Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Hansard source

I speak in support of the amendment moved by the member for McMahon to the second reading motion. It is a very sensible amendment that would improve the bills that are being debated here, the Superannuation (Objective) Bill 2016 and related bills, regarding the objectives of superannuation and a number of reforms to superannuation tax concessions. When I speak to my constituents about superannuation, the feedback that I generally get is that they are sick and tired of governments continually moving the goalposts around their retirement incomes. They are sick of governments changing the rules around superannuation. They think that superannuation is complicated enough. Just when they get used to a set of conditions that they can work with to save for their retirement, government comes along and moves the goalposts.

I appreciate that, when Labor were in government, we did make changes to superannuation. Some of those included the MySuper reforms for low-income Australian workers and the lifting of the statutory rate for employer contributions from nine to 12 per cent over the course of a 10-year period, but all of these reforms came from a series of recommendations in the Murray review, the most thorough investigation, consultation and review of the adequacy and the operation of Australia's superannuation laws since, basically, their inception—since the Keating years—to ensure that they were fit for purpose and that they met the objectives for which superannuation was established in Australia. Through that investigation, David Murray consulted with industry, Labor proposed reforms and we based those reforms on the recommendations of that inquiry. They were sensible amendments and conscious of the fact that Australians were tired of and had fatigue from some of the reforms that had been undertaken in the past. Nonetheless, we intended them to be a clear road map for superannuation to cover at least the next decade, based on the principle objective of sustainable retirement incomes for all Australians and removing the need to rely on the age pension in retirement.

Then, of course, the Abbott government were elected in 2013. They came along and completely changed everything. They undertook to stop a lot of the reforms suggested by the Murray review and put a freeze on the compulsory increase in superannuation contributions from nine to 12 per cent, basically because, as we all know, the Liberal Party do not believe in superannuation, never have and never will. They do not want to see retirement incomes for working class people in Australia increase. They do not want to see that pool of savings that is managed well—in fact managed the best—by industry funds increase so they put a stop to that increase in compulsory superannuation with no regard at all for the adequacy of superannuation balances, particularly for low-income workers, in this country and whether or not they are going to have enough to retire on.

The government had no regard at all for the future of the Australian fiscal position because, let's face it, if people have an adequate superannuation retirement fund, they do not need to rely on the age pension so that takes pressure off the fiscal position of the Australian government in supplying those aged pensions. They had no regard for that at all in that decision. They abolished the low-income superannuation contribution because, let's face it, the former Prime Minister, the member for Warringah, never really believed in superannuation and certainly did not believe in low-income workers, those on less than $37,000, getting a tax rebate to ensure that they had an incentive to save rather than remain on welfare. And they also sought to change the governance and the operation of superannuation bonds.

the member for Warringah of course was then rolled as the Prime Minister, and Turnbull, the member for Wentworth, was elected as the nation's Prime Minister. We then got another set of changes, another set of reforms, many of which were completely contrary to those proposed by the member for Warringah when he was the Prime Minister. I talk of course of the low-income superannuation contribution. The member for Warringah got rid of it; the member for Wentworth, the Prime Minister, sought to get back in this year's budget.

The government also proposed in this year's budget a number of changes to the taxation of superannuation, particularly the introduction of a very controversial retrospective lifetime cap for non-concessional contributions. Then of course the government's party room got angry. The government members all got battered from pillar to post during the election campaign and their party room got angry with the Treasurer. It became apparent that they did not like what the Treasurer was proposing and the Treasurer had a problem on his hands—he was not going to be able to get those reforms through the party room when it came to putting a bill to the party room for debate—so it was all put on hold. There was further confusion, uncertainty, disruption—stoked by this government—for Australians who were looking for some certainty about retirement incomes and the way that they could save for their future particularly in the context of being in the wake of the financial crisis where Australians were increasing the amount that they were saving. Australians were not encouraged to put it into superannuation funds by this government because of the uncertainty they had created.

The government announced that they were reviewing what was proposed in the budget. That is code for 'I cannot get this through the party room so I will announce a review of what is going on and further consultation'. By this time, the Australian people's heads were spinning. As if superannuation is not complicated enough but this government have once again—after two attempts at it—on the third go attempted to move the goalposts once again. All through this process, the stable, consistent and responsible approach has been taken by the Labor government. When the government again got themselves into this pickle of not being able to get these reforms through the party room, the member for Maribyrnong and the Leader of the Opposition announced at the Press Club earlier this year that Labor would offer a sensible compromise that would get the government out of its pickle, particularly in respect of retrospectivity, and raise additional funding on the back of targeting some of the tax concessions for the budget. The government ignored that sensible offer.

