element of the superannuation policy, but what you are talking about –

PATRICIA KARVELAS:

If another policy fails, go and take a different road to get to the outcome.

KELLY O’DWYER:

But it’s not comparable, this situation is quite different, we said that we would put this to the Australian people for a vote, it is our absolute intention to do that and we ask the Labor Party to respect the Australian people, to honour the decision that they made in the election and to ensure that that vote can proceed. Which, if it proceeds on 11 February, I believe very strongly that there will be strong support for a change in the Marriage Act and we will be able to have the legislation through by March.

PATRICIA KARVELAS:

That’s the Minister for Revenue and Financial Services, Kelly O’Dwyer.