Chris Pearce (Aston, Liberal Party, Shadow Minister for Financial Services, Superannuation and Corporate Law) Share this | Link to this | Hansard source

I begin my remarks this afternoon by congratulating the new member for Lyne on his maiden speech in the federal parliament. I wish him well throughout his parliamentary career here. The Temporary Residents’ Superannuation Legislation Amendment Bill 2008 and the Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2008 strive to achieve two broad outcomes: less money lost in the superannuation system and a lowering of compliance and administration costs for superannuation providers. There will be two primary functions of these bills: firstly, transferring funds from the superannuation provider to the ATO and, secondly, providing the capacity for funds to be retrieved from the ATO through the existing departing Australia superannuation payment, otherwise known as the DASP.

I go firstly to the transferral of funds to the ATO. Once these bills become law, superannuation funds will be required to transfer the balances of former temporary residents’ accounts to the ATO within six months of such persons departing Australia. Under the proposed arrangements, the ATO will notify superannuation providers that a former temporary resident with a superannuation interest has departed Australia after six continuous months have elapsed. Superannuation funds will then pay the ATO the starting amount of the account balance minus payments already made to the former temporary resident. In the area of retrieval of funds from the ATO, once the account balances have been paid to the ATO, former temporary residents will be entitled to claim their superannuation from the ATO. Such persons will be able to retrieve their superannuation entitlements from the Australian Tax Office without a time limit being imposed. Amounts which have been paid to the ATO can be paid to former temporary residents subject to any withholding tax which may apply under the law. Once persons have been identified by the ATO, amounts can be paid to the person, their legal representative or a fund if the person is identified as an Australian or New Zealand citizen or is a holder of a permanent visa.

I will make a few remarks on the legislative context of these bills. These proposed laws are largely the previous coalition government’s policy, which was announced in the Mid-year economic and fiscal outlook 2007-08. We instituted this policy at the time because many former temporary residents do not take their superannuation with them as they do not lodge DASP applications. Therefore, unclaimed superannuation balances often become lost moneys in the system. Inactive accounts in the superannuation system currently represent approximately $12 billion in assets. By-products of inactive accounts are unnecessary compliance and, of course, operational costs associated with those accounts. Despite the claim that has been made by some on the opposite side—in particular, by the Minister for Superannuation and Corporate Law in his media release dated 8 August 2008—these bills do not represent significant changes to the measures that we announced in relation to these matters when we were in government. Under the measures announced by the previous coalition government, unclaimed balances of superannuation accounts belonging to former temporary residents would be paid to the ATO, with the capacity for the former temporary resident to claim back the lost balances. The bills currently before the House represent the same outcomes, which are lower compliance costs and less money lost in the system. So the minister’s claim that this is Labor policy is simply false.

Let me make some remarks regarding consultation. As is consistent with the Liberal Party philosophy of consulting widely with relevant interest groups, we have determined that there are some very significant concerns from industry on these matters. Industry have raised with me three prime concerns which they have with these new bills. They consider the timing and cost of implementation is the key problem facing superannuation companies. Industry have stated that three versions of reporting requirements will be required during the transition period and, further, that new administrative costs will be incurred by superannuation providers. Industry have argued that the new costs will be centred on registry and systems management issues. A further issue has been identified by industry—that is, that there are liquidity concerns for some funds which could be forced to liquidate assets in a short time frame because they have a large number of former temporary residents as members. If this were to occur, any such hasty sale of assets may adversely impact on the value of the remaining members’ accounts. Industry have also raised the problem of some former temporary residents who may have had their superannuation arrangements based on the current laws. Industry argues that such individuals would have been confident in the knowledge that their superannuation accounts would remain lodged with their superannuation provider indefinitely, but these would be subject to additional taxation under the proposed arrangements. The opposition notes these concerns raised by industry; they are significant concerns. We encourage the government to take these concerns into account when implementing these measures.

In summary, while I note that compliance cost concerns have been raised during our consultation period, these proposed laws should reduce the number of superannuation accounts containing unclaimed amounts, and all employee superannuation payments will now occur under the same DASP procedure. Both outcomes should result in a lowering of costs for government and for superannuation providers. Providing that there are, of course, no adverse findings from the inquiry into these matters by the Senate Standing Committee on Economics, the opposition supports the passage of these bills.

Chris Trevor (Flynn, Australian Labor Party) Share this | Link to this | Hansard source

I rise to support the government’s Temporary Residents’ Superannuation Legislation Amendment Bill 2008 and Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2008. The Temporary Residents’ Superannuation Legislation Amendment Bill 2008 implements the government’s measure to help reduce the number of lost accounts and unclaimed money in the superannuation system which can arise when temporary residents depart Australia without taking their superannuation with them. The Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2008 forms part of the government’s temporary residents superannuation measure. Under this arrangement, temporary residents leaving Australia will be able to claim their superannuation benefits through existing avenues before it becomes unclaimed. This allows for a more consistent approach and for a better service to temporary residents compared to that of other countries.

The departing Australia superannuation withholding tax currently applies to amounts claimed by departed temporary residents. The tax aims to ensure that tax concessions provided to superannuation are appropriately aimed at those who wish to retire in Australia. The amendments make a small increase to the departing Australia superannuation withholding tax rate of some five per cent. As Councillor Paul Bell AM, President of the Local Government Association of Queensland, said:

… Queensland is attracting an increasing number of skilled migrants from across Australia and the world. Many migrants are now settling in regional and rural communities.

                  …              …              …

Over the last decade Queensland has witnessed sustained economic growth and has received increasing numbers of migrants from interstate and overseas. Queensland continues to attract the most overseas migrants after Victoria and NSW …

This increase in overall migration to Queensland has included increased skilled migration to rural and regional Queensland. The main conduit for migration to regional and rural areas has been the state specific and regional migration incentives implemented by the federal government. Since 1995, when the Regional Sponsored Migration Scheme was first introduced, there have been a plethora of initiatives and visa categories to encourage migrants to live and work in rural and regional areas of Australia—particularly Central Queensland, due to the resource boom the area is currently experiencing. Regional migration programs aim to address the skills shortages faced by a number of rural and regional areas and to encourage the economic and demographic growth of rural and regional Australia.

It is widely acknowledged that both permanent and temporary skilled migration deliver significant economic benefits to the host country. These economic benefits are particularly critical in rural and regional areas, whether they are undergoing population decline or mining booms. The key theme in Australia’s recent migration policies has been the economic benefits of migration and skilled migration in particular. The focus on the economic benefits of skilled migration has been shaped by a number of realities facing developed nations such as Australia, including ageing populations, globalisation of labour markets and skills shortages.

There have been a number of programs run by various organisations in my electorate of Flynn to encourage temporary residents to the area, especially in Longreach and Gladstone. Much of the good work in Longreach has been led by the Remote Area Planning and Development Board, which has sought funding to develop a number of projects to assist the members of communities of its regional council members to work together to attract and support new arrivals. RAPAD has set up a regional marketing plan and, to better understand the experiences of new migrants to the area, a migrant reference group. The group will shed light on what worked for them when they arrived and what could be improved, including: raising an understanding and awareness of the challenges for new migrants in rural and remote areas; establishing an information migrant network within the region to provide guidance and information that will support skilled migration and settlement activities; raising an understanding and awareness of the benefits of skilled migration; and providing resources and information about improving the attractiveness of the region to potential migrants.

