The Government has delivered on our commitment at both the 2010 and 2013 elections to scrap the failed Minerals Resource Rent Tax (mining tax).
Along with scrapping this failed tax we are abolishing or re-phasing all of the unfunded promises that Labor irresponsibly and recklessly attached to it. The tax package was so poorly designed, it was in fact costing the Government billions of dollars each year.
While the Government’s negotiated package will be budget neutral in the medium term, abolishing the complete mining tax package will save the Budget around $50 billion over the next decade.
The Government has agreed to delay the abolition date of the following associated spending measures:
- the Low Income Superannuation Contribution will be abolished from 1 July 2017;
- the Income Support Bonus will be abolished from 31 December 2016; and
- the Schoolkids Bonus will be abolished from 31 December 2016.
The Government will, in the interim, also apply an income test to the Schoolkids Bonus limiting eligibility to families with an adjusted taxable income of $100,000 or less.
This takes total forecast net savings to more than $10 billion over the current forward estimates. The total financial impact of the negotiated measures will be a cost to the current forward estimates of about $6.5 billion.
The reduction in savings will be recovered in the medium term by re-phasing the superannuation guarantee increase. The superannuation guarantee rate will be paused at 9.5 per cent until 1 July 2021. After this the superannuation guarantee rate will increase 0.5 per cent each year until it reaches 12 per cent from 1 July 2025.
Given that increases in the superannuation guarantee are largely funded from reductions in take-home wages or business profits, re-phasing the superannuation guarantee puts more money in employees’ pockets while reducing businesses’ overall wages bills, boosting near-term economic activity.