Andrew Leigh (Fenner, Australian Labor Party, Shadow Assistant Treasurer) Share this | Hansard source

The Treasury Laws Amendment (2017 Measures No. 2) Bill 2017 makes changes to the measures enacted through the Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016. The changes are technical in nature and aim to support the integrity of last year's superannuation measures and to ensure the law operates as intended. As such, Labor will be supporting the bill.

The changes include amendments, first, to ensure that self-managed superannuation fund members cannot circumvent the use of the new cap on tax-free retirement phase assets through the use of limited recourse borrowing arrangements; second, to ensure people who receive compensation orders as a result of suffering a serious or catastrophic injury do not have their structured settlement or personal injury order, or the earnings on those, counted towards the transfer balance cap, regardless of when the contribution is made; and, third, to clarify arrangements in relation to the transition to retirement income streams. We understand that many of the changes in the bill are to address issues raised by the superannuation sector following the changes introduced last year and that they have support within the sector.

The bill also amends the Bankruptcy Act 1966 and the Corporations Act 2001 to address two issues arising from the Insolvency Law Reform Bill 2015, which the parliament passed with Labor's support in early 2016. Those two issues are, first, to allow a single approval from creditors to cover a profit or advantage received by an external administrator or trustee, even when they are received by multiple related entities, where currently an approval would be needed for each of the relevant entities; and, second, to require annual and end-of-control returns by controllers to continue to be included on ASIC's public register. Under the Insolvency Law Reform Bill 2015, this requirement would have ceased on 1 September 2017. This bill reinstates this requirement, as the Fair Entitlements Guarantee Recovery Program relies on access to controller records to determine whether controllers have complied with their statutory obligations. These changes to the Corporations Act and the Bankruptcy Act will reduce legal complexity, increase certainty for insolvency practitioners and remove unnecessary costs from insolvency proceedings. The amendments also assist the Fair Entitlements Guarantee Recovery Program in its work reclaiming funds paid out under the program.

While this bill is technical in nature, it is worth noting that its effect is to clean up the mess of the government rushing its superannuation changes through last year. While Labor has had a clear and considered position on superannuation changes, the government has flipped and flopped, at one point arguing that no changes to our superannuation tax concessions system were required, then ultimately giving in to community pressure to adopt the view—which had long been taken by Labor—that our superannuation tax concessions are not fair and not sustainable.

When we look at the poor economic record of the Howard-Costello government, we see one of the reasons for that record was the structural deficit, which the IMF has noted, that was run in the later period of the Howard-Costello government. That structural deficit was in part due to overgenerous and unsustainable superannuation tax concessions given disproportionately to high-income Australians. The decisions made by John Howard and Peter Costello were fiscally reckless and utterly unsustainable, and it is those reckless decisions by a previous coalition government which this parliament has had to wind back.

When those opposite talk about the extraordinary economic achievements of the Howard-Costello era, they frequently refer to the razor-thin surpluses that were run in those years. But when you look at the structural budget position, it was significantly worse. As the IMF has noted, this was a period of particularly poor financial management. Reining in those superannuation tax breaks required significant public debate. Of course, somebody who enjoys a tax concession is often reluctant to give it up. But it simply was not sustainable to continue in a situation in which our superannuation tax breaks were so skewed to the top of the distribution.

The principal purpose of superannuation must be to reduce the chances that Australians end up on the pension. The benefit to the community of building a large pool of national savings when the owners of those savings are well ahead of pension eligibility stage is fairly limited. Superannuation should not be used to try somehow to address housing affordability, as the government has done in this budget through the notion that young Australians, if they want to get into the housing market, should have to raid their superannuation. Superannuation needs to be about maintaining the sustainability of the pension. Superannuation tax breaks going disproportionately to the top end are not in accord with fundamental principle of superannuation. So we are pleased that the government has steadily come towards Labor's view on superannuation, but because so much this was done in a hurry and done without consultation, because the government's proposed lifetime cap on non-concessional contributions raised significant concerns in the community about retrospective changes, then the government got it wrong. That is why we are debating this bill today—because it is cleaning up the mess of the superannuation changes last year.

In substantive terms, Labor has called for additional changes to improve the fairness of our superannuation system. Bill Shorten spoke to the National Press Club last August—

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