The Longreach Regional Council engages with the cultural diversity of the local area. Employers in Longreach are actively engaged in supporting new arrivals. This support starts from the time they contact the prospective employee overseas and follows through their arrival and settlement in the community. Longreach council itself employs skilled migrants and is very supportive in providing employment and settlement support to its community. Another such program is managed by Gladstone Area Promotion and Development Ltd. The charter of GAPDL is to promote the Gladstone region as a great place to live in, invest in and visit—and so it is. It is our business to ensure we promote strong growth and development within the region.

A shortage of skills has long been perceived as one of the most serious issues currently facing the Gladstone region’s business and industry. A lack of available personnel with the right skills may threaten the economic viability and growth of our region. Whilst this is also a state and national issue, the shortage of skills may particularly affect this region due to its high concentration of industry and remoteness from a capital city. In a climate of strong industrial growth the service dollar leaks out of the region due to a shortage of tradesmen and professionals, and small to medium businesses have difficulty recruiting people with the skills they require. For example, a skills survey launched by GAPDL recently confirmed what many of us living in the electorate have been aware of for some time: we definitely do have a skills shortage which is impacting in particular on the small to medium business sector. Seventy-four per cent of local businesses reported having difficulty attracting skilled employees, and nearly half of them found it nearly impossible to do so.

The Make the Move strategy is an initiative of GAPDL to attract investment and skills to the Gladstone region that will benefit businesses, community organisations and the broader community in general. The strategy’s core focus is to promote the region to potential new residents and employees through a range of publications and services that will make the move to the Gladstone region a positive experience for work and play. This approach works on the premise that initiatives relating to both raising the skills of our existing workforce, especially young people, and attracting skilled people from outside the region as employees or business operators are likely to be of benefit in increasing our region’s skills base, supporting our youth and building our economy and, consequently, our nation.

While temporary residents, including thousands who have worked in Central Queensland, depart Australia, they are able to take their superannuation with them as a departing Australia superannuation payment, but many do not do so. This contributes to the total amount of lost moneys in the system. Individuals who hold an eligible temporary resident visa are currently able to access their superannuation benefits early, prior to reaching preservation age, if their visa has been cancelled or has expired and they have departed Australia, by applying for a departing Australia superannuation payment. The DASP is subject to a final withholding tax to recoup the tax concessions provided to the superannuation of temporary residents.

Despite having the ability to claim their superannuation, many temporary residents do not do so and leave amounts of small and lost balances in the superannuation system, thereby contributing to the total amount of lost moneys in the system. Currently, the Superannuation (Unclaimed Money and Lost Members) Act requires superannuation providers to report and pay the superannuation of a member to the Commissioner of Taxation as unclaimed money where certain conditions relating to the member are met. Broadly speaking, unclaimed money is money which the superannuation provider holds in respect of members who have reached the eligibility age of 65 or died and the provider is unable to contact the person entitled to receive it.

The government is concerned by the growing amount of superannuation which has been identified as lost over the past decade. The tax office’s 2006-07 annual report shows that the number of superannuation accounts reported on the lost members register grew from 5.7 million to 6.1 million in that income year. These inactive accounts total approximately $12 billion in assets. The amendments contained in this bill seek to address the lost account problem by requiring superannuation funds to pay the unclaimed superannuation of departed temporary residents to the tax office. The government has consulted on the measure by releasing a discussion paper in May of this year and engaging in consultation with key stakeholders on the draft legislation. The government’s final policy reflects many of the suggestions made during the consultation process.

The amendments provide that the superannuation of a temporary resident will effectively become unclaimed and payable to the tax office after the individual has ceased to be the holder of a temporary visa—that is to say, their temporary visa has been cancelled or has expired—and they have departed Australia and at least six months has passed and they have not claimed their superannuation. Departed temporary residents will retain the ability to claim their superannuation benefits through the existing departing Australia superannuation payment process before it becomes unclaimed.

Departed temporary residents who have not claimed their superannuation and have unclaimed superannuation paid to the tax office can claim their money back at any time. The individual can apply to the Taxation Office for the amount to be paid to them or to be transferred to a super fund in certain circumstances. This provides consistent or better treatment of temporary residents compared to that in many other countries, where temporary residents may be unable to access or are limited in accessing compulsory social security contributions. Generally, the amount that is claimed back from the tax office will be subject to the departing Australia superannuation payment withholding tax. This is consistent with existing arrangements, as the withholding tax already applies when a temporary resident claims their superannuation after departing Australia.

This measure will be administered by the Department of Immigration and Citizenship and the Taxation Office. The Department of Immigration and Citizenship will provide the tax office with information to assist the tax office in identifying departed temporary residents who have left unclaimed superannuation behind. The tax office will then issue notices to super funds identifying departed temporary residents. Funds which receive such notices will be required to report and pay any unclaimed superannuation they hold for a departed temporary resident to the tax office by a certain day. The first notices are proposed to be issued in March 2009, requesting payments from funds by April 2009. In the future, it is proposed that the tax office will issue notices at least twice a year. The tax office will also have the ability to revoke a notice it has sent to a fund where it is appropriate in the circumstances to do so—for instance, if the individual returned to Australia on a new temporary visa prior to the six months elapsing.

The superannuation of Australian and New Zealand citizens, current holders of permanent or temporary visas and those applying for permanent residency will not be paid to the tax office. Instead, their superannuation will remain in a super fund. Certain types of temporary visas can also be prescribed in the regulations to be excluded from the measure if it is appropriate in the circumstances to do so and to cater appropriately to any specific visa classes. For instance, retirement visa holders will be excluded from the measure so that their superannuation will remain in the fund and not be paid to the tax office.

At this stage, state and territory public sector funds will not be captured by the measure, although the Commonwealth will enter into discussions with state and territory governments to examine the scope to include such schemes in the future. The tax office will have the ability to refund overpayments that have been wrongly made by super funds. Individuals will also have review rights. This measure will commence from a date to be fixed by proclamation. This will occur in sufficient time for the tax office to send the first notices out to funds in March 2009 and to receive payments of unclaimed superannuation from funds in April 2009. I do congratulate the Rudd Labor government for its leadership on this issue and I commend these bills to the House.

Stuart Robert (Fadden, Liberal Party) Share this | Link to this | Hansard source

I rise to lend support to the Temporary Residents’ Superannuation Legislation Amendment Bill 2008 and the Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2008 as they seek to put into effect the policy announced by the former coalition government in the 2007-08 Mid-Year Economic and Fiscal Outlook. They reflect how super is now part of the backbone of the Australian retirement financial system.

Prior to the super guarantee legislation, the old superannuation system that prevailed in the late 1980s and early 1990s was predominately a defined benefit system restricted to public sector employees and managerial employees of the private sector. By way of history, the proportion of employees covered by super under the old scheme was relatively low, especially for part-time workers. In 1974 only 32 per cent of workers were covered by super—24 per cent in the private sector and 58 per cent in the public sector.

In 1983 the reform of the taxation of super really began. I actually will commend the Labor government, especially under the leadership of the Rt Hon. Bob Hawke, for reforming super in 1983. It is noted that in 1984 the CBUSS, one of the first industry super funds, commenced. In 1987 there was $41.1 billion in super funds according to the ISC annual report 1988-89. The super revolution within Australia had certainly begun.

