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

Despite the chief executive of a significant financial institution describing me as Hugo Chavez, I will speak for only 15 minutes.

The Assistant Treasurer has sought to portray the coalition as antisuperannuation and antisavings. I assure him that we are not. The coalition believes there is a pressing need to increase national savings. As a nation we need to save more to meet our burgeoning requirements for more infrastructure. We need to save more to provide for the longer retirements that we can all now expect to enjoy, as the Assistant Treasurer referred to. But we also need to save more to become less reliant on international capital markets.

The coalition supports Australia's three-pillar retirement system comprising an aged pension, a compulsory system of retirement savings through superannuation and incentives for voluntary saving. The coalition wants to encourage as many Australians as possible to plan and save for their retirement and to take full advantage of the benefits the superannuation system offers. We want to see a superannuation system which is as efficient, as transparent and as competitive as possible so as to maximise retirement incomes for all superannuants.

That is why the coalition will continue to support any changes making our superannuation system more efficient, transparent and competitive and which deliver better value to superannuants across Australia. In particular, sensible changes to streamline super fund operations and to strengthen corporate governance arrange­ments should be progressed by government as a matter of priority.

Where we differ from the government is in the way that increased national saving can be achieved. The very first step should be for the government to lead by example and get its fiscal house in order. This year the government is dissaving to the tune of $49.4 billion and next year—a heroic assumption, but nevertheless reported in the budget papers—$22.6 billion. Net debt will continue to rise and will peak at an estimated $107 billion next year, the highest peacetime debt in dollars in our history. This is a disturbing outcome at a time when Australia is enjoying the strongest terms of trade in around 150 years. Now is the time when the government should be putting money aside, paying down debt and preparing for a rainy day.

The coalition is opposed to some, but not all, of the government's proposals on superannuation. This is not because we do not believe in superannuation. Rather, many of the government's measures are funded from the proceeds of the mining tax. The coalition does not believe that saddling our most productive business sector with another tax is in the best interests of the country. It does not help our country to compete on a global scale by putting lead in the saddlebags of our fastest horse.

The Assistant Treasurer has outlined various elements of the government's policy on superannuation. The government has committed to increasing the superannuation guarantee from nine per cent to 12 per cent. What they have not been upfront about is who is going to pay. The additional superannuation which workers will accrue is not intended to be a wage rise. The total remuneration received by workers will not increase. Rather, the intention is that workers should accept lower wages growth in return for increased superannuation. Workers will have less spending power today in return for greater spending power in the future. Now is not the time to be eroding the growth in workers' take-home pay. Australians are already under considerable financial stress from the rising cost of living, rising interest rates and additional government taxes.

The Melbourne Institute survey shows that household financial conditions fell by nearly one quarter in June to the lowest level since the survey began in March 2001. The Westpac-Melbourne Institute Consumer Sentiment Index shows consumer confidence has fallen to the lowest level since the global financial crisis. It is no wonder that Aust­ralians are cocooning—reducing spending and increasing savings. The household savings ratio for the March 2011 quarter rose to 11.5 per cent—again, a level not seen since the global financial crisis. The 11.5 per cent ratio means that households are now saving more than a tenth of their disposable income. Australians cannot afford another hit to their take-home pay.

The Henry tax review argued against an increase in the superannuation guarantee. Remember, this was chaired by the man who was then the Secretary of the Treasury and is now, rather extraordinarily, the private adviser to the Prime Minister. The review's Report on strategic issues for the retirement income system specifically recommended not increasing the superannuation guarantee from nine per cent to 12 per cent but that the superannuation guarantee rate should remain at nine per cent. It states:

This strikes an appropriate balance for most individuals between their consumption opportunities during their working life and compulsory saving for retirement.

The review suggested there were better ways to support retirement savings:

The Panel considers that more can be done through preservation and other rules to ensure that the 9 per cent contribution rate produces an adequate retirement income for greater numbers of people, and its other recommendations are made partly for this purpose.

The Henry review also made the point that Labor's plan to increase compulsory super beyond nine per cent would most heavily impact on low- and middle-income earners. These are, of course, Labor's forgotten families, already doing it tough and dealing with increasing cost-of-living pressures. There is Labor's flood tax and obviously the carbon tax, if it comes through this place, and they will probably be indirectly affected by the mining tax.

