Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Hansard source

I direct them through you, Mr Deputy Speaker, to the three Labor members over there and even to the member for Adelaide at the table, and I would ask those members: are you proud of a Treasurer who commits to keeping an election promise not to touch superannuation and then says, ‘Well, we changed the caps because the caps were excessively generous, and in changing them we did not breach any promise’. Isn’t there something ironic about that, or something hypocritical, when this comes from the lips of the Treasurer? He expects us to believe him on so many different things. It is Orwellian; the ministry of truth—I am telling you the truth; I am lying. That is what the word of the Treasurer amounts to.

The net effect of this tampering and backflip has been to undermine certainty and discourage Australians from saving. And naturally enough—how can they have confidence in a superannuation system, let alone confidence in a government, that fails to keep its promise? It was with the government’s record of meddling and interfering with superannuation in mind that the coalition approached the Superannuation Legislation Amendment Bill 2010. This bill is not a major reform of the superannuation system. It will do nothing to increase national savings. Nor does it address the important reforms laid out by the Henry taxation review. This bill essentially tidies up a few loose ends. It implements a range of measures and minor clarifications to Australia’s superannuation system.

First, it gives effect to the 2010-11 budget measures to allow for a transfer of unclaimed state and territory public sector superannuation moneys to the Commissioner of Taxation, as is the case for the private sector. That does not affect individuals; obviously those individuals have not claimed their super, and that money is sitting in state jurisdictions. Going to one place to claim unclaimed super is a good idea. That will facilitate state and territory authorities and public sector superannuation schemes paying unclaimed super money to the Commonwealth. This is a change to the current situation, and we think it is a pretty good idea so we will support it.

The bill also enables the taxation commissioner to accept and to subsequently pay out amounts transferred by state and territory authorities and public sector super schemes. Importantly, individuals will still be able to claim back their money from the Australian Taxation Office at any time. It will also provide a gain to revenue of $29.6 million over the forward estimates. What a surprise! They are running a budget deficit in excess of $40 billion. We think it is good from a procedural perspective but, such a surprise, it is a little revenue raiser for the Commonwealth as well. That should not surprise anyone. The Association of Superannuation Funds Australia claims:

The Commonwealth will not find it any easier to locate the owners of lost super when compared with state bodies. This illustrates that linking lost superannuation with new member accounts remains an ongoing issue. Nevertheless, the measure has the benefit of facilitating more uniform treatment of unclaimed money, and it is a one-stop shop.

I accept that. The second change will provide transitional relief for income tax deductibility of total and permanent disability insurance premiums which are paid by superannuation funds. Super funds generally take out death and disability insurance policies to insure their risk for a liability they may incur to their members. Legislative reforms in 2007 may have cast some confusion over the deductibility of that insurance. There was a clarification in 2009 to allow super funds to claim income tax deduction for the TPD insurance premiums to the extent the policies have the necessary connection to a liability of the fund to provide disability superannuation better.

This amendment will extend the commencement of the 2007 changes to 1 July 2011, and that gives the super funds time to switch administrative arrangements over to the new requirements. This measure has been discussed with the industry, superannuation and insurance companies have been calling for clarification, and we think it is a good idea. This aspect of the bill will apply to the income years 2004-05 to 2010-11, and the amendment is sensible.

The third change addresses the powers of superannuation funds to acquire an asset in the event of a breakdown of a relationship of a superannuation fund member, without contravening the prohibition against related-party acquisitions. It will, for example, allow a trustee to acquire the actual asset rather than accept cash or a replacement asset from the related party. The measure will ensure that section 66 of the act is not an impediment to separating partners achieving a clean break from each other in terms of their super arrangements.

There will also be additional minor clarifications to the tax treatment of super that will allow an individual to give a notice of intent to deduct a contribution to the successor superannuation fund where the contribution was made to the original super fund. It will allow employers to claim a deduction for super contributions made with respect to a former employee within four months of that employee ceasing employment and at any time after the employee ceases employment for contributions made to defined benefit interests.

It will also clarify that the due date of the shortfall interest charged for the purposes of excess contributions tax is 21 days after the commissioner provides notice of the amount payable, which is sensible. It allows the commissioner to exercise discretion to disregard or allocate to another financial year all or part of a person’s contributions for the purposes of excess contributions tax before an assessment is issued. Furthermore, it provides a regulation-making power to specify additional circumstances when a benefit from a public sector super scheme will have an untaxed element. In addition, it will streamline references to the immigration secretary and the immigration department in relation to the disclosure of migration and citizenship information.

These amendments provide clarifications to the legislation, in our view, and we believe they will improve the operation of superannuation provisions in the income tax legislation. So, in short, the coalition supports the amendments because they are sensible, they are practical and at the end of the day I think the industry wants them to help reduce red tape.

But of course this does not address the more substantive issue of how we increase national savings. The coalition accepts that as a nation we need to increase national savings. And the starting point must be to run a budget surplus. That is the fastest way this government can contribute to national savings: to start running surplus budgets. And in doing so, instead of being in the markets, borrowing money in competition with small business operators, in competition with farmers, in competition with larger operators—and therefore effectively crowding out the markets—the best thing this Labor government could do would be to get the budget back to surplus.

Now, it is not just us saying that. It is the Treasury providing that advice, through the various red books. The department of finance is providing that advice. The Reserve Bank and members of the Reserve Bank are providing that advice. It seems to be every day that credible economists are coming out and saying the best thing the government could do when the economy is running at full capacity, to take upward pressure off interest rates, to prevent crowding out in the credit markets, is to start doing something about getting the budget to surplus faster. But of course this is a government that continues to roll out stimulus spending in 2012 for an economic downturn in 2008! It is a little late! It is like trying to have a heart-start defibrillator to get Lazarus out of the box three days after he died—it is a little late. But this government is continuing to borrow money. This government is continuing to spend money. It is running expansive fiscal policy at a time when the economy is running at near full capacity, therefore it puts upward pressure on inflation and it puts upward pressure on interest rates.

The Labor Party just do not get it. Just as their policy on water is a mess, just as their policy in relation to asylum seekers is a mess, just as their policy in relation to climate change is a mess, so too is their treatment of the Australian economy—confused, leading to delay and uncertainty, leading to the point where Australians are saying the government need to pull back on their expenditure. We are now in a phase where the Reserve Bank is about to go with interest rates beyond the norm. You can have old Swannie every day, going forward and saying, ‘Oh, well’—

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