The government and the Greens are confident of crunching a deal to increase petrol excise by the spring, using the momentum generated by this week’s agreement to cut the age pension by $2.4 billion.
But with the petrol deal worth $23 billion in revenue over the next decade, one Greens source warned “we won’t be a cheap date”.
Sources in both camps said negotiations on reintroducing the indexation of fuel excise in return for dedicating some of the revenue to public transport were proceeding well with a view to legislating after Parliament resumes in August.
The pension deal will be pushed through both Houses before Parliament rises for the winter at the end of next week, putting pressure on Labor to state whether it will revoke the pension cuts if it wins the election, due at the end of 2016. The pension cuts, which reduce the eligibility thresholds for the part pension, are due to begin in July 1, 2017.
Shadow Finance Minister Tony Burke said Labor would not be rushed into making a decision.
SINODINOS: TAX REFORM INEVITABLE
Late Wednesday, NSW Liberal Senator Arthur Sinodinos broke ranks on the government’s repeated promise to not touch superannuation taxes this term or the next, saying tax reform was inevitable.
“You have to look at all elements of tax together,” he said.
“If you want low income tax, that’s got to be paid for.”
The Australian Financial Review understands there were differences of opinion within shadow cabinet over the decision to reject the pension proposal, which was a compromise to the doomed push in the 2014 budget to reduce the indexation rate of all age pensions.
As a result of the Greens deal, the asset threshold for couples, excluding the family home, at which the part pension would cease, would fall from $1.15 million to about $820,000. It would fall to about $550,000 for singles.
About 320,000 part pensioners would either lose their payment or some of it but as a trade-off, 170,000 pensioners with more modest assets would receive an increase of about $30 a fortnight.
In return, the government agreed to extend the tax white paper submission process by six weeks so people could make submissions into reforming the retirement income system, including superannuation taxes. But the government from Prime Minister Tony Abbott down, emphatically ruled out touching super either this term or the next.
REVIEW A ‘BLUEPRINT’
Greens leader Richard Di Natale conceded there would be no tax changes to superannuation unless the Liberal Party dumped Tony Abbott as Prime Minister or lost the next election.
He said the review would at least provide a “blueprint” for a future government or prime minister to adopt.
Labor accused the Greens of selling out pensioners and taunted the Abbott government for doing a deal with the Greens, something Mr Abbott used to frequently criticise the former Labor government about.
“The Greens have got a completely dud deal. They have got some commitment to a pathetic review when Tony Abbott has already ruled out any changes to the tax treatment of high income superannuants,” said shadow families minister Jenny Macklin.
Labor’s modelling showed a single age pensioner who owns their home and has a super income of less than $25,000 would lose $8200 of their $11,800 part pension, per year.
The pension deal secured an extra $4 billion in revenue over four years. As well as the $2.4 billion saved by the deal with the Greens, Labor agreed to scrap the $1.1 billion pension supplement and a another $500 million measure.
This brings to $7 billion in savings the government has achieved in the last two weeks given previous decisions by Labor to scrap the increase to the tax free threshold and the dependent spouse offset.
If the petrol deal is done, the savings over four years will increase to $10 billion.
Extracted in full from Australian Financial Review.