A deal struck between the government and Palmer United Party has repealed the mining tax but hit superannuation savings.
The coalition has delivered on its election promise to axe the mining tax but in the process is denying average workers about $100,000 in superannuation.
Just days out from the government’s first anniversary, a deal was struck with the Palmer United Party to deliver the votes necessary to pass the repeal through the Senate.
“We promised to get rid of it and we’ve delivered,” Treasurer Joe Hockey said of the deal, which will cost the budget $6.5 billion over the next four years.
The reduction in budget savings will be recovered in the medium term by pausing the superannuation guarantee rate at 9.5 per cent until July 1, 2021.
After this, the superannuation guarantee rate will increase 0.5 per cent each year until it reaches 12 per cent from July 1, 2025.
Industry Super Australia called it a short-sighted deal which would cost a 25-year-old average income earner around $100,000 over their working life.
Under the deal with PUP, the government has agreed to extend the low-income super contribution until June 30, 2017 and the income-support bonus until December 31, 2016.
The schoolkids bonus will also stay in place until December 31, 2016, but will be means tested so that only families earning up to $100,000 will qualify.
Mr Hockey said given that increases in the superannuation guarantee were largely funded from cuts in take-home wages or business profits, the changes would put more money in employees’ pockets and help business.
PUP leader Clive Palmer said the economy would be boosted by the mining tax’s abolition.
“(The MRRT has) done a lot of damage to Australia and hasn’t raised any money,” Mr Palmer said.
Opposition Leader Bill Shorten, who unsuccessfully attempted to censure the prime minister in parliament, said the coalition had promised at the election to make no adverse changes to superannuation.
“We have seen today … the disgraceful, destructive and dishonest attack to freeze superannuation,” Mr Shorten said.
Mr Abbott had set a “new land speed record for a duplicitous government” and put the interests of 10 mining companies ahead of nine million Australians, Mr Shorten said.
The repeal bill was supported by the three PUP senators, Australian Motoring Enthusiast Party’s Ricky Muir, Family First’s Bob Day and the Liberal Democrats’ David Leyonhjelm.
Senator Leyonhjelm said it would take the budget back in the right direction.
Business Council chief Jennifer Westacott said it was disappointing the government had been unable to abolish some of the mining tax spending measures.
She said it underlined the need for wider tax reform rather than ad hoc measures.