Finally, we get to these bills. It appears they have been amended once again. The Treasurer and the Minister for Revenue and Financial Services have been able to get these reforms through their party room. But the great shame is that the reforms reflect a political deal rather than good public policy. They have been rushed and are not in the best interests of many Australians, particularly when it comes to taking adequate action to target some of the superannuation tax concessions and, importantly, to raise additional revenue for the budget. There are some redeeming features in this bill—which I will go through in a moment—which Labor will support, particularly those amendments that will improve the adequacy and the effectiveness of superannuation and its impact on the budget, and those that target superannuation tax concessions for high-income earners.

In respect of those concessions, we do need to take action—and this is a problem that was identified a long time ago by the Labor opposition. Currently in Australia, 38 per cent of tax concessions on superannuation go to the top 10 per cent of income earners. It is inequitable, it is uneven and it is unsustainable. Those who are getting those superannuation tax concessions at the high end do not even need them. They are on high enough incomes to be able to save for their own retirement. If you are going to have concessions on superannuation, they need to be targeted, and well targeted, to the low end to provide the incentive for low-income workers to put aside an amount, hopefully additional to the compulsory contributions, to save for their retirement.

We can all thank the former Treasurer, Peter Costello, for these massive tax concessions on high-end superannuation. He introduced this massive wealth accumulation vehicle, which massively advantages those people on high incomes, by removing, in 2005, the superannuation surcharge which ensured that high-income earners paid a fair rate of tax on their superannuation contributions and earnings, rather than just 15 per cent flat tax. The government of the day got rid of that superannuation surcharge, and high-income earners paid just a flat tax rate of 15 per cent. Then, in 2007, they reduced the taxation on super to zero for Australians aged over 60. These are the two gifts that the former Treasurer Peter Costello left the Australian public. They cost the budget $2.5 billion in 2009-10, and they were unfunded. When they were introduced, during the mining boom, they were not offset by other reductions in expenditure or revenue-raising measures in the budget. They were accompanied by close to $50 billion worth of unfunded measures, which cost the Australian budget. Australians are now paying for the profligacy and inept management of Peter Costello as Australia's Treasurer. We are all paying for that at the moment, and that is why this parliament has to have a look at these tax concessions and take action. It is good to see that this bill rights some of the wrongs of the former Treasurer, but it does not go far enough.

Labor's package, in respect of the first measure in these bills, would support the government's $1.6 million superannuation transfer balance cap, which would apply on the total amount of accumulated superannuation an individual can transfer into the tax-free retirement phase. Any further contributions will need to be held in an accumulation account, where they are taxed at 15 per cent. We will support that first measure.

On the second measure, we would lower the annual non-concessional contribution cap to $75,000, rather than the $100,000 that this government is proposing, and we would also introduce a $225,000 carry forward measure. This, of course, replaces the government's controversial $500,000 lifetime cap in the government's original package. It significantly lowers the annual non-concessional cap, which is currently $180,000. Importantly, too, the ability to make any non-concessional contributions will be limited to people with superannuation balances of less than $1.6 million.

The third measure, the low-income superannuation tax offset of $500 for income earners on less than $37,000 a year, has Labor's full support. This puts back in place the low-income superannuation contribution that Labor put in, which was removed by the member for Warringah when he was the Prime Minister and put back in by the member for Wentworth. It perfectly represents the confusion of this government but nonetheless we are going to support it.

Labor would also seek to lower the high-income super contribution threshold from the government's $250,000 to $200,000. This would ensure that people earning above this amount pay 30 per cent tax on concessional contributions above $200,000—the same as someone on $80,000 a year. Labor will oppose the catch-up concessional contributions and changes to tax deductibility of personal superannuation contributions. With the deficit almost at $40 billion, we believe that responsible governments must ensure that every new dollar of Commonwealth money is targeted and well spent. The government's proposed new superannuation loopholes will cost the budget $12.3 billion over the decade, and this is simply not affordable in the current climate. Each of these measures is likely to be taken up by those on high incomes, who can afford to make additional contributions. Meanwhile, the number of middle- and low-income earners who have the financial capacity to take advantage of these changes is limited.

In conclusion, our package, which we are offering as an alternative, would improve the government's proposals by $1.4 billion over the forward estimates and $18.9 billion over the medium term, for a total budget improvement of $4.5 billion in 2019-2020 and $32.6 billion in 2026-2027. Based on those figures our reforms are sensible. They target those massive superannuation tax concessions but also offer credible alternatives, and in that respect I support the amendment moved by the member for McMahon.

See this speech in context