Graham Perrett (Moreton, Australian Labor Party) Share this | Hansard source

Thank you for that guidance, Mr Deputy Speaker. The bill before the House has seven schedules. I am only going to focus on one of the schedules but I will just quickly go through the seven schedules.

Schedule 1 amends the Income Tax Assessment Act 1997 and Taxation Administration Act 1953 to change the taxation treatment of excess non-concessional superannuation contributions, and that is going to be the part of the legislation I will focus on, so I will return to that.

Schedule 2 amends the Inspector-General of Taxation Act 2003 to transfer the tax investigation and complaint-handling function of the Commonwealth Ombudsman to the Inspector-General of Taxation, and merge that function with the Inspector-General of Taxation's existing function of conducting systemic reviews.

Schedule 3 amends the Income Tax Assessment Act to provide an exemption from capital gains tax for certain trustees and beneficiaries, and for certain compensation and insurance payments.

Schedule 4 amends the income tax legislation to provide that individuals whose superannuation benefits are involuntarily transferred from one superannuation plan to another are not disadvantaged by being unable to bring forward accumulated tax losses. This schedule also amends tax laws to remove the need for a rollover benefit statement to be provided to an individual whose superannuation benefits are involuntarily transferred.

Schedule 5 amends tax laws to allow taxation officers to record or disclose protected information to support or enforce a proceeds of crime order.

Schedule 6 amends tax legislation to provide a tax incentive to encourage investment in small mineral exploration companies undertaking greenfields mineral exploration in Australia. For constitutional reasons, the Excess Exploration Credit Tax Bill 2014 provides for the imposition of the excess exploration credits tax. All of this legislation is supported on both sides of the chamber—by the opposition.

Schedule 6 in terms of the excess exploration credits tax, for anyone interested in this topic, I would refer to the speech delivered late last night by the member for Brand, Gary Gray. This is a good initiative that, hopefully, will ensure that there are significant amounts of exploration done over the next little while. We have some mines, particularly in Queensland, that are nearing the end of their life and, obviously, it is a long time between exploration, development and export of these resources.

Schedule 7 makes a number of miscellaneous amendments to various taxes and superannuation laws that I will not go into in any great detail.

I return to schedule 1, dealing with superannuation. Superannuation in Australia is, I think, one of the Labor Party's great achievements. It has been able to transform the way Australians approach their retirement. I will just give a little history of superannuation. Going back to March 1973, the Whitlam government established a national superannuation committee to look into the possibility of a national superannuation scheme—that was way back in March 1973. By February 1974, it is interesting to note that the superannuation coverage had reached 29 per cent of employed people—just to put it in context.

The Fraser government, when that report was delivered to them, rejected the committee's recommendations to establish a partially contributory universal pension system with an earnings related supplement. They said no. At the time, or by February 1974, 53 per cent of employed people were covered by superannuation so that increased from 29 to 53 per cent.

Then the Hawke-Keating governments established a mandatory superannuation scheme through the superannuation guarantee, which was a legislated minimum employer contribution to superannuation which covered most employees. They also did some other things, including increasing the taxation applied to certain superannuation lump sums—that came in in July 1983—introducing a tax on superannuation contributions and a reduction in tax on benefits from 1 July 1988.

The superannuation coverage increased from 53 per cent to 71 per cent by November 1991—so 53 per cent when they started through to 71 per cent—and the pool of accumulated superannuation savings was around $146 billion at the end of 1991, which is equivalent to 38 per cent of GDP.

The Keating government introduced legislation to support the superannuation guarantee in parliament in 1992 with the rate to progressively increase from three per cent for small employers and four per cent where the employers' base year payroll was above $1 million from July 1992 to reach nine per cent by July 2002. This was certainly my first interaction with superannuation as an employee. I remember those discussions and the wage increases forgone by employees in that process.

Superannuation coverage increased from 71 per cent in November 1991 to 81 per cent of employed people by November 1995; and the pool of accumulated superannuation savings rose from around $146 billion at the time Paul Keating became Prime Minister to around $238 billion in early 1996—equivalent to 46 per cent of GDP.

Under the Howard government, the Howard government's first budget in 1996 saw the introduction of the superannuation surcharge for higher income earners—a measure that was later abolished; I will acknowledge that. Their other significant policy was the increase to superannuation preservation from age 55 to 60 on a phased-in basis. They also introduced the superannuation co-contribution arrangements and that superannuation assets had to be divided between parties in a marriage breakdown, which is much of the work of family lawyers nowadays because of so much wealth that has gone into superannuation.

