Terri Butler (Griffith, Australian Labor Party) Share this | Hansard source

Thank you, Mr Deputy Speaker, and thank you for the promotion. I will address the Tax and Superannuation Laws Amendment (2014 Measures No. 1) Bill 2014 and the amendment moved by the member for Fraser, a learned and wise member who has moved an excellent amendment. The reason I am so passionate about that amendment is that I care deeply about health care in this country. It was a very strong issue in the Griffith by-election and arose on a number of occasions. In fact, it was during that by-election that Liberal-National Party people across the country were saying contradictory things about the proposal for a GP tax. But people on our side are very clear about the GP tax proposal. We do not support the GP tax proposal because we support universal health care. As one of the doctors in my electorate said during that by-election campaign, GPs are very important because they are gatekeepers. They are not gatekeepers to get people into hospital; they are gatekeepers to keep people out of hospital. It is such an important point.

As we have heard today, the whole point of imposing the GP tax is to reduce people's propensity to go to the doctor—in other words, to discourage people from going to the GP. On our side of the House, we believe that people should be encouraged, not discouraged, to go to a GP. The House might be aware and you, Mr Deputy Speaker Vasta, might be aware of a Harvard university study in 2009 that found that around 45,000 Americans had died because of delayed treatment for patient cost consideration reasons. No-one wants to see people failing to get the medical help that they need. We should not be discouraging people from going to the GP. The idea behind discouraging people from going to the GP seems to be that people who go to the GP do not understand the value of health care. That seems to be the idea; that is why people want to send a price signal.

The proposal for the GP tax is very interesting. If you read the entire proposal, at the end the author says, 'By the way, maybe we should find out whether people really are going to the GP unnecessarily.' It is symptomatic of the lack of evidence that seems to be the basis of so many of these attacks on universal health care. We do not know if there are people who are going to the GP unnecessarily, but I do believe in the benefit of people getting early medical help. I believe that we should not discourage people from going to the GP and that is why I will always oppose GP taxes and attacks on universal health care.

As the shadow minister, the member for Ballarat, said earlier in this debate, the American system is a cautionary tale for us. The US is one of only three countries in the OECD where more than 50 per cent of healthcare expenditure is borne by private sources rather than public sources. This GP tax proposal and other moves to shift the cost of health care on to private individuals and insurers is a slippery slope to pushing more of the cost of health care on to private individuals and private sources. What sort of example does the US system set us? It is an example where 17.7 per cent of the GDP is spent on health care. That compares very favourably with ours, which is about the OECD average. When you look at the per capita spend on health care in the US, it is an even starker picture—US$8,508 per head is spent on health care, according to the OECD, compared with our spend of US$3,800 per head.

If you look at the health inflation figures for US health care, you will see that health inflation decoupled with general inflation some time ago and has been rising sharply for a number of years over the past 30 years. In fact, health inflation is a serious problem in the US. As the Rand Corporation have said, one of the problems that the US healthcare system faces is that virtually every actor in the US healthcare system is focused on maximising revenue. That should not be the focus of health care. The focus of health care should be, as Labor people know, making sure that people get the health care that they need, not just the health care that they can afford. So I appreciate very much the member for Fraser's amendment.

I now turn to the substantive bill. Compulsory superannuation is one of the finest achievements of our nation's social democracy. As Bill Shorten previously said, Labor are the party of superannuation. We created it and we are the only party interested in growing the retirement savings of hardworking Australians. Superannuation serves Australia's interests by significantly boosting our national savings and by reducing pressure on the age pension. But the coalition, with the greatest respect, has always been dragged kicking and screaming to compulsory superannuation, describing it variously as a racket, a con job and a confidence trick. Mr Abbott has said that compulsory superannuation is one of the biggest con jobs ever foisted on the Australian people by government, as my colleague the member for Scullin noted before. Mr Abbott has also observed that the coalition have always been against compulsory superannuation increases. That is quite correct: the coalition have opposed every increase to compulsory superannuation. In contrast, Labor have a proven commitment to bolstering Australians' retirement savings.

In 2013, when Labor increased the superannuation guarantee, around 8.4 million hardworking Australians saw more going into their retirement savings. But, since Mr Abbott's coalition government was elected, it has announced superannuation measures aimed at helping more well-off people at the expense of people on ordinary incomes. It has introduced legislation to freeze the superannuation guarantee at 9¼ per cent and to delay the increase to 12 per cent by two years. It has moved to take away the low-income superannuation contribution—a superannuation contribution made on behalf of individuals with an adjusted taxable income of $37,000 or less, effectively a $500 tax cut—and it wants to do so retrospectively from 1 July 2013.

As the member for Scullin said, low-income earners entered this financial year on the understanding that they would be refunded their superannuation tax but now, part-way through the year, the Liberal-Nationals are changing the rules. This move, as the member for Scullin has observed, will increase superannuation taxes on one in three of Australia's lowest paid workers. The explanatory memorandum to the repeal bill says that the government will revisit incentives in superannuation for low-income earners once the budget is back in a strong surplus. But that is a change that high-income earners do not have to wait for. High-income earners do not have to wait for superannuation measures to improve their retirement savings.

