Jason Falinski (Mackellar, Liberal Party) Share this | Hansard source

It is with great alacrity that I speak on the Superannuation (Objective) Bill 2016, as it was one of those changes during the election campaign that excited many people in my electorate. In fact, my favourite piece of correspondence during the election came from a Mr Bill Snodgrass, who lives in Palm Beach. He reflected that he did not think the Treasurer was terribly smart because the Treasurer keeps saying that only four per cent of Australians are impacted by these changes to superannuation. So it made absolutely no sense, and he had proof that it made no sense, because everyone he spoke to in Palm Beach has been impacted adversely by these changes.

The government changes to superannuation is clearly an important issue for the people of Mackellar and for all Australians. But the fact of the matter is that this is what good microeconomic reform looks like. These changes are about ensuring that our economy allocates scarce capital as effectively and efficiently as possible to ensure our economy grows. Savings in super funds are usually and quite properly put into conservative investments. That is a good thing, not a bad thing, unless we start excessively saving in these vehicles to maximise tax benefits.

If we are too risk adverse in our investments of capital then we limit opportunities for new businesses and ventures that need to access risk capital. These changes to superannuation are not a numbers game. They are not purist, theoretical economics. They are about reducing inequality in our society at large. Removing disincentives to risk capital will secure jobs growth, wages growth, more competition in the market and better choices for consumers. This means employment for the unemployed. It means increased wages for hardworking Australians who aspire to a better future for themselves, their friends and their families. It means increased competition in the markets—so greater and better choices for consumers. It means producers that currently have limited avenues through which to distribute their products will have greater choices when choosing to market them. Everyone will be happier—well, everyone except for entrenched players; those with a vested interest from the business world or the union movement who have taken advantage of hardworking Australians for far too long.

For those who have saved for retirement and who do not want to rely on taxpayers—of whom there will be fewer as a proportion of those in retirement in the future—this is also a win. We cannot ignore that not changing the current system is leading to intergenerational problems. Tax incentives are benefiting savings for older, well-off individuals at the expense of younger and less-well-off people—in most cases their very own children. They have certainly aspired to a bright future and worked hard for what they have, but this cannot come at the cost of younger people and families in the workforce looking to save so that they can afford things like a home. This government's changes to superannuation will improve the fairness, sustainability, flexibility and integrity of the superannuation system. They will better position the superannuation system to meet the key challenges over the rest of the 21st century, including the ageing of our population and the need to return the budget to surplus. For the first time, the purpose of the superannuation system is defined in law to provide income in retirement to substitute, or supplement, the age pension.

These bills implement a specific recommendation from the financial services inquiry which found that while Australia superannuation system has considerable strengths it lacks efficiency in a number of areas. In particular, the inquiry said that the lack of clarity around the ultimate objective of superannuation lead to short-term, ad hoc policy making, added complexity, imposed unnecessary cost and undermined long-term confidence in the superannuation system. The changes this government has put forward will improve sustainability by better targeting superannuation tax concessions to hardworking Australians who aspire to be self-sufficient in their retirement.

All caps that form part of the government's superannuation reforms continue to be set at levels well above the average and median contribution levels. For example, the $1.6 million transfer balance cap is around twice the level at which access to the age pension ceases on account of an individual's assets. This illustrates that the transfer balance cap has been set at a level to support retirement income streams well above that provided by the age pension.

The median Australian worker currently makes annual concessional contributions to their superannuation of around $4,200 per year. For them, the concession cap will now be $25,000. The government is also ensuring that low-income Australians are not worse off, through the introduction of the low-income superannuation offset, to ensure most individuals with taxable incomes of $37,000 or less do not pay more tax on their concessional superannuation contributions than on their take-home pay.

The government's reforms not only improve the fairness and sustainability of the superannuation system; they also improve its flexibility and integrity. Flexibility will be enhanced by introducing measures to allow more people to claim tax deductions on personal superannuation contributions from 1 July 2018, making catch-up concessional contributions available to those with interrupted work patterns, like mothers returning to the workforce.

We have introduced measures to limit the superannuation system from being used for tax minimisation or estate-planning purposes and to ensure broadly commensurate treatment across the superannuation system between accumulation and defined benefit accounts. This package will make it possible for Australians to manage their superannuation and plan their retirement with confidence, while strengthening the foundation of the superannuation system for Australia's future.

When it comes to deductions for personal superannuation contributions, we are abolishing the so-called 10 per cent rule. This rule prevented anyone earning more than 10 per cent of their income from salary and wages from claiming a deduction for personal superannuation contributions. As a result, more people, not fewer, will be able to claim a tax deduction for personal contributions to superannuation. This reform will benefit up to 800,000 Australians, particularly self-employed contractors, individuals employed by small businesses and freelancers who are partly employed. It offers flexibility to people who are partially self-employed and partially wage and salary earners and in instances where employers do not offer salary sacrifice arrangements. It will also help small business compete on a level playing field for talented people. Currently, many small businesses just do not have the capability to offer salary sacrificing to their employees. This limits their ability to attract talented staff, particularly those who are moving closer to retirement age. Under this change, those employees will be able to access the superannuation concessions to the same extent as the rest of the community, without imposing red tape on the small businesses that they work for.

We have also introduced a low-income superannuation offset, to ensure that most individuals earning less than $37,500 will not pay more tax on their concessional contributions than on their take-home pay. This measure will boost the superannuation accounts of around 3.1 million Australians. The government are expanding the current spouse superannuation tax offset to help more couples where one partner makes contributions to their spouse's superannuation savings. We are extending it by making the offset available to those whose spouses earn up to $40,000 a year. This is up from the current threshold of $13,800 a year, and an additional 5,000 people can access this offset.

From 1 July 2018, people with superannuation balances of less than $500,000 will be able to access any unused component of their concessional contributions cap on a rolling basis for a period of five years. This is a crucial step in providing assistance to those, particularly women, who have interrupted work patterns, whether it be to raise children or look after elderly parents, or who seek to boost their retirement savings just before retirement. This gives hardworking Australians the flexibility to make catch-up concessional contributions when they can afford to do so. Annual concessional contribution caps can limit the ability for people with interrupted work patterns or variable incomes to make savings through superannuation. This goes to the very issue of fairness within the superannuation system. Over 90 per cent of Australians who have balances below $500,000 will be able to make these catch-up contributions if they have unused cap space to carry forward.

We are, of course, not forgetting the backbone of our economy: the small-business sector. Under the reforms, eligible small-business owners can make superannuation contributions that do not count to their non-concessional contributions cap where the contribution is the proceeds from the disposal of a capital gains tax asset that is exempt from CGT under the 15-year exemption or the retirement exemption. The 15-year exemption allows a maximum contribution of $1.415 million where it is an active asset that has been owned continuously for 15 years and the owner is over 55 years of age. The retirement exemption allows a maximum contribution of $500,000. Currently, both exemptions cannot exceed the cumulative total of $1.415 million. These contributions will continue to be available and will be in addition to the annual non-concessional contribution caps.

I am very proud that this government is implementing reform. It has listened to people who would be impacted by these changes to superannuation and has proposed a system that will benefit all Australians—for this is what good microeconomic reform looks like. This is how you grow an economy for everyone, not just the entrenched privileged few occupying positions of power.

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