The superannuation coverage increased for all employees from 90 per cent in November 1995 to 93 per cent by August 2002; and the superannuation pool rose from around $238 billion in March 1996 when the Howard government came in to $1.2 trillion at the end of 2007, which is equivalent to 110 per cent of Australia's GDP.

Then, under the Rudd government, one change that I am particularly proud of, as a member of that government, was the removal of same-sex discrimination from acts governing Commonwealth superannuation schemes. From memory, that was supported by both sides of the parliament and it was great to see that moment of bipartisanship in terms of making those changes. Under the Gillard government we saw the pool of accumulated super increase from $1.2 trillion in June 2010 to $1.6 trillion in June 2013—obviously not a significant change but there was something called the global financial crisis which created a lot of heartache and stress for people who had retired. Under the Abbott government we saw the delay in the increase in the superannuation guarantee to 12 per cent by two years and also the abolition of the low-income superannuation contribution.

The pool of accumulated super increased from $1.7 trillion to $1.9 trillion in September last year, which is equivalent to 117 per cent of the GDP—surely a great success story for both sides of the parliament in terms of making sure that Australians will be set up for their retirement. Obviously as members of parliament we do cop a bit of stick about our superannuation arrangements. There are two types of MPs and senators: those who were elected before 9 October 2004 and those who were elected after. Of the 226 MPs and senators, 72 per cent were elected after that date and they are on an accumulation scheme; those elected before have a slightly different arrangement. Whilst they do not have the numbers on the floor of the House of Reps or the Senate, they do have the numbers in the executive, so it might be a while before we see any changes there.

The proposed changes to superannuation in this legislation are mainly to do with the concessional tax treatment of superannuation contributions. These are limited by caps on concessional contributions—which are essentially those contributions made by employers that are taxed at 15 per cent—and non-concessional contributions, which are basically the contributions from after-tax income. Caps on the amount of concessional and non-concessional superannuation contributions were introduced by the Howard government under their 'simpler super' changes. Up until the 2012-13 financial year, a tax was applied on contributions in excess of the caps. As the member for Wright touched on, whenever there are opportunities for people to take advantage of our financial system that is what happens, and governments respond to those taking advantage. I am not suggesting there is anything illegal going on; people are minimising their tax payments. Super is set up to provide for people in retirement but if people are arranging their circumstances to avoid paying tax, governments have to be aware of that.

The falling concessional contributions cap from 2009 contributed to increasing numbers of taxpayers becoming liable to excess contributions tax, with over 52,000 excess contributions tax assessments issued by the ATO in the 2009-10 financial year; whereas in the previous year there had been around 18,000. The Gillard government responded to this by having a once-only option for people to have excess concessional contributions taken out of their superannuation fund and assessed as income at their marginal tax rate. Obviously with the marginal tax rates no-one would be paying at the 15 per cent. These changes were supported by both sides of parliament.

In the 2014-15 budget, the government announced that individuals would have the option of withdrawing superannuation contributions in excess of the non-concessional contributions cap made from 1 July 2013 and any associated earnings, with these earnings to be taxed at the individual's marginal tax rate.

The changes in this legislation are fundamentally fair—I certainly have not received too much feedback from my electorate about them—and are supported by both sides of the chamber. The number of taxpayers who breach the non-concessional cap is relatively small. There have been 1,940 assessments issued for breaches and 709 assessments issued in relation to breaches of the concessional as well as the non-concessional cap. Interestingly, the amounts by which individuals breach these caps are generally small, with the median amount being $5,876. Interestingly again, it is not the higher income earners who are penalised; most of the breaches of the non-concessional caps have been made by taxpayers who had taxable income of less than $50,000.

In conclusion, the changes proposed by schedule 1 affect only a relatively small number of taxpayers and many of them do not have relatively high incomes. The proposed changes weaken the existing deterrents for taxpayers who exceed non-concessional caps but there will continue to be a limit on annual contributions into tax-preferred superannuation. Combined with the rise in the non-concessional cap to $180,000 from 2014-15, it is likely that only small numbers of taxpayers will be affected by the changed arrangements in the medium term. The legislation is supported by the opposition. I could spend more time talking about the flow-through shares initiative, and the excess exploration credits tax is a great initiative as well. I hope that it will do its bit to ensure that the mining jobs of the future are being created at the appropriate time. I commend the legislation to the House.

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