Mining tax repeal: Joe Hockey says $6.5 billion hit to budget bottom line is 'damn good deal' for Australians

Updated

Treasurer Joe Hockey has hailed the agreement to axe the mining tax - which will cost the budget $6.5 billion - as a "damn good deal" for the Australian people.

The Senate voted to repeal the mining tax yesterday after the Federal Government and the Palmer United Party (PUP) struck a deal to keep the schoolkids bonus until after the next election.

But the agreement also further delays superannuation increases for Australian workers, putting them on hold until 2021.

Mr Hockey said the deal was not the Government's "preferred option" but added that it was the only option on the table, because Labor and the Greens had dealt themselves out of negotiations.

"We can only deal with what we have and I think this was a damn good deal for the Australian people," he said.

But the Treasurer would not "speculate" on how the $6.5 billion blow to the budget over the forward estimates would affect his push towards a surplus.

"I'm not going to speculate on the surplus," he said. "It does have a negative impact on the forward estimates - we're dealing with that."

PUP had insisted it would not back the mining tax repeal unless the schoolkids bonus and other assistance measures were retained.

The legislation passed the Upper House with the backing of the PUP senators as well as Motoring Enthusiast Ricky Muir, Liberal Democrat David Leyonhjelm, and Family First's Bob Day.

The bills will now head back to the House of Representatives, where their passage is guaranteed.

Mr Hockey heralded the vote in Question Time as a promise "delivered in full".

"The mining tax is now gone," he said.

"It is testament to a failed Labor Government, failed economic policy, failed taxation policy and a failed treasurer.

"The fact is, we promised we would set about fixing the economy and fixing the budget, and that is exactly what we are doing."

The amendments include:

Delaying any compulsory increases to employers' superannuation contributions until 2021

Retaining the low income superannuation contribution until June 31, 2017

Retaining the income support bonus until December 31, 2016

Retaining the schoolkids bonus until December 31 2016, and means-testing it to give it to families on an annual household income of up to $100,000

12 per cent super guarantee now pushed back to 2025

The superannuation guarantee increased from 9.25 per cent to 9.5 per cent on July 1 2014.

The previous Labor government announced the rate would continue to increase to 12 per cent by 2019 - a timeframe which was pushed out by the Coalition in its May budget to 2022.

This bill will push that back even further until July 1, 2025.

But the Prime Minister has rejected accusations that the delay represents a broken election promise, because he had previously stated there would be no "adverse changes" to superannuation under a Coalition government.

"It's not an adverse change - no one is going backwards," Tony Abbott told 7.30.

"We did take into the election a two-year pause, this is a somewhat larger pause, a somewhat longer pause.

"Nevertheless, what we have done is delivered on one of our most fundamental commitments of all - which was to repeal the mining tax."

The low income superannuation contribution gives up to $500 a year to help those earning $37,000 or less save for their retirement.

The schoolkids bonus is a $410 boost to family tax payments for primary school students, and $820 for families with children at high school.

Shorten brands Abbott 'arch-culprit' and 'recidivist fairytale teller'

Labor leader Bill Shorten interrupted Question Time to move a motion to condemn the Prime Minister for "violating the trust of the Australian people".

"This deal has been done and the arch-culprit is the most-out-of-touch prime minister since the top-hat-wearing Stanley Bruce," Mr Shorten said.

He accused the Coalition of being "recidivist fairytale tellers of political lies", particularly in relation to the Government's commitment to superannuation.

The Government could have shot down the motion with no debate, but instead Mr Abbott replied to defend the deal and amended the motion to turn it to the Government's favour.

"We are fixing all of the messes that we inherited from members opposite," he said.

"They gave us the carbon tax, this Government has got rid of it. They gave us the mining tax, this Government has got rid of it."

Labor's leader in the Senate Penny Wong attacked the deal which got the mining tax legislation through the Senate.

"Another dirty deal they're trying to ram through the chamber, just like we've seen before," she said.

"Showing as much contempt for this Senate as they show for the Australian people as they break promise after promise after promise."

Greens leader Christine Milne said the deal was a win for the big mining companies and for PUP leader and mining magnate Clive Palmer.

"If ever there is a conflict of interest, it is this one," she told the Senate.

"How is it possible that you can have a coal billionaire voting to vote down a mining tax?"

Greens senator Scott Ludlam tweeted: "How is this Palmer mining tax deal not the biggest conflict of interest in modern political history".

Mr Palmer dismissed the criticism, saying he had never paid the tax because of the way it was structured.

"That's a negative way of looking at it," he said.

"We don't see it that way. First of all I don't pay the mining tax. BHP doesn't pay the mining tax. Rio Tinto don't pay the mining tax."

Topics: government-and-politics, mining-industry, business-economics-and-finance, tax, minor-parties, political-parties, australia

First posted