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

I'm speaking in support of this bill. It's not often that I concur with the member for Forrest, but I certainly do agree with her on the quality of the viticulture and the wineries and wines produced in her electorate. Indeed, it also has some of the great surfing spots, if you are happy to share the water with a few great whites! So there is good-quality wine and good-quality surfing—what more could you ask for in an electorate? But I digress.

This bill contains two distinct schedules—the first being about the wine equalisation tax and the second being about income tax relief for transfers within MySuper product. Amendments associated with schedule 1 are made to A New Tax System (Wine Equalisation Tax) Act to improve the integrity of the wine equalisation tax producer rebate. The intent here is to bring a bit of fairness to the operation of the wine equalisation tax and allow some of those smaller wineries the opportunity to compete with some of their bigger counterparts in the markets that they provide their quality products to.

As the member for Forrest and other speakers have outlined, Australia does have a very good and burgeoning viticulture industry. Through recent free trade agreements, particularly in the Asia area, new markets are opening up, and the depth and breadth of wineries in Australia and the quality of the product that's being produced means it is now being sold internationally, and we're gaining a great reputation for doing so and this reform will only add to that. Unlike beer and spirits, which are taxed based on the amount of alcohol per litre they contain, domestically produced wines, cider, mead and fruit wine are all taxed at 30 per cent of their wholesale value. That's where the difference is between the operation of taxation in relation to beer and the wine equalisation tax.

The amendments contained in this bill make integrity changes to the WET producer rebate quoting the WET credit rules, reduce the WET rebate cap from $500,000 to $350,000, tighten the associated producers' rules and repeal the earlier producer rebate rule. Reform of the wine equalisation tax producer rebate is something that the producers in the area have been advocating for some years now, and it will better target the rebate and improve its integrity. It will also ensure consistency with the original policy intent of benefitting smaller wine producers who are making a genuine investment in the wine industry—many of whom are located in rural and regional Australia. Many Australians visit some of these areas on a regular basis and, indeed, increasingly international visitors are attracted to rural and regional Australia and some of the smaller wineries that dot the landscape in areas like the Hunter Valley and the Clare Valley and around the south of the electorate of the member for Forrest.

The changes featured in this bill have been widely supported by industry stakeholders. Providing comment to the ABC in April, the winemaker Damian North of Journey Wines in Victoria's Yarra Valley supported this package by saying:

The new changes define an eligible producer as someone who owns the grapes through the winemaking process, and producers who build brands, invest in regional communities and create jobs, and we think that's a great change, …

That's a perfect way to put what the parliament is doing here. Mr North went on to say that the changes were a confidence booster which would assist winemakers to invest in their businesses. He said:

It means we can continue to build our brands, now we're confident we won't be excluded from the scheme because of the way we start out, or our inability to afford expensive equipment, …

If left in its current form, the wine equalisation tax producer rebate would continue to create a perverse incentive for businesses to structure themselves so as to maximise those rebate claims. The result would be excess wine production, exacerbating challenging market conditions for growers.

In conclusion, in respect of the WET and the wine equalisation tax producer rebate, this is a sensible reform. It evens the playing field for some of those smaller producers, particularly those that are looking to make capital improvements to their production facilities, and it's a great outcome for rural and regional communities and viticulture in those areas.

Schedule 2 of the bill looks at a distinctly different area of policy, which is nonetheless related to taxation reform, and amends the Income Tax Assessment Act to provide income tax relief for superannuation funds that are transferring account balances of their members as they transition to the MySuper rules. The MySuper basic account was introduced by the previous, Labor, government when we were in office. It came about as a result of a series of recommendations that were made by an independent assessment of the industry and the fact that many Australians were missing out on ensuring that they had a low-cost, low-fee superannuation option that would ensure that they're maximising the opportunity of building a credible superannuation balance so they avoid having to completely rely on the aged pension in retirement.

Of course, superannuation is something that the Labor Party is very, very proud of. In 1992 the Keating government introduced a compulsory superannuation guarantee system as part of a major reform package addressing Australia's retirement income inadequacy in policies. The reason behind this historic reform was that, along with many other western nations, Australia was expecting to increase in population and experience a major demographic shift in the coming decades, resulting in an increase in aged pension payments. If we hadn't done anything at the time, there would have been an explosion in the number of people relying on the age pension, because of the ageing population, and a resulting impact on the fiscal position of the government. It was feared that this would place an unaffordable strain on the Australian economy. History really does have a way of repeating itself.

Labor built Australia's superannuation system. It is our commitment that we will always work to make sure that superannuation is fair, whilst providing a comfortable life in retirement for a growing number of Australians. As I said earlier, in 2011 the Gillard government announced—as part of those stronger super reforms—MySuper, a simplified superannuation accumulation product into which contributions are paid if the employee either nominates the product or does not express a choice about which fund their superannuation contributions are going to be paid into. MySuper has provided a simple, cost-effective default product that all Australians can rely on. Superannuation funds have been able to provide MySuper products since 1 July 2013.

As part of the transition to the new rules, funds are required to transfer existing balances of their default members to MySuper-compliant products by 1 July 2017. In doing so—when superannuation funds are making that transfer to these MySuper products and transferring the balances and the assets which support those balances—tax liabilities could arise on the transfer. This tax payable will reduce a member's balance and really undermines the purpose for which the government originally established the MySuper product: to be a low-cost product for low-income workers. Tax relief is currently available for those superannuation funds that transfer their default members to a different fund, and asset rollover, which defers the income tax that would otherwise be payable on the transfer, is available. However, this tax relief has not been available where a member transfers to a MySuper product with their existing superannuation provider. So there was tax relief when it was done by the fund, but not so much when it was done by the member.

Schedule 2 of this bill will extend the asset rollover relief to mandatory transfers to a super product within a superannuation fund. This will ensure that default members of superannuation funds will not incur adverse or unintended consequences when their account balances are transferred to a MySuper product within the fund. The legislation will ensure equity between members that move to a new fund provider and those that take up new products with their existing provider. It also makes sure that member balances are not negatively impacted by tax liabilities within their fund, and when their balances are moved.

In conclusion, again, these are two sensible reforms which Labor is pleased to support. They ensure a level playing field for producers in the wine industry and will benefit rural and regional communities. They strengthen and add integrity to the operation of the superannuation system, particularly for MySuper products, ensuring that low-income workers in particular will be able to accumulate, hopefully, enough superannuation in retirement to avoid having to completely rely on the age pension. This taxation reform will ensure that we are maximising those account balances and reducing the fees and taxation associated with, in particular, transfers into MySuper products. I commend the bill to the House.

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