There is another problem with Labor's approach. The government is creating a structural hole in the budget. The spending—that is, the tax forgone—from the increase in the superannuation guarantee will rise through time. However, the revenue from the mining tax is highly variable. The government's forecasts of revenue over the forward estimates are based on commodity prices and the terms of trade remaining at historically high levels. Inevitably, over the longer term, commodity prices will fall and revenues will decline. This combination of volatile revenues and rising commitments will add to the fragility of the budget. It will add to the cyclic movements in the budget bottom line. It is another example of the poor fiscal practice and inexperience of this government.

The government has announced that it will raise the superannuation guarantee age limit from 70 to 75, with effect from 1 July 2013. The coalition welcomes this change. We wish the government had gone further. The coalition's shadow minister for seniors, Bronwyn Bishop, the member for Mackellar, introduced a bill to parliament on 28 February 2011 which sought to amend the Superannuation Guarantee (Administration) Act to abolish the age limit on the payment of the superannuation guarantee charge. This would provide for all employees to receive superannuation guarantee contributions, no matter what their age. The coalition's current position is that it does not see it necessary to have any age limit at all. The current age limit set at 70 unfairly discriminates against older workers and, in effect, means they take a pay cut at age 70 through the loss of compulsory superannuation. At this point, some may be discouraged and leave the workforce. We should be encouraging mature Australians to work for as long as they want. We cannot afford to prematurely lose their hard won wisdom and skills.

The Assistant Treasurer wants the government to be given credit for doubling the concessional contribution cap from $25,000 to $50,000 for over-50-year-olds with superannuation balances below $500,000. However, what the Assistant Treasurer fails to mention is that this policy is simply unwinding in part the government's earlier decision in the 2009-10 budget to halve the contribution cap. That was ill-considered policy—in keeping with a number of other initiatives from the government. It was done at a time when many working Australians approaching retirement age had been dealt a hard blow by the global financial crisis. Their accumulated retirement savings had fallen sharply in value as stock markets crashed in Australia and around the world. What Australians needed was the capacity to rebuild their savings. Instead, this government chose to make it harder for them to contribute to superannuation.

Labor has changed the rules regarding concessional and non-concessional caps in each of the last three budgets. These changes have, overall, been designed to raise additional revenue to pay for this government's wasteful ways. In effect, the government has been reducing the saving capacity of ordinary Australians so that it does not have to cut its own bloated spending. It is not good policy. The frequent changes have created great uncertainty and impacted confidence in the superannuation system as a retirement savings vehicle.

These frequent changes and uncertainty have been a factor in many more Australians being caught by excess contributions tax. The Assistant Treasurer has noted a concession on the excess contributions tax, allowing people with first-time breaches of excess contributions up to $10,000 to be assessed at their marginal rate of tax rather than incurring a potentially higher rate of excess tax. This is welcome. Treasury estimates that more than 65,000 Australians are likely to breach their concessional superannuation contribution cap during the 2009-10 financial year, up from 28,000 the previous year. The government is taxing those excess contributions at 46.5 per cent and will collect around $140 million in additional tax revenue from these accidental breaches.

There are a lot of annoyed hardworking Australians who have been doing the right thing by providing for their own retirement but who have now been stung by the frequent and confusing changes this government has made to concessional contribution caps. Excess contributions tax on superannuation contributions has been a particularly hot issue in my electorate of North Sydney. I have been advised that some superannuants who have unintentionally breached the non-concessional contribution cap rules by between just $125 and $5,000 each are now facing tax bills of around $70,000 each. This hardly seems equitable in the light of a government that has continuously shifted the goalposts for the past three financial years. It has made compliance and monitoring difficult if not impossible for working Australians, and all these hardworking Australians will not be assisted by the government's latest changes.

In conclusion, the coalition is fully supportive of the superannuation system as one element of retirement savings. When last in government, the coalition introduced reforms to enable Australians to choose their own superannuation fund. We oversaw payments and incentives that encouraged Australians, especially Australians on lower to middle incomes, to make additional contributions to their retirement nest egg. The coalition will continue to support measures that encourage Australians to provide for their future.

See this speech in context