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

The Superannuation Legislation Amendment (Early Release of Superannuation) Bill 2011 does recognise that there should be a transfer of certain functions from the Australian Taxation Office and APRA to Medicare Australia, and following on from what the Minister of State at the table just talked about with the redesign of Human Services, I can say to you that nothing would be more emblematic of the redesign of Human Services than the fact that Medicare Australia is now providing back office superannuation processing. When I was the first Minister for Human Services back in 2004 and when I created the department, I would not have thought that it would ever have these sorts of functions or that it would totally incorporate Centrelink and Medicare. I must admit that I am agnostic at best about the thought that that integration should have occurred, but it is what it is and my colleagues have explained their position on it.

I would like to state at the outset that the coalition will not be opposing this bill. As with many bills that come into this place, we work together, contrary to some perceptions. This bill amends the law relating to superannuation. It transfers responsibility, as I said, from administration of early release of superannuation on compassionate grounds from APRA and the Australian Taxation Office to the chief executive of Medicare. This change will be of assistance to Australians who have already been granted early release of superannuation on medical grounds. These people would already be in regular contact with Medicare and it will reduce the number of government agencies with which they will have to deal. This change makes sense as Medicare Australia already undertakes the general administration associated with processing of early release of superannuation on compassionate grounds. It is expected by the government that there will be little additional cost associated with this change.

Amendments to the regulations under a number of acts will be required to enable the chief executive of Medicare to administer the early release of superannuation. Firstly, it is APRA which currently administers the regulations under the Retirement Savings Accounts Act 1997 which make the determinations on whether an amount of benefits in retirement savings accounts may be released on compassionate grounds. This responsibility will now be handed to the chief executive of Medicare, and I just reflect on the fact that it was the coalition that established retirement savings accounts back in 1997 to provide some level of comfort to people who had had multiple jobs at the time and wanted to have a single, consistent superannuation account. That was the background, in a sense, to the retirement savings accounts.

Secondly, APRA currently administers regulations under the SIS Act, the Superannuation Industry (Supervision) Act 1993. These apply to APRA regulated entities where funds may be released on compassionate grounds. Responsibility for administration of this will now be handed, again, to the chief executive of Medicare. Finally, the Commissioner of Taxation currently administers regulations made under part 3 of the SIS Act and determinations about whether benefits paid in self-managed superannuation funds will also be transferred to the chief executive of Medicare.

In providing support for this bill, I would emphasise that the coalition does not support any changes to the rules which determine whether superannuation can be released early on compassionate grounds. This is a very important point, because essentially there has been bipartisan agreement on having very strict rules about the early release of superannuation. It is often the case, as members of parliament, that people come to us and ask, if not beg, to have early access to their superannuation on the grounds that they have temporary financial troubles or due to an event that has occurred.

Accessing superannuation must be the absolute last resort, because that money is meant to get you through the days when you are essentially unable to work full time and fund your quality of life, and a dollar saved in superannuation today can represent multiple dollars in the future. The coalition supports the government's call that the limited circumstances for early release of superannuation on compassionate grounds be preserved and the criteria for early release not be changed. Superannuation must remain the savings for retirement, and it should only be in extreme circumstances that the funds can be withdrawn.

This week in the House the Assistant Treasurer ran through the government's proposal to increase the compulsory superannuation guarantee from nine per cent to 12 per cent and criticised the opposition's lack of support for this initiative. His criticism was misplaced and obviously rather political. The coalition strongly supports superannuation. Compulsory superannuation is a key pillar of a system which, along with the age pension and the incentives and voluntary savings, helps all Australians to prepare for a reasonable quality of life in retirement. The coalition will continue to support changes that make our superannuation system more efficient, transparent and internally competitive and that 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 the government as a matter of priority. My colleague Senator Mathias Cormann, in the other place, has said that on numerous occasions.

Having said that, we do not support the proposed increase in compulsory superannuation as it stands as part of the government's offset to the mining tax. That is because it will be funded by the increase in the mining tax and the coalition is opposed to the mining tax. We have said before that, as it stands, we will rescind it in government and we will unwind the expenditure linked to it. Rather than increase compulsory superannuation, our preference is to look at other areas of voluntary savings to complement the nine per cent in compulsory super. We have been very concerned about the lack of trade-off. Although the former minister for finance was more willing than the current minister to state that the increase from nine to 12 per cent would come out of business rather than out of the net salary of workers, the fact is that the government has not been clear on where the extra three per cent is meant to come from. Is it meant to be a trade-off for increased wages? Will employees have less money to take home? Is it going to mean a greater cost burden on small business in particular?