Legislation was passed in 1987 and 1988 which included the Occupational Super Standards Act 1987 and the Hawke government statement titled Reform of the taxation of super. By 1988, 58 per cent of full-time employees, 19 per cent of part-time workers and only two per cent of persons not employed were covered by superannuation schemes and the number was clearly growing. By 1989 super funds under management had grown to $119 billion, growing to $123 billion in 1990 with 64 per cent of employees covered.

By 1 July 1992 the superannuation guarantee commenced at three per cent, rising to nine per cent by 2002. By 1993 super assets had reached $169 billion and 80 per cent of people were covered. It was a fine start to the super revolution. From $169 billion through the 11½ years of the Howard-Costello government super assets reached a staggering $546 billion by 2003, with 90 per cent of Australians covered, and last year super assets were $1.153 trillion, 119 per cent of GDP.

Through the Hawke-Keating and Howard governments, a superannuation revolution ensured that well over 90 per cent of Australians were covered by superannuation and an impressive $1.1 trillion had been gathered. Whilst acknowledging the fine start that the Labor government of 1983 gave to the super revolution, I will also acknowledge the fine start that the Howard-Costello years gave, especially in removing any penalties for those over 60 to withdraw their superannuation funds.

The superannuation guarantee scheme was first conceived in 1986 and again I acknowledge the Labor Party and indeed the Australian Council of Trade Unions. Led by Keating and the ACTU secretary, Bill Kelty, a superannuation guarantee of three per cent was allegedly first proposed, though it appears the government’s preferred position may have been for a total of 12 per cent comprising an ultimate nine per cent of salary and a three per cent contribution by employees. Regardless, the superannuation guarantee has become a natural part of the fabric of the Australian way of life and three successive governments have ensured that Australians are becoming well and truly covered by super.

The key issue though, is that the superannuation guarantee was introduced to boost retirement savings, especially for those on lower incomes. It has also served the national interest, that of strengthening Australia’s national saving performance. As part of the great super revolution these bills recognise that, within the super regime, there are people who simply do not claim their super. Indeed, as at May 2007, the ATO revealed that around $9.7 billion in unclaimed super resides in Australian superannuation funds. As at last month the member for Flynn reports the number could well indeed be above $12 billion. Considering the member for Flynn and I are old boys of the same school, Rockhampton Grammar School, how could I possibly disagree with the good member as to the current rate of unclaimed super?

Part of that amount of unclaimed super was accrued by workers who were in Australia on temporary visas of some sort. Despite having the ability to claim their superannuation, many temporary residents have failed to do so—and I am sure they will continue to fail to do so—for a range of reasons, including a hasty departure or, frankly, not giving the issue much thought at all. These bills are making amendments so that the unclaimed superannuation of previous temporary visa holders will be returned to the Commonwealth after at least six months have passed since the temporary visa ceased to be in effect and they have departed Australia. The person who accrued that super will still be able to claim the super, provided certain conditions are met, although the super being held by the Commonwealth will not accrue interest. The measures are seeking to reduce the number of lost accounts and the unclaimed money in the super system that can arise when temporary visa holders leave Australia without taking their benefits with them.

It is noted that these measures have the general support of industry. Although superannuation providers have raised concerns regarding compliance costs during the consultation period, it is unlikely that these measures will impose any undue compliance burden. It is also noted that the administrative costs of implementing the system will be borne by the ATO and DIAC. These measures move on what the coalition proposed in the 2007-08 Mid-Year Economic and Fiscal Outlook. They are sound in their implementation and they are sound in their design. They certainly enjoy my support.

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

I congratulate the member for Fadden on a fine speech on the Temporary Residents’ Superannuation Legislation Amendment Bill 2008 and the Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2008. It is rare that we hear him say nice words about a Labor government, so it is a good day. Superannuation certainly is the lasting legacy of the Hawke Labor government. As I told the House in my maiden speech, I think it is Labor’s greatest postwar economic and social achievement.

Superannuation is the mechanism to deliver one of the great objectives of a social democracy—that is, the dignity of older Australians. It ensures that in retirement every Australian can live with greater independence, financial security and dignity. Importantly, it also increases our national savings. Having that pool of national savings is terribly important in this world at a time when we are all too aware that capital is fickle and mobile. But the system is not perfect. It does need periodic adjustment to make sure that it is efficient, effective and fair. The bills before the House today represent one such adjustment.

A problem in our system across the board is that too many people have too many accounts and that all too often money gets lost or forgotten and ends up being eaten up by fees. The problem of lost accounts particularly affects people who have worked in Australia on temporary resident visas. These bills reform the laws regulating how departed temporary residents can access their superannuation accounts and how they are taxed. Under these measures, departed temporary residents—and there were over 240,000 of them in the last financial year—will retain the ability to claim their superannuation benefits through the existing payment process before those superannuation payments are designated as unclaimed. These provisions simply introduce a reasonable time limit before the accounts are reclaimed by the government to ensure that the money is not lost over time to account fees and charges and is instead put to good use.

It is expected that such a change will result in $250 million in new revenue that would otherwise sit for years in unclaimed accounts. That is a very considerable sum of money. That amount will rise in 2009-10 to some $378 million and later down the track it will get back down to around $250 million. That is money that can be put to good use in our schools and hospitals, for our roads and for employing public servants and others to do good works for the Australian people.

The provisions reflect a political consensus on the issue, as the previous government proposed substantially similar changes late last year. It is good to see an outbreak of bipartisanship in this House. These rules provide for consistent and better treatment of temporary residents when compared to that that applies in many other countries where often they are unable to access superannuation contributions upon departure. The Australian system is fair to these people, but these bills make sure that the money is not lost.

The changes will operate through cooperation between the Department of Immigration and Citizenship and the Australian Taxation Office. DIAC will provide information to the ATO to assist the ATO to identify departed temporary residents who have left unclaimed superannuation in our system. This is a simple, straightforward and fair change so that, if departed residents snooze on their super, the whole community will not lose. This makes sure that if those people do not take care of their superannuation then the government can put it to good use.

These bills will also amend the departing Australia superannuation withholding tax, which currently applies to amounts of super claimed by departed temporary residents. The purpose of the tax is to ensure that our superannuation system and tax concessions on it are targeted to support people who retire in Australia. Those tax concessions should not be extended to those who work in Australia and then go home to foreign countries. The amendments contained in these bills increase by five per cent the departing tax and recoup the taxation concessions provided as part of our superannuation system. Importantly, departed temporary residents will be able to claim indefinitely their superannuation benefits less this departing tax back from the ATO.

The bills are sensible and fair. They ensure that our superannuation system is geared to supporting Australians. They give temporary residents who work in our country some opportunity to benefit as well. They ensure that this money does not just disappear and go to waste on account fees. They ensure that those who contribute to our world-leading superannuation system have access to their contributions. I commend the bills to the House.

Steve Irons (Swan, Liberal Party) Share this | Link to this | Hansard source

I would like to congratulate the member for Wakefield on his speech and for recognising the member for Fadden. He has probably given you an early Christmas present! I rise today to support the Temporary Residents’ Superannuation Legislation Amendment Bill 2008 and the Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2008. Everyone in this House understands the importance of superannuation, particularly those who arrived pre 2004 and, even more importantly, those like me who arrived post 2004.

The Temporary Residents’ Superannuation Bill amends the Superannuation (Unclaimed Money and Lost Members) Act 1999, the Taxation Administration Act 1953 and the Income Tax Assessment Act 1997. The amendments in the Superannuation (Departing Australia Superannuation Payments Tax) Bill are related to the proposed amendments to the Superannuation (Unclaimed Money and Lost Members) Act 1999 through the Temporary Residents’ Superannuation Legislation Amendment Bill.

