Bill's Media Releases

Opinion Piece: What was just their wealth is now also yours and mine

Published in the Daily Telegraph, Page: 28 on Thursday, 22 March 2012

Alot has been said this week about the passage of the mining tax and what it means for the Australian economy.

Mining is a great Australian industry that is going from strength to strength in full knowledge of the introduction of the mining tax.

New investment in the resources sector has risen from $47 billion in 2010-11 to $95 billion this year, to an expected $120 billion in 2012-13. As a Labor government we believe sharing the benefits of Australia’s mineral wealth, which belongs to all of us and can only be dug up once, is the right thing to do. That is why the mining tax funds a cut in the company tax rate for businesses big and small, helps give tax breaks for new cars and utes to tradies and small businesses, and funds a boost in superannuation for all Australians as well as virtually eliminating tax on superannuation for low income earners.

This boost in superannuation is good for the economy.

Superannuation has provided a growing source of relatively stable finance for the Australian economy, and has helped our banks and non-financial firms to shift toward safer forms of financing since the global financial crisis.

With an economy operating around full capacity and a massive pipeline of mining investment, the increase in superannuation contributions over the medium term is likely to help reduce pressure on inflation and therefore interest rates.

The mining tax also gives back billions of dollars from the richest companies in the world to ordinary Australians through massive investments in infrastructure like better roads, new bridges, and more efficient rail and ports particularly in our great mining regions.

But as always with big changes involving big numbers, it’s easy to lose sight of what this means for ordinary Aussies and their families. By digging a little deeper it becomes clear that the superannuation boost made possible by the mining tax has real benefits for real Australians.

For example, a 22-year-old hairdresser earning around $38,000 per year will, at the age of 67, have an extra $100,000 in their retirement savings as a result of this reform.

A 35-year-old plumber on $60,000 a year will see an extra $75,000 in their nest egg when they hit retirement.

And even a teacher who at 55 is contemplating the last decade of their working life, will have an extra $12,000 to look forward to when they retire at 67.

In discussions about superannuation and retirement you will hear people talking about the replacement rate. That is the amount of money you’ll have in retirement relative to what you are accustomed to when you are working. The satisfactory replacement rate when a worker retires is between 65 and 70 per cent of their accustomed earnings.

For workers in industries like construction, skilled trades, office reception and school teaching, the mining tax by funding the increase of the Superannuation Guarantee to 12 per cent improves their salary replacement rate by up to 6 per cent. No one should underestimate the importance of increasing this replacement rate for the wellbeing of millions of working Australians who will retire in the decades ahead. Through this reform, we’re also effectively abolishing tax on superannuation paid by the 3.6 million Australians earning less than $37,000 through the Low Income Super Contribution (LISC), a reform the Liberals have cruelly said they’ll abolish.

This is real reform for real people and at every step of the way the Liberal Party has just said no to it.

This is a real issue for real Sydneysiders. Tony Abbott and Joe Hockey are saying no to the 21,550 and 20,200 low income earners in their respective electorates in Manly and North Sydney who stand to benefit from handing back the tax they pay on their superannuation, let alone the over half a million Sydneysiders who stand to benefit from the LISC. And these two Liberal frontbenchers don’t support the fact that many of the 24,800 plumbers in New South Wales, to use just one example, will get bigger retirement savings due to 12 per cent superannuation.

No one wants to get to the end of their working life and have to scrape by on baked beans and charity, that’s why the increase to superannuation is so important.

The mining tax is a big deal. It’s a lot of money, but ordinary Australians should be confident that it’s giving back 100 per cent to them and their families.