Television Interview, Sky News First Edition

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The Hon Richard Marles MP

Deputy Prime Minister

Minister for Defence

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02 6277 7800

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3 March 2023

SUBJECTS: AUKUS; Superannuation.

PETER STEFANOVIC, HOST: Joining us live now is the Defence Minister and the Deputy Prime Defence Minister Richard Marles. Richard, good to see you. Thanks for your time this morning.

I will get to super in just a second. First, I want to talk to you about subs. What's it going to be, British or American nuclear subs?

RICHARD MARLES, DEPUTY PRIME MINISTER: Well, you'll have to wait and see, but it's not far off before we make the announcement. But I think the point I'd make is that whereas some have cast this as being a competition between British and American submarines, in fact, what you'll see when we make this announcement is that it is a genuinely collaborative proposition which involves all three countries, and really what we’re seeing is –

STEFANOVIC: So you've made up your mind?

MARLES: We're clear about what the optimal pathway is going to be and we'll be announcing it very shortly. And this is going to be a trilateral effort where the U.K. and the U.S. are genuinely working together to help Australia acquire the capability to operate nuclear-powered submarines. And I'm really excited about what this will look like. It will see an evolution of Australia's submarine capability from where we are today with our six diesel-electric submarines through to making submarines in Australia, which are nuclear-powered and will be part of our fleet.

STEFANOVIC: Okay, well, on that point, because Peter Dutton's strong advice is for American Virginia class subs, the reasons being the U.K. design would be plagued by problems, there would be no extra capacity to support an Australian build and would come with significant delays. Are you getting the same advice? Because that all sounds very troubling.

MARLES: Yeah, look, I don't really know where Peter Dutton is coming from here. I mean, first thing, there's a lot of water that's gone under the bridge since Peter last got advice here. I mean on the one hand, Peter Dutton is saying he is going to support whatever we announce, and on the other hand, he's seeming to put a whole lot of conditions upon that. So I think it's a real question now for the Opposition about whether or not they actually support AUKUS or whether they don't. But ultimately that's a matter for them. The government is very clear about the path that we are walking and we are doing this hand in hand with the U.K. and the U.S. We're very mindful of all the issues, but we were left with a situation where the first opportunity to really see a submarine was not going to come into play until about the 2040s. That would have opened up a capability gap, given the last decade that we had under the former government, as they were in and out of a deal with Japan, in and out of a deal with France. What we've needed to do is put in place a situation where we do have an evolving capability, where there is no capability gap – or the capability gap is plugged – and the announcement that you see will achieve all of that. And it will put us in a position to grow our submarine capability, to take us to a place where we're now operating nuclear-powered submarines at a critically important time in geostrategic politics.

STEFANOVIC: Okay, I know you're at the Airshow. We can see that behind you. The Air Force has flagged that we need an increase in low cost, lethal drones. Fighter jets simply can't do a job on their own. Can we expect our first drone purchases to come as a result of the DSR?

MARLES: Well, I think as we look at the evolution of air power – not just air power, I think all domains, but certainly air power – uncrewed vehicles are going to be an increasing part of what air power looks like. I think you're going to see a whole lot of platforms in various sizes which operate potentially with crewed platforms. And the DSR certainly talks about the direction in which warfare is going and the direction in which air power is going. And as I've walked around the Air Show yesterday, and we're doing the same today, it is amazing the kind of capabilities which are on display which perform that role. And that's obviously really encouraging in terms of the future of our Air Force. It's really encouraging in terms of the future of Australian defence industry.

STEFANOVIC: Okay, now onto super. There are claims out this morning that the super tax could scoop up six times the workers the government originally claimed, so up to 500,000 folks could be caught up in it over their working lives. Will you index the cap in the legislation?

MARLES: Well, we're not indexing the $3 million –

STEFANOVIC: That's a lot of people. So why wouldn't you?

MARLES: Well, let me be clear about this. It's not a lot of people. It is 0.5 per cent of superannuates –

STEFANOVIC: But it grows over time, that's the point.

MARLES: Well, 99.5 per cent of people are unaffected. At the end of the day this is a really modest change, Pete, and it's one which has been put in place because we've got to make sure that the superannuation system is sustainable and sustainable for everyone within the system. And we can't escape the fact that we inherited a budget from the Coalition, from Peter Dutton, which was a trillion dollars in debt. And so we need to be making decisions which are responsible. And that's what we've been doing from the last Budget through until now. And this is a very modest change which is going to affect only people who have $3 million in their super fund.

STEFANOVIC: Okay, now, there is a plan to tax unrealised gains and, quite troubling, that could force retirees to sell shares at a loss. How is that not highly discriminatory?

MARLES: Well, there's a whole lot of speculation around that which is not right. At the end of the day, come back to the starting point here – this doesn't apply unless you've got $3 million in your superannuation fund. And what we're talking about is reducing a concession which already exists and will continue to exist, but reducing the concession in terms of earnings on super funds of more than $3 million. So that's what we're talking about. You’ll hear the Opposition put a whole lot of smoke and mirrors about what this might do or what it might not. The simple fact is it only applies if you've got more than $3 million in your super fund and there's very few people in that category.

STEFANOVIC: But with an eye on unrealised gains, essentially you're taxing something that hasn't been sold, right?

MARLES: What we're doing is putting in place a process which will see the concession on tax on earnings on super funds with more than $3 million –

STEFANOVIC: Right, but that also includes unrealised gains?

MARLES: Well, I mean, what we're talking about now is those super funds which largely are in the self-managed super fund system. A process will be determined for that – or is being determined for that – but it only applies to a very small number of people. And that's what people need to bear in mind. It's only happening if you've got a super fund of more than $3 million.

STEFANOVIC: But forcing retirees essentially to sell shares at a loss. I mean, back to that question. That sounds to me very worrying.

MARLES: Well, no one is doing that –

STEFANOVIC: But unrealised gains, that forms part –

MARLES: Pete, you’ll hear a whole lot of comments from the Opposition which seek to sound troubling to try and turn this into something which it's not. No one is forcing anybody to sell anything. At the end of the day, we are talking about super funds of that order of magnitude, more than $3 million. It is a very small number of people. And what's being described now is those that are in self-managed super funds with a superannuation fund balance of that order of magnitude. And this simply goes to how the concession would apply to the earnings in relation to that.


MARLES: But this is a modest change. That's what people need to bear in mind. It doesn't come into effect until after the next election.

STEFANOVIC: But are unrealised gains part of the concessions?

MARLES: Well, I come back to the point. This will change the way in which earnings are taxed in respect of super funds which have more than $3 million in it. And that includes, obviously, self-managed super funds. And it's simply the process which applies to how that is assessed. But it's large superannuation accounts – $3 million or more – which are affected by this.

STEFANOVIC: Okay, Richard Marles, we are out of time. I appreciate your time, as always, though. Thank you. We'll talk to you again.


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