It is first important to consider the context in which these bills are being implemented. The proposed laws are based on the Howard government’s 2007-08 mid-year economic outlook. Every year Australia grants immigration to many people who want to come here to work. In the last financial year, 239,152 temporary visas with work rights were granted and over 87,300 business long-stay 457 visas were issued.

In WA the number of successful applications for business long-stay 457 visas by primary applicants increased by 70 per cent between 2007-08 and 2008-09. I am consistently reminded by organisations in my electorate of the difficulties associated with the labour shortage in our country. Small businesses all across Swan are struggling to find people to work for them. This has led to inflationary wage increases and, ultimately, higher interest rates for the Western Australian people.

It is not just small businesses that are suffering. I recently met with Mr Graham Francis, the CEO of the SwanCare Group, part of Australia’s aged-care industry. SwanCare is a not-for-profit organisation that provides retirement accommodation for seniors, often at a subsidised rate. The group operates Bentley Park retirement village in my electorate of Swan, which is home to approximately 1,100 residents. Mr Francis explained to me the significant impact the labour shortage is having on the aged-care industry. Western Australians are ageing: in WA in 2007 people aged 65 years and over made up 12 per cent of Western Australia’s population, and this is projected to increase to about 22 per cent in 2056. The demand on the services SwanCare provides is therefore steadily increasing. At the same time, SwanCare is finding it increasingly difficult to attract and retain workers in the aged-care sector. One the reasons for this is their inability to pay competitive wages on account of the shortfall between their rising costs—partially attributable to the inflationary pressures I mentioned before—and increases in their index-linked government funding. However, an equally important aspect of this is the labour shortage.

Immigration inquiries represent by far the greatest number of inquiries that my office receives. We do our best to help all the people who come to our office in East Victoria Park. From Chinese welders to UK dermatologists, we see in our office the clear importance of migrant workers to the local community in Swan. Therefore, from the outset, it is important that this bill recognises the importance of workers coming to Australia and protects these people. I am pleased to see that this bill represents the best interests of these people and the community.

Many of these workers return to their countries of origin after their time in Australia having earned significant amounts of superannuation in accordance with Australian law. Upon leaving Australia, these people are eligible to apply for a proportion of the money in their superannuation account. This is called the departing Australia superannuation payment, or DASP, and comprises the value of superannuation minus tax, which is 30 per cent for the taxed element and 40 per cent for the untaxed element. Under the provisions of the current law, the superannuation of a departed temporary visa holder who does not take a DASP upon departure remains in the fund until it is claimed or becomes payable to the Commissioner of Taxation as unclaimed money—for example, if the departed visa holder has reached the age of 65 but no contact or contributions have been received. The departed temporary visa holder can later claim the amount back from the tax commissioner.

It is worth mentioning at this juncture that generous superannuation is one of the many incentives for people to come and work in Australia. Whilst many people take advantage of this generous policy, countless people fail to claim their superannuation. Superannuation funds are required to report ‘lost’ details to the ATO and these details are recorded on the Lost Members Register to assist individuals in locating their accounts. According to the Australian Taxation Office’s 2006-07 annual report, there are over six million ‘lost’ superannuation accounts on the Lost Members Register maintained by the ATO, with an aggregate value of an astonishing $12 billion.

It was in this context that the Howard government became concerned with the growing amount of superannuation identified as ‘lost’ over the last decade and concerned with the operational costs incurred by the ATO and the superannuation funds managing these accounts. It was in this context that the Howard government initiated the policy which we are debating today. Given this, I want to turn my attention to the key elements of the Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2008. I will outline why I support these key elements but also suggest some concerns with the bill which I ask the government to consider when progressing with the legislation.

It is important to note that the bill will operate retrospectively with regard to the ‘lost’ funds previously mentioned. As the member for Aston mentioned in his speech, these bills have two primary functions. The first function of this bill is to ensure the transfer of unclaimed superannuation funds to the ATO. The proposed legislation will mean that the amount of superannuation earned by a temporary resident will be deemed unclaimed six months after the person has left Australia. At this point the superannuation payment will be transferred to the ATO. The payment will comprise the starting amount of the account minus the payments already made to the former temporary resident. This will of course require effective cooperation between the Department of Immigration and Citizenship, and the ATO.

The second function of the bill relates to the retrieval of funds from the ATO. When the six months have elapsed and the superannuation funds have been paid to the ATO, the temporary resident will still be able to access the fund. There will be no time limit imposed. All payments at whatever stage of the process will be paid at a new tax rate; however, this will be in accordance with the Superannuation (Departing Australia Superannuation Payments Tax) Act component of the bill. Items 4 and 5 amend section 5 of the act to increase tax amounts for DASPs to 35 per cent for the element taxed in the fund of the taxable component, currently 30 per cent, and 45 per cent for the element untaxed in the fund of the taxable component, currently 45 per cent. The rationale for this increase in the tax rate is the first benefit of this bill I would like to discuss.

The increase in the tax rate ensures the recovery of some of the superannuation tax concessions provided to departed temporary visa residents and fits in with the general ethos of the bill of ensuring that superannuation tax concessions are well targeted at people who will retire in Australia and not those who have departed Australia. As I suggested earlier, the Australian superannuation system is an advantage to workers coming to Australia that needs to be retained if we want to solve our labour crisis. However, it is right that those temporary workers that choose to leave Australia pay a degree of tax. The small tax rise associated with these bills will provide an additional incentive for temporary workers to continue to contribute to the nation and ease the labour shortage. I agree with the general principal that our superannuation system rewards those who choose to make Australia their permanent home.

The second benefit of this legislation is financial. These bills are predicted to have a positive impact on government revenue. Although there is likely to be no net change in the 2007-08 financial year, in 2008-09 the government is expected to gain an additional $251 million in revenue. This will climb to $378 million in 2009-10. Given this, it is important that this money is spent wisely. We need to know from the government exactly how this extra revenue is going to be spent. I suggest that it be spent on addressing some of the concerns—and qualifications for my support—I am about to outline. Firstly, we need to ensure that people departing Australia are properly informed about the effect of this policy. It is important, for example, that we have the information available to distribute to the many people who approach my electorate office. In particular we need to take note of the concern of the Association of Superannuation Funds of Australia that temporary residents who have already made their superannuation arrangements based on the current laws may be uncertain as to whether their superannuation accounts will remain lodged with their superannuation provider indefinitely. This requires clarification and ultimately money to be spent on an information campaign. Secondly, I believe the money should be directed towards assisting organisations such as SwanCare, led by its CEO, Mr Graham Francis, to employ and retain skilled workers to ensure that vital industries, such as the aged-care industry, do not collapse.

The final benefit of this bill I would like to discuss is administrative. The bill is likely to reduce the operational costs of both superannuation providers and the ATO, which is a welcome reduction of red tape. I restate, though, that there needs to be effective cooperation between all parties. This includes the DIAC, the ATO and the superannuation funds. I would like to urge the government to take into account a further concern of the Association of Superannuation Funds of Australia—that is, given the legislation will also operate retrospectively, funds with a large number of former residents would be forced to liquidate their assets quickly. This may lead to an adverse impact on the value of the remaining member’s accounts. The government must ensure that people’s superannuation is protected against this eventuality with a phased and sensible introduction of the legislation.