This is a very important point, and I suspect what heavily influences it is employment pressures. If the unemployment rate is around 4½ to five per cent then of course there is greater pressure on employers to stump up the extra three per cent. But, should there be rising unemployment, this may well represent a further incentive for employers to reduce their workforce, because this increases the cost of employing people. Alternatively, and perhaps even more realistically, increasing compulsory super with a rising unemployment rate may well mean that people will have less money to take home. Given that the government are introducing a carbon tax and have in place a flood levy, and given that they will not pay for the $4.2 billion black hole associated with the carbon tax—a $2.9 billion hole this year alone—I would say that the Australian people know, and they are instinctively right, that when the government cannot make their sums add up they inevitably go back to the Australian people to try and make up the money.

Instead of forcing workers to defer extra wages, the government should be focusing on improving the performance of the super industry, although competitive pressures themselves should do that. It should not be up to the government to improve the performance of the industry; the industry should be competitive enough to do it itself.

We are looking at, and considering carefully, a number of different areas of superannuation in the lead-up to the next election. For example, the coalition will make sure that the process of selecting default workplace superannuation funds under modern awards is open, transparent and competitive—something that the government promised to do but failed to deliver. The Henry report identified that nine per cent superannuation was a sufficient level for compulsory super guarantee contributions but recommended a series of changes to the taxation of superannuation. Dr Henry made the point in the report that increasing the superannuation guarantee beyond nine per cent would most heavily impact on low- and middle-income earners. The additional burden of the payment would not be borne by business but would, rather, be funded by reducing the growth in take-home pay. So more of a worker's income would be put aside in superannuation rather than be paid today. Effectively that means that there would be a reduction in the take-home pay of the lowest paid workers if they had this increased contribution. That was Dr Henry's take on it. He is now a special and rather privileged adviser to the Prime Minister.

Out of all that, where are we? Before the 2007 election the Labor Party promised not to change superannuation laws. It, of course, broke that promise by changing the rules regarding concessional super contribution caps over the last three budgets. Labor halved the concessional contribution cap from $50,000 to $25,000 for Australians under the age of 50. Australians under 50 can no longer save over $25,000 in superannuation each year without being charged excessive tax rates. Labor also halved the concessional contribution cap from $100,000 to $50,000 for Australians over 50 years of age. The changes for over-50s have particularly concerned older workers nearing retirement. The changes have discouraged them from making sufficient contributions late in their working lives. These changes were simply made as a revenue measure; they were not made for any other reason. This government is a big-tax, big-spend government. Wherever it can get money and then go and spend it to control people's lives it will do so.

One initiative the coalition will support is the Cooper review recommendations for improving the administrative efficiency of the super industry. These initiatives are collectively called SuperStream. SuperStream is a package of measures designed to improve the back office of superannuation. It proposes the increased use of technology, uniform data standards and the tax file number as a key identifier of member accounts. That is a good thing. The coalition's support of SuperStream is consistent with our commitment to facilitate improvements in industry efficiency.

Another area where the government action is welcome, although overdue, is in changes to excess contributions tax penalties. ATO figures reveal that more than 65,000 Australians will be hit with penalty tax after inadvertent breaches of the concessional super contribution caps during the 2009-10 financial year. The problem obviously has escalated during 2010-11. Since 2007, Labor has collected $180 million in excess contributions tax at an estimated administrative cost of $60 million to the Australian Taxation Office.

In the 2011-12 budget the government announced that it will provide eligible individuals with the option to have excess concessional contributions taken out of their super fund and assessed as income at their marginal tax rate rather than incurring the tax penalties. Well done. The measure will apply where an individual has made concessional contributions of up to $10,000 in a particular year. It is only available for breaches in respect of 2011-12 or later years, and only for the first year in which a breach occurs. The coalition says this is common sense. However, I do recognise the efforts of my colleagues Senator Mathias Cormann and the member for Casey, who have been prosecuting the arguments.

Returning to the bill before the House, the transfer of administration responsibilities for the early release of super on compassionate grounds from APRA and the ATO to the Chief Executive of Medicare is a reasonable change. The coalition will not be opposing this bill.

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