Peter Costello

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Super Surcharge Abolished, Against the Wishes of Labor

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SUPER SURCHARGE ABOLISHED, AGAINST THE WISHES OF LABOR

Legislation to abolish the superannuation surcharge passed the Senate today.

Although this measure was announced in the Budget on 10 May the Labor Party has managed to use its majority in the Senate to prevent the abolition up until today.

The abolition of the surcharge will simplify the operation of the superannuation system, boost the superannuation savings of affected individuals, and provide incentives for individuals to make additional voluntary superannuation savings. It also builds on previous changes introduced by this government aimed at assisting Australians to achieve greater financial self-reliance for their retirement.

The surcharge was introduced in 1996 to help deal with the massive Budget deficit – the Beazley Black Hole. Now that the Government has paid off most of Labor’s debt legacy, it is appropriate to abolish this measure which was never designed to be permanent.

Labor’s stance on the super surcharge has been a mass of self-contradictory positions. Labor opposed its introduction, then opposed reducing it, and now opposes abolishing it.

The legislation to abolish the surcharge complements the significant boost to superannuation savings announced last year. The Government expanded the co-contribution scheme to significantly enhance the incentives for low and middle income employees to contribute to superannuation, at a cost of $2.3 billion over four years.

At the same time, the Government announced a plan to reduce the superannuation surcharge rates. The Government also undertook at the last election to reduce further the maximum surcharge rates. The Government has now exceeded its election commitment by abolishing the superannuation surcharge with effect from 1July2005.

CANBERRA

10 August 2005

10 Aug 2005

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