I want to spend the last few minutes of this speech considering the importance of a strong superannuation system given the current financial crisis. I want to focus in particular on self-funded retirees, of which there are a significant number within my electorate. Self-funded retirees take responsibility for their own finances. The financial crisis has therefore placed a significant burden of worry on these people. The predicted ramifications of the financial crisis are changing daily, which makes it very difficult to make specific points. However, at this point in time it is important that self-funded retirees receive good advice from the government of the day. The coalition government worked hard to provide incentives for Australians to boost their retirement savings, introducing one of the biggest reforms to superannuation ever. The Howard government simplified superannuation, making superannuation benefits tax free for most Australians over 60 and allowing the self-employed to claim a 100 per cent deduction for all contributions.

The superannuation co-contribution scheme, whereby superannuation contributions are matched by the government, was introduced in July 2003 as a means of assisting lower income workers to save for their retirement. In the first three years of this scheme over 2.9 million co-contribution payments worth $2.2 billion have been paid to the superannuation funds of lower income Australians. The coalition also introduced a tax rebate to encourage individuals to make superannuation contributions on behalf of low-income spouses; gave employees the right to choose which super fund their employer pays into, injecting competition into the marketplace; and introduced a new trustee licensing regime to better safeguard members’ benefits, while strengthening preservation arrangements to help people accumulate larger superannuation benefits for retirement. I hope the Rudd government will continue this positive superannuation legacy, and in particular support self-funded retirees through this difficult time.

In conclusion, I support the two bills before the House today. They ensure that the benefits of superannuation are enjoyed by those that choose to retire in Australia, they generate revenue and they save on operational costs. However, the government must ensure that this extra revenue is spent wisely, on providing information to the temporary workers affected by this legislation, including many people in my electorate, and also helping to solve the labour crisis. I urge the government through this financial crisis to appropriately protect self-funded retirees and indeed all holders of superannuation in Australia. I commend these bills to the House.

Tony Zappia (Makin, Australian Labor Party) Share this | Link to this | Hansard source

I too rise to speak in support of the Temporary Residents’ Superannuation Legislation Amendment Bill 2008 and the Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2008. In short, these bills will ensure that superannuation funds held in super fund accounts for temporary residents who have left Australia without claiming their superannuation entitlements are transferred to the Australian Taxation Office. Temporary residents for whom those super funds were paid will still be able to claim those funds at a later time. In summary, the new arrangements will significantly reduce the compliance costs for the industry; will allow for the insurance cover of temporary residents, as they will continue to fund members while they reside in Australia; will best address the lost member issue; will provide the same superannuation payment arrangements to all employees in a workplace; will allow for the full payment of superannuation to all former temporary residents at any time following their departure from Australia; and will, importantly, still allow Australia to attract foreign skilled workers to assist us to address skill shortages that currently exist.

These bills simplify the whole process currently in place with respect to payment and withdrawal of superannuation contributions made on behalf of temporary residents—a process that has been extremely burdensome for many employers, I might add. As the Minister for Competition Policy and Consumer Affairs and Assistant Treasurer has pointed out, some $12.9 billion representing some 6.4 million lost super accounts is currently held by the Australian government. Much of this money comes from temporary residents who work whilst they are in Australia and then leave without claiming their superannuation entitlements. The administration of six million lost super accounts is, in itself, an administrative workload for employers, the fund managers and the government. Equally, funds are being held in people’s names who probably are not aware that funds had been paid on their behalf and are being held for them.

In a global economy we are going to see an increasing number of people moving from one country to another for temporary employment reasons. We will see people come to Australia from overseas and we will see Australians travel overseas for the same purpose. We are already seeing it happen, with many Australians travelling to the Middle East for short-term infrastructure and construction projects where Australian expertise is in demand. I could refer to many other professions where similar examples are occurring and where Australians fulfil short-term employment contracts in overseas countries. Likewise, Australian industries and employers recruit skilled or professional workers from overseas for short-term purposes.

In my own state and, Mr Deputy Speaker, in your state of South Australia, I am aware of many such examples. One particular example which I want to refer to is the defence industry sector. South Australia, and Adelaide in particular, has established itself as a major defence industry hub in recent years. The Defence Science and Technology Organisation has had a presence at the Royal Australian Air Force base at Edinburgh for decades. In more recent years, firstly with the Australian contract for the construction of the Collins class submarines being won by South Australia and, more recently, with the contract to construct Australia’s three air warfare destroyers, the defence sector has become even stronger and has developed into a major economic driver and employment sector in South Australia.

I am aware, however, that because of the specialist skills often required by companies such BAE Systems, Tenix Defence and SAAB Systems—to name just three—the need to recruit or relocate qualified workers from overseas for a temporary period is common for them. Simplifying the employment process for those companies and reducing the red tape associated with the superannuation payments will undoubtedly be very welcome. In turn, such industries are likely to expand their operations or remain in Australia if the government makes administration of their businesses easier.

I just want to highlight the point I make here. It was not that long ago that I was talking to the CEO of one of those companies. Their concern was simply this: if they are not able, on a short-term basis, to recruit suitably qualified staff from overseas it jeopardises their ability to fulfil contracts here in Australia, and therefore jeopardises the security of them remaining in Australia as an industry and as employers. So the need to allow companies like that, at the times they require, to have suitably qualified, skilled staff come into the country for short-term purposes is going to continue to grow. Let us understand that many of these companies are responding not only to contractual needs of the Australian people and the Australian government but quite often to the contracts they have won in overseas countries. The work is being carried out here, but the final product will be delivered overseas. But, again, those companies may well be reliant on recruiting from overseas.

What is even more interesting is that many of these companies are, in fact, global companies and, as such, for short-term purposes will often transfer or second to Australia someone from one of their operations in another country. Again, they will have to continue to pay them. I understand that quite often where those kinds of transfers happen the payment system may still relate back to the country from where the person comes. But that is not always the case and for short-term purposes they sometimes have to get involved in paying superannuation for those employees whilst they are here in Australia.

The other sector that I want to refer to—and I notice that a number of speakers have already quite rightly done so—is the agricultural and horticultural sectors within Australia. I can assure you, from my discussions with many people in those industries, I have found that anything the government can do to simplify their bookkeeping processes will be very much welcomed and appreciated by them. Since being elected to this parliament I have been contacted by numerous people urging my support for easing Australia’s temporary visa system to allow seasonal workers into the country. I am pleased to see that the Minister for Immigration and Citizenship has now announced that a trial, of some 2,500 seasonal workers from three overseas countries, will be allowed to assist farmers, particularly in their harvesting seasons.

Most farmers or vegetable or fruit growers are not skilled bookkeepers. They have enough to do trying to make their farms viable and simply working their farms without having to worry about complicated bookkeeping systems. As I said earlier, any proposal which makes their lives a little easier would certainly be welcome. The kinds of people that they are asking to be brought into this country are quite often people who will only be here for short-term purposes. As I said earlier, perhaps they will come for harvesting purposes only, and then they will go back to their country. Many of these people, as we all know, will perhaps not even be aware that the employer might be paying superannuation into an account for them, and they may leave without ever being aware that those funds have been held for them. Perhaps that is something that needs to be properly addressed at the time that they are brought into this country to ensure that they are fully aware of their rights and fully aware that, perhaps as part of their employment contract whilst they are over here, there will be a number of benefits that they can access, and they should not leave without at least being aware of what they are entitled to.