The coalition government has demonstrated it is prepared to give tax breaks to the more well-off people, while taking away the low-income superannuation contribution. It has decided not to close loopholes that allow people to get around the contributions cap and engage in tax avoidance. It has decided not to proceed with Labor's move to better target the tax exemptions for earning on superannuation assets supporting income streams. In other words, it is giving people with large superannuation fund balances a tax break. Under the reform, earnings from assets supporting income streams above $100,000 would have been taxed at the concessional tax rate of 15 per cent, which is the same tax rate as we all pay in the accumulation phase. As Bill Shorten said announcing the reform, an individual with $100,000 of tax-exempt earnings typically receives more government assistance than someone on the maximum rate of the single age pension.

The reform that we were introducing, that this government has decided not to proceed with, would help make the superannuation system fairer and more sustainable and would help restore a number of the original intentions of the system. Labor was not talking about the self-managed superannuation funds of Australians of ordinary means. Labor was talking about well-off Australians who were getting a tax break of greater value than the taxpayer assistance provided to age pensioners. Instead of closing loopholes and making tax arrangements fairer for more well-off members of our community, the Liberal-Nationals are taking away the modest contribution for low-income earners. Against this background of the coalition opposing Labor superannuation measures and opposing changes to retirement savings arrangements aimed at assisting people on ordinary incomes, it is pleasing that the coalition has now, albeit begrudgingly, decided to implement some of Labor's superannuation reforms in the bill presently before the House. It contains Labor reforms to assist in lighter touch regulation of self-managed superannuation funds and to equip the regulators with tools to protect working people and retirees from unscrupulous people and corporations who promote illegal early release of funds.

Regrettably, the bill also represents missed opportunities to act in the interests of working people and retirees. The Liberal-National government has decided not to proceed with a number of reforms, such as those arising from the Cooper review, initiated by the former Labor government, and other reforms. For example, the government is not going to go ahead with the reform that would require funds to report contributions either quarterly or every six months.

The purpose of that reform is to alert people when their employer is not paying superannuation contributions. This is crucial. Too often, working people assume that superannuation is being paid as the law requires. Sometimes they even make that assumption because the employer gives them a pay slip which indicates that the superannuation is being paid when it has not been. Obviously, that has a direct effect on a member's superannuation account balance. When an employer is solvent, that may be able to be rectified conveniently, but when an employer is insolvent, it can be very hard to recover unpaid superannuation. Worse, if contributions are not paid, insurance and benefits to which the member would otherwise be entitled may not be available. Losing their coverage because superannuation has not been paid can have catastrophic consequences for members who cannot work because of injury or illness. That is why our reform, which would have alerted working people when the employer was not meeting its superannuation obligations, is important. The coalition has not taken up the opportunity in today's bill to implement that reform—it has decided not to implement it.

Another missed opportunity is the deferred lifetime annuities. The superannuation sector had clearly called for the change to be made in October last year when the acting CEO of the Association of Superannuation Funds, Ross Clare, called on the government to make the change. He said:

While we all want to live a long life in retirement, sometimes this can have financial consequences, which is why developing products which address longevity risk is crucial. With the Government committed to addressing the impediments which hinder the development and use of retirement income stream products, now is an opportune time to consider the positive adjustments that can be made to help facilitate this.

The government is not presently addressing the deferred lifetime annuities issue. It is not currently implementing this reform. Labor, on the other hand, announced in April 2013 that we would make this change. Another reform not presently being pursued is clarifying the position of certain superannuation trust deed clauses. That reform would have ensured that trust deed clauses could not be used to prevent excess amounts from being counted as contributions. In other words, it was a measure to close a tax avoidance loophole. The measure was announced because the government became aware of situations where a fund could include a clause in its trust deed designed to treat amounts that would otherwise have been considered contributions to the fund as not having been accepted by the fund if those contributions would lead to a breach of the contributions caps. Under the planned reform, the fund would have been deemed to have accepted such contributions despite the trustee clause if they had not been returned promptly and had been intermingled with the assets of the fund. This is a tax avoidance loophole that the coalition is now refusing to close.

Another point is about preventing abuse of superannuation funds. Ensuring superannuation is used for retirement savings purposes, not for ulterior purposes, is a matter of strong public and private interest, yet the government has forgone an opportunity to close a loophole in relation to acquisitions and disposals of assets between self-managed superannuation funds and related entities. Having done so, it has flouted the Super System Review Panel report recommendations, which expressed in strong terms concerns about self-managed superannuation funds and related entities acquiring or disposing of assets between one another without doing it through the market mechanisms that existed or without getting independent valuation. But the bill we are considering today has missed the opportunity to make that reform and to give effect to those recommendations.

As I said, the measures that the government is now backing—including lighter touch regulation tools and equipping regulators to tackle promoters of illegal early payments—are Labor reforms. They are Labor reforms that arose because Labor has a commitment to superannuation and continuing to improve our superannuation system, in the interests of working Australians. We will always work to try to improve superannuation, and that is why I agree that it is important that regulators have a full suite of powers to ensure compliance with superannuation laws. Sometimes a heavy hand is required, which the Super System Review referred to as the 'nuclear option', but oftentimes regulators just need light touch regulation for self-managed superannuation fund trustees so that they can give the education notices, the process change notices and the lower administrative penalties, and that is why I am pleased to stand up and support that measure in the bill.

As I have also said, I am pleased to support the balance of the bill, and I am also very pleased with Labor's history of always supporting compulsory superannuation.

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