Tax changes will redistribute wealth: PM

Prime Minister Kevin Rudd has launched a pre-election salvo that seeks to deliver
Labor a second term by promising to redistribute the nation's wealth by taxing the
profits of big mining and boosting Australians' retirement savings.
The government has accepted only five and rejected outright 28 of 138
recommendations contained in the review, and shelved many more.
In response to the long awaited Henry tax review, Treasurer Wayne Swan on Sunday
revealed the government would introduce a 40 per cent tax on mining profits.
The Resource Super Profits Tax, which comes into force in 2012-13, will deliver $12
billion in its first two years.
Mining companies will get some of it back - about $1.2 billion - in a exploration
rebate.
Opposition Leader Tony Abbott predictably labelled the new measure a "great big new
tax".
It will be used to pay for a range of measures aimed at boosting the retirement
savings of Australians. It will also pay for a cut in the company tax rate from 30
per cent to 28 per cent.
The Superannuation Guarantee - the money your boss pays into your super - will be
gradually boosted, beginning in 2013-14, from nine per cent to 12 per cent over the
next 10 years.
Under the changes, an employee aged 30 today, on average weekly earnings, can expect
an additional $108,000 to fund their retirement.
In another election sweetener, from July 1, 2012, the government will provide a
contribution of up to $500 annually to the super accounts of people earning up to
$37,000.
"The changes announced today are expected to increase Australian GDP by 0.7 per cent
and real wages by 1.1 per cent in the long run," Mr Swan said.
"This reform dividend is equivalent to an extra $450 in the pocket of a full-time
worker on average weekly earnings."
The rivers of gold flowing from the resources boom are expected to add $85 billion
to the nation's pool of superannuation savings over the next 10 years.
With his reform agenda largely in tatters, Mr Rudd has signalled an election fight
that will pit ordinary Australians against the nation's mining barons.
The prime minister has been unable to get his emissions trading policy passed and is
haunted by the bungled and deadly home insulation scheme.
"Just as the government has worked hard to ensure our economy was the envy of the
world during the downturn, we must now work hard to build a strong economy for the
future," Mr Rudd said.
"This long-term plan released today builds a stronger economy by using super profits
earned from the resources owned by all Australians."
The government has signalled it is unlikely to attempt to legislate the changes
before the election, avoiding a hostile Senate.
The response to the Henry review comes ahead of the budget on May 11, which is
expected to deliver more tax cuts.
Mr Abbott warned the tax on mining profits would kill off the resources boom and
damage the prospects of small business.
"If you are determined to kill the mining boom stone dead you could hardly of
precisely calculated a measure to achieve it," Mr Abbott said.
"I am deeply and profoundly hostile to the idea of a great big new tax like the ETS
on the most important and productive part of our economy."
But the opposition leader also said the review would be used to formulate some of
the coalition's own tax policy.
"There's a lot here that we will be looking at and let's see how much of it
ultimately informs coalition policy."
The Rudd government will have to win the support of the resource states of Western
Australia and Queensland.
It appears that battle has in part been won with Queensland backing the plan.
"We want to make sure that the people who own the resources, the people of
Queensland, get a fair rate," Qld Treasurer Andrew Fraser said.
However, WA Premier Colin Barnett, like Mr Abbott said it would damage the mining
industry.
"I am concerned as to the long-term effect it might have on our mining and petroleum
industry," he said.