I notice that some of the opposition members have raised some concerns that, in turn, have been raised by the superannuation fund industry, and I think the issues that they have raised are quite legitimate—nothing that I would disagree with. Certainly the transfer of these funds very quickly from superannuation funds into the Australian Taxation Office could have an effect on their cash liquidity and also the income that is generated on behalf of their fund members. I also noted that in the last year super fund schemes raised some $75 million in fees from funds held in accounts that had not been transferred to eligible rollover funds and another $170 million in fees from funds held in eligible rollover funds. These fees are not insignificant. These are substantial fees that, without question, would affect the income stream of the super fund holders, so I raise that point. I also suspect that, perhaps, some of the funds’ concerns relate to the fact that they will not be able to access these fees from the $12 billion-plus that is sitting in accounts with them.

On that point, I raise this issue: the question of fees when it comes to superannuation accounts is one that has concerned me and, I am sure, others for some time. It is not unusual for someone who has a small amount of money in superannuation to see that money dwindle away through the fees being charged by the managers of those schemes. As part of the minister’s review of superannuation schemes in this country, I ask that he also consider the question of the fees that are being charged and include that in any review process.

I said at the outset that this proposed legislation will do a number of things which I believe will benefit a whole range of people. Yes, it represents only a technical amendment. I believe it was the member for Aston who said that this measure is pretty much in line with a proposal by the previous Howard government to improve the current super scheme. I therefore support the bills and commend them to the House.

Bernie Ripoll (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

It is a great pleasure to be speaking tonight on the Temporary Residents’ Superannuation Legislation Amendment Bill 2008 and the Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2008. I will start my contribution by briefly talking about the importance of superannuation and how important it has been not only to individuals in this country but to the country as a whole. I do not think anyone doubts today the seriousness and importance of the superannuation policy first put forward by the Hawke and Keating governments and the substantial changes that we made to superannuation through guarantees to make sure that in tough times we provided security for people’s retirement incomes. I want to begin with that because I think any debate and any legislation on superannuation should acknowledge the great contribution that Labor governments throughout history have made in this sense. Those superannuation and retirement savings have been instrumental in providing the platform by which the Australian economy has managed so well over many years. We see that particularly today when we look at the global financial crisis and see the position that people are in. Luckily, there are more people today who have decent national superannuation savings than there would have been under any other scheme, particularly under anything that the opposition or a conservative government would have provided. It is always a pleasure to be speaking on these issues. While we are on that matter, I will talk about just how significant Australia’s national savings are. They are around $1 trillion.

Chris Pearce (Aston, Liberal Party, Shadow Minister for Financial Services, Superannuation and Corporate Law) Share this | Link to this | Hansard source

One point one.

Bernie Ripoll (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

$1.1 trillion, I am now informed. This must have changed overnight. It is good to see that, even during a global financial crisis, people’s retirement savings are not only safe but growing. It is important to acknowledge that these are difficult times for people. Superannuation itself will this year be a very difficult and concerning subject for many people who are about to retire or will retire in the next 18 months or two years, because they would have seen either negative returns or significantly reduced returns in their retirement savings. I know how concerned they would be. It has affected my family as much as anybody else’s family around the country, with my own parents and parents-in-law affected, although I will not get into the detail of their circumstances. Certainly it has meant that things will be a lot tougher this year. But they can at least rest assured of a number of things. One is that they have a good government right now in the Rudd Labor government. We are taking every necessary step to ensure that we maintain a strong economy, that we protect the surplus and that, where we do spend the surplus, we spend it on them and make sure that they have a government that will keep the economy strong. They can also rest assured that it was we in the first place who put the mechanisms in place to make sure they had that.

I know and understand, as do many people—although it may be hard to acknowledge when things go south a little bit—that the previous years around the world have been pretty good for superannuation and retirement savings, and people have seen massive increases in the value of their holdings. So, while it is very regrettable, I know that in Australia we will do everything we can to manage that and ensure that people’s savings are protected, as we have done through a range of mechanisms. They should have confidence that we will be there for them.

The bills before us make some very specific changes to the way we treat people’s superannuation savings when they are temporary residents in Australia. It is quite a common occurrence that people who work here for a period of time, because of the superannuation guarantee, have employer contributions and perhaps their own contributions—although I very much doubt that if they understand the system—go into an account. When they depart and go back home, there are systems in place whereby they can then retrieve the amount of super that was placed in their account. They are not permanent residents of Australia—they are not going to live here or enjoy their retirement here—so there is no need as such for their superannuation to be kept here in Australia. I think that, for a lot of people, superannuation is a case of out of sight, out of mind. For people who are young and mobile, whether it is Australians or temporary residents who are here on a particular work assignment, it probably is not such an issue.

We are moving to take care of what is a growing problem in Australia. The Australian Tax Office has said in its annual report that the number of superannuation accounts reported on the lost members register grew from 5.7 million to 6.1 million in that income year. That is not a dollar amount; that is the actual number of accounts. It is a massive number. You have to look at it twice to fully grasp that we are not talking about dollars. It actually represents a much larger amount in dollars. I have got to say, I had to read this one not twice but three times to be sure that it was the right amount. There is $12 billion sitting in lost superannuation accounts. Potentially, a significant slice of that $12 billion belongs to people who are no longer in Australia or to temporary residents who worked here. It is their entitlement and they can claim it under our scheme at any time, if they have not already done so. We are putting into place specific changes to deal with some of that. It also means that we have a lot of work to do. We have been doing a lot of work trying to reconnect working Australians with their lost superannuation, because that is important to do. It is about their retirement savings and it is about trying to give them some efficiency by collecting in one place their superannuation dollars, their money, to make sure they have the best possible growth and the best possible access to that money in future years.

But it poses a conundrum for government. That is a bit of a bottom line. When you have $12 billion of money sitting in lost accounts, you have a bit of a problem that needs to be dealt with. The measures that we are implementing will transfer to the Commonwealth under the unclaimed money arrangements the superannuation of those temporary residents where this money has not been claimed. Where that money from temporary residents has not been claimed, there will be a transfer across. We need to put it in a specific place and that is what we are doing. The superannuation will be transferred six months after the relevant visa has expired and the temporary resident has left Australia. It is important to note that temporary residents will continue to be able to claim—and I mentioned this before, but I think it is important to repeat it—their superannuation when they leave Australia by paying the relevant withholding tax. It is important that they understand that they can claim it, but they need to pay their withholding tax. Former temporary residents who have had their superannuation transferred to the Commonwealth under these new arrangements will also be able to claim back the money at any time, and the same rules will apply. The idea is not to steal this money or forgo it but to make sure that it is properly collected, administered and arranged in a manner which means that people still have access to it. I am certain, given the number of unclaimed accounts—we are talking about around six million of those accounts and $12 billion worth of assets—that we are not going to be successful in this in its entirety.

These measures are designed to assist with slowing the rapid growth in the number of lost accounts. For government this is an administrative nightmare. This is a massive, inordinate amount of accounts. We need to take every step available to us to minimise that number. Many of those are in respect of former temporary residents in Australia. I do not know that my words will reach them, either here tonight or in the Hansard—unless some good media person decides that my speech tonight deserves to be on the front page of the newspaper. I doubt that very much, but perhaps they could find it in their hearts just to send out the signal—not for my self-gratification but for the people who have lost accounts—that those people ought to claim their accounts, wherever they live in Australia. And, if they got that message, it would ease the burden on government of trying to administer these many lost accounts.

