The government today has finally secured the repeal of the mining tax, after agreeing to keep the schoolkids bonus and two measures for low income earners until after the 2016 election.
As part of a deal with the Palmer United Party, the government’s promised move to increase the compulsory superannuation rate to 12% will be delayed from 2022 to 2025.
While abolishing the mining tax fulfils – just before the first anniversary of the election – a core Coalition promise, the delay in the superannuation rise breaks yet another commitment.
The Senate passed the repeal this afternoon – the changes go back to the House of Representatives for formal endorsement – as Labor in the House was mounting a ferocious attack on the superannuation delay.
Shadow treasurer Chris Bowen said the government had broken a commitment to almost nine million Australians.
Opposition leader Bill Shorten said that Tony Abbott had promised Australians “on at least 14 separate occasions not to make any adverse changes to superannuation” – and now the government had done “a dirty, devious, backroom deal”.
But Abbott sought to put a positive spin on the delay, telling parliament: “There are no adverse changes as a result of this. By delaying the increase in the superannuation guarantee levy we are keeping more money in workers’ pockets”.
PUP leader Clive Palmer had a similar line: “Australian families are doing it tough and we think it’s more important ourselves that Australian families have access to the funds or purchasing or bargaining power, now while they are bringing up their children, not in 50 years time”.
The deal with PUP costs A$6.6 billion in forfeited budget savings over the forward estimates but secures $10 billion from the other savings in the mining tax package.
As part of the agreement the schoolkids bonus will be means tested, confining it to families earning up to $100,000.
It stays until December 31, 2016; the income support bonus remains until December 31, 2016; and the low income super contribution continues in its existing form until June 30, 2017.
Palmer said that at the next election “the people of Australia will have their opportunity to send a strong message to this government that they support those measures”.
Under the previous schedule, the 9.5% compulsory superannuation rate was to increase to 10% on July 1, 2018, rising in yearly increments of 0.5 of a percentage point until it hit 12% in mid-2022. Now the increases will not start until July 1, 2021. In the May budget the government had already delayed the superannuation timeframe.
Finance Minister Mathias Cormann said in a letter to Palmer the delay would “achieve higher take-home pay for employees pre-retirement and lower costs for business helping them employ more Australians”.
Cormann also wrote: “The government appreciates the very constructive approach taken by the Palmer United Party in helping remove the mining tax in a fiscally responsible way”.
The short-lived mining tax was bitterly opposed by the industry when it was announced by the Rudd government and the controversy was one factor undermining the then-prime minister. A deal was struck by the Gillard government for a much weakened version. That, however, was flawed, and did not raise even the reduced amount estimated.
Palmer’s agreement follows an earlier deal he did to preserve the government’s new regime on financial advice. The latest compromise will encourage the government to think it can reach agreements on some other budget measures, although Palmer today reaffirmed PUP would not vote for any Medicare co-payment.
The Australian Chamber of Commerce and Industry said the government, PUP and the Motoring Enthusiast Party’s Ricky Muir “have given ground in a compromise that delivers Australia a double benefit. Firstly, we see an inefficient, job-stifling tax removed, and secondly, the budget is improved through further savings”.