That would be consistent with the way we treat Australian citizens. We are doing this in a properly considered manner. We ought to treat those people who make a contribution to our country by coming here temporarily to add value to our economy in the same way that we expect Australian citizens to be treated. They do that by working here. They have obviously been invited here to work and we should support them in that because of what they have done for us. We expect that Australian citizens working overseas would enjoy similar benefits and standards and be accorded the same sorts of comforts. There will always be our New Zealand friends, colleagues and comrades over here in Australia, and I just want to let them know that they, along with Australian citizens and retirement visa holders, are excluded from these new arrangements.

In addition, the DASP rates are being increased by five percentage points to recover the tax concessions that were provided to support the retirement of Australian citizens in this country. This is another good solid measure which not only deals with the significant administrative issue that we face as a government—properly dealing with the issues that superannuants face as temporary residents when they leave—but also gives back to Australian citizens and properly recompenses them for the efforts they make in their own retirement savings. This measure, as you would expect, has had political consensus since the policy was first announced. There are some slight differences between what was first announced and what is in place now, but I believe the consensus remains—unless there are voices that say that is not correct. No, there are no voices that say that is not correct. There is a consensus. This is noncontroversial. This is good policy.

This legislation is another strong example of good government and good governance. It is a good, strong example of the Rudd Labor government actually doing what it was elected to do. We are the builders of national savings and retirement savings through superannuation. We have always believed that it is a key platform that we deliver not only to individual workers but to families, to the economy, to the nation. We will continue to build on that, to maintain that and to ensure its integrity in coming years. This is a good bill. As I said, this is a bill that I believe is supported with great consensus right across this chamber and across the community. I commend the bill to the House.

Shayne Neumann (Blair, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in support of the Temporary Residents’ Superannuation Legislation Amendment Bill 2008 and the Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2008. This legislation will have an impact on my local electorate, whether on backpackers who work in the horticultural industry in the Lockyer Valley, doctors and nurses who work in the health system in Ipswich or meatworkers who work at the Dinmore meatworks, currently run by Swift Australia. This legislation will require that superannuation funds of departed temporary residents who do not take their superannuation with them upon departing Australia be paid to the Australian government via the Australian Taxation Office. Of course, that does not mean that we are taking the money by theft; if they wish to claim it back they can do so.

This is a good amendment. It will ensure the integrity of our superannuation industry. It is a good amendment insofar as it allows better administration of our superannuation industry. It will mean that the superannuation money of a person who departs this country, their temporary visa having ceased to be in effect for more than six months, can come into the coffers of the Australian Taxation Office. It will ensure that those many, many superannuation funds that are currently in existence without anyone ever making use of them or even knowing about them will be able to be consolidated and used for the benefit of the taxpayers of Australia.

To cover the taxation concessions and the costs, we are raising withholding tax by five percentage points to 35 per cent in most cases. This measure has the bipartisan support of the opposition and we welcome that. It is a good measure which is consistent with what Labor governments have done in the past.

My parents and my grandparents before them have not had the benefit of superannuation. I daresay there are many people in this House whose parents are in similar circumstances. It is the case today that Australian citizens expect that superannuation will be paid as an incidence of employment, that both those who have permanent residency and those who have temporary residency will gain the benefit of superannuation. It is quite sad that for quite some time there was significant opposition to the introduction of superannuation into this country. In the past, some decades ago, employer groups opposed superannuation. I acknowledge that today employers and employees now accept, like they accepted Medicare, that superannuation is an integral aspect of the Australian way of life.

I want to pay tribute to the Hawke and Keating governments, which did so much for this country. It was the Hawke and Keating governments which floated the dollar, internationalised our economy, reduced the tariff barriers, ensured that consumers in this country paid fair amounts for consumer goods and ensured that our country became internationally competitive. It was the Hawke and Keating governments which opened up the banking system in a way that has enabled it today to cope with the international crises that are currently confronting so many countries, Western and other, around the world. It is the greatest achievement of the Hawke and Keating governments that the superannuation industry in this country is so prosperous, with in excess of $1 trillion being accumulated in the superannuation industry.

There are so many people these days who have a stake in the Australian economy—and its wealth and prosperity—and in our economic future because they have superannuation. Many people have shares these days, and many have shares through superannuation funds. We have hundreds of thousands of self-managed funds in this country and we have hundreds of thousands of people in this country—indeed, millions of people in this country—who have superannuation as employees. They therefore have a stake in our economic development.

Superannuation equals security. Historically, retirement for most people on low and middle incomes meant periods of uncertainty, worry and anxiety. That was common where I grew up in Ipswich, with railway workers, coalminers, meatworkers, butter factory workers and many people I know who, through injury, had early retirement or reached certain ages and therefore had to retire and faced a great deal of worry, anxiety and concern about what would happen in the future for themselves, their partners and their families. Many of those people were in circumstances where they had dependants and had to deal with putting their children through school and university, still without the kind of financial support in terms of their income which would allow them to achieve what they wanted to achieve for themselves and their families.

I know there are many people, me included, who have found in the last 12 months that the level of their superannuation is not what they would have hoped. But it is true that historically superannuation funds have done well in this country. The superannuation industry has allowed us to invest in all kinds of industry in this country, in manufacturing, agriculture and biotechnology. Compared with overseas countries, our country is stronger economically, we are wealthier and we are a more fair and just society, by reason of superannuation.

It is the case that many people these days retire on a combination of superannuation and a pension. Many people who have contacted my electorate office in Blair in Queensland have expressed to me that they will be increasingly dependent on a pension. It is in that context that the Economic Security Strategy of the Rudd Labor government is so welcome to the people in my electorate. In fact, the $10.4 billion which will be afforded in this package will benefit 43,701 households in my electorate, with many payments to carers and pensioners, single and partnered. This is crucial in terms of providing these people with a decent living and allowing them to be able to feed and clothe themselves and afford adequate housing and proper health care. The superannuation industry is vital in that regard, as is the Economic Security Strategy of the Rudd Labor government.

Superannuation is a tremendous thing for this country. It has been an instrument of wealth creation and wealth distribution and it gives the kinds of people that I represent the kinds of lifestyles they deserve. It gives them a decent living and proper access to the kinds of things that wealthy people in this country take for granted. It is a great Labor achievement. I accept and acknowledge that during the Howard years the opposition also supported the superannuation industry, and I welcome their continued support of it and the type of legislation that is before the House today. If we get bipartisan support in relation to the superannuation industry and the economic development of this country then the people of this country will have faith and confidence in us.

Since my election in November last year, I have seen and experienced many things which I did not think I was going to, but I have learnt that there are people of goodwill, respect, commitment and hard work who think the best of this country and want the best for it. Superannuation is an area which affords the people in my electorate the kind of life that they need but which is earned, not given to them gratis. People get superannuation through their employment. Australians—certainly the people in my electorate—accept that superannuation is something which they receive as part of the decency of the Australian way of life. I commend all the people in this House who have voted for superannuation in the past.

I personally thank the Hawke and Keating governments who allowed so many of the people that I know in my electorate to have a life of respect and adequacy in their retirement as a result of the superannuation industry and the reforms of those governments. When I leave this place and look back, whether it is at the next election or in many years to come, I will say this: I would not have been in this place but for Labor governments; this country would not be what it is today without Labor governments; and the superannuation industry would not have been created without Labor governments. Accordingly, I commend these bills to the House.

James Bidgood (Dawson, Australian Labor Party) Share this | Link to this | Hansard source

I also rise to speak in favour of the Temporary Residents’ Superannuation Legislation Amendment Bill 2008 and the Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2008. It is very important that a culture such as Australia recognises the valuable input of our overseas guests, whether they are temporary or resident. I really appreciate the words that the member for Blair said about the history of the Hawke and Keating governments and their achievements. It is a proud tradition that enables us to say, ‘Yes, we are looking after the elderly in our society. We have long-term plans. And how good is the recent $10.4 billion package which has given $1,400 to single pensioners and $2,100 to couples. Yes, we are looking after people in their retirement.’ I think that is very important.

This is about people who come here. I did a bit of research through the Parliamentary Library. A lot of people come from Europe, especially the UK. It interested me, and quite surprised me, to see that the second highest number of temporary residents in Australia come from Korea. A lot of people come from there. With these bills we do the right thing. It is the Australian way. It is being fair and reasonable by saying, ‘Look, if you’ve left our shores for six months, you have a right to put in a claim to the Australian Taxation Office to get your money back.’ That is fair and reasonable. We live in a global society where new technology enables this to happen a lot easier over the internet and claims can be processed very speedily.

Just as a bit of background, the Temporary Residents’ Superannuation Legislation Amendment Bill 2008 and the Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2008 contain certain amendments to legislation that require the unclaimed superannuation of departed temporary residents to be paid by their superannuation funds to the Commonwealth government through the ATO. The superannuation of a temporary resident will only become unclaimed superannuation and payable to the ATO if at least six months has passed since their temporary visa ceases to be in effect and they have departed Australia without claiming that superannuation.

Currently, temporary residents are able to take their superannuation with them upon departing Australia by requesting a departing Australia superannuation payment, otherwise known as DASP. However, despite having this ability to claim their superannuation, many temporary residents do not do so and leave small, lost balances in the superannuation system when they depart, thereby contributing to the total amount of lost moneys in the system. This measure seeks to reduce the number of lost accounts and amount of unclaimed moneys in the superannuation system which can arise when temporary residents depart Australia without taking their superannuation benefits with them. The government has consulted very widely on this. The measure was discussed, and in May of this year a discussion paper was produced to engage key stakeholders in consultation on the draft legislation. The government’s final policy reflects many of the suggestions made during the consultation process.

The ability for departed temporary residents to claim their superannuation through the DASP will continue to be available under this measure. This provides treatment to temporary residents that is consistent with or better than that in many other countries around the world, where temporary residents may be unable to or very limited in their ability to access compulsory social security contributions. The measure will operate by the Department of Immigration and Citizenship providing information to the ATO to assist the ATO in identifying departed temporary residents who have left unclaimed superannuation in the system. The ATO will send notices out to superannuation funds which it believes are holding unclaimed superannuation for the departed temporary residents, and funds that receive a notice will be required to report and pay any unclaimed superannuation that they hold to the ATO by a certain date.

The superannuation of Australian and New Zealand citizens, current holders of permanent or temporary visas and those who are applying for permanent residency will not be paid to the ATO. These groups of people will have their superannuation remain in a fund, and certain visa class holders can also be prescribed in the regulations to be excluded from the measure where the circumstances make it appropriate to do so. For instance, retirement visa holders—subclasses 405 and 410—will be excluded from the measure so that their superannuation will remain in the fund and not be paid to the tax office. Departed temporary residents will be able to claim from the ATO their unclaimed superannuation, subject to the existing DASP withholding tax. That withholding tax will be raised by five per cent, to 35 per cent, in most cases. That is to further recoup these tax concessions. At this stage, state and territory public sector funds will not be captured by the measure due to constitutional reasons but the Commonwealth will be entering into negotiations with the state and territory governments about the potential to include these schemes in the future. Initial discussions with state and territory officials indicated a willingness for state and territory schemes to be included in the measure at a much later stage.

This addresses something which obviously requires some housekeeping here. It is a fair, right and reasonable thing to do. We are enabling people to access their accumulated superannuation at least six months after they have left these shores and their temporary visas have expired. I believe it is a fair and reasonable thing. We get a lot of backpackers coming through the seat of Dawson. The temporary work they do in the area, particularly fruit picking in Bowen, is invaluable. They really do add value to our economy, so they are a very important part of it. If we want these people to come back and experience again the benefits and beauty of working in tropical Queensland, where I come from, the way we treat people after they have left our country will engage them to come back again. They will think it is great that they can come to Australia and do some temporary work. Six months after they have been here, earned some money and travelled around, nine times out of 10 that money will have been spent back into the economy. The money goes round.

But isn’t it good that, when these temporary residents go back to whichever country they came from, they can then access that superannuation which has been accumulated. I daresay they would use a very Australian colloquialism and say, ‘That’s a real fair go.’ They would want to come back and add value to our society again. For the backpacker community, particularly the one-year temporary holiday visa holders and working visa holders, this is very important. I think it will stand Australia in good stead internationally and encourage that backpacker market to come over. It is the right thing to do in this international, global community. I commend these bills to the House.

Gary Gray (Brand, Australian Labor Party, Parliamentary Secretary for Regional Development and Northern Australia) Share this | Link to this | Hansard source

I thank all the members who contributed to this debate: the members for Aston, Fadden, Swan, Flynn, Wakefield, Makin, Oxley, Dawson and Blair. To briefly sum up: the Temporary Residents’ Superannuation Legislation Amendment Bill 2008 will make changes to the Superannuation (Unclaimed Money and Lost Members) Act 1999 to help address the growing number of lost superannuation accounts in the system. In the tax office’s 2006-07 annual report, over six million lost accounts have been reported on the lost members register, rising from 5.7 million in that income year alone, representing a total value of some $12 billion.

A temporary resident who departs Australia without taking their superannuation with them can add to the lost accounts problem. Temporary residents are currently able to withdraw their superannuation by applying for a departing Australia superannuation payment. However, many do not do so. This bill will help reduce the number of lost super accounts by using the mechanism currently in place to deal with unclaimed superannuation money. The amendments will require superannuation funds to report and pay the unclaimed superannuation of departed temporary residents to the tax office by a due date. The superannuation of a temporary resident will only become unclaimed after the individual has departed Australia and ceased to be the holder of a visa and at least six months have passed and the individual has not claimed their superannuation. Departed temporary residents will continue to have the opportunity to claim their superannuation and thereby avoid having unclaimed superannuation by applying for a departing Australia superannuation payment.

I note that the bill will not affect the superannuation of temporary residents while they continue to hold a visa. Their super will not be paid to the Australian Taxation Office but will remain in a fund. As well, the superannuation of Australian citizens, New Zealand citizens, permanent visa holders and holders of retirement visa 405 or 410 will not be affected. In addition, departed temporary residents who have not claimed their superannuation are entitled to claim back at any time the unclaimed superannuation that has been paid to the tax office. This provides a consistent or better treatment to temporary residents in Australia compared to many other countries, where temporary residents may be unable or limited in their ability to access their compulsory social security contributions.

Finally, the Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2008 contains an amendment which will make a small increase to the withholding tax rates that currently apply to departing Australia superannuation payments. The tax is aimed at ensuring that the tax concessions for superannuation are appropriately targeted to those who retire in Australia. The tax rates will rise by five percentage points, to further recoup the tax concessions provided to the departing temporary residents. I commend these bills to the House.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.