Mrs Bronwyn Bishop (Mackellar, Liberal Party, Shadow Minister for Seniors) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The member may proceed and I will call for a seconder after her speech.

Mrs Bronwyn Bishop (Mackellar, Liberal Party, Shadow Minister for Seniors) Share this | Link to this | Hansard source

Thank you very much. In seeking a second reading for this bill and a vote upon it, I do so based on the reasons that I set out in my speech on the first reading when I made the case very strongly for why 70 years should be abolished as the age limit after which the compulsory superannuation guarantee charge is not payable.

This is a very discriminatory piece of legislation. It sends out messages to people remaining in the paid workforce over the age of 70 that somehow their work is not valued as much as that of those who are under the age of 70. When the superannuation guarantee charge was first introduced, that was on the basis that it represented part of an individual’s salary and that that money was to be regarded as part of their salary. Therefore the discrimination that is put in place by this bill means that that part of their salary is not being paid.

We made this commitment before the last election and, in bringing this bill in we were honouring that commitment. But I am very concerned once again at the attitude that the Labor Party has towards older Australians, whether they are working, pensioners, those seeking to participate in the workforce or simply strong volunteers.

We had an insight into the attitude of the Prime Minister as to what she thinks of older Australians when, courtesy of a cabinet leak, we heard that the Prime Minister had said, ‘Why would we bother with a pension rise because they don’t vote for us anyway.’ The Prime Minister’s hatred for older people is already well established and in not supporting this bill we will see arguments coming forth that will try and knock it out on a technicality—anything to prevent older Australians receiving a message and a signal that their participation is both valued and valuable.

It is interesting when looking at the statistics to see that mature age Australians are remaining in the workforce for longer and longer periods. The Labor Party has decreed that the pensionable age will be raised to 67, but the OECD has commented that reforms to pension and early retirement systems alone are insufficient to encourage increased participation by individuals in older age groups. It says that tackling age discrimination and negative attitudes towards older workers and job seekers, improving working conditions and flexibility and improving the skills of mature age workers have been suggested as complements to reforms to pensions and early retirement systems. In other words, it is the attitude of the government of the day in seeking a change in attitudes in employers that becomes the defining feature of good policy.

We said prior to the election that we would introduce a system where employers would be paid $3,250 in order to encourage them to employ and keep mature age Australians on for six months—or a proportion of that payment for a lesser time—sending a signal that the mature age worker is a valued part of our working population. All we hear from the government are groans about the ageing of the population—they are responsible for a burden on younger people, they are responsible for increasing the cost of health costs and they are responsible for a deterioration in opportunities in so many areas. Every time the question of mature age workers or pensioners is mentioned there is a groan that comes from the Prime Minister in particular and the Treasurer as well.

What we want to see is recognition in policy that we want a high participation rate of mature age workers and of younger workers in the 16- to 19-year age group. We saw technical arguments put up against the splendid Social Security Amendment (Income Support for Regional Students) Bill 2010 [2011] brought in by the coalition earlier to assist young people to get justice. No doubt we are going to hear similar sorts of arguments trotted out with regard to this bill. I might flag that I will consider amendments to counter these at the consideration-in-detail stage. I would put to the House that this is a very important signal to be sending out to mature age workers, beginning at age 45, that we want to see them remain in the workforce and that we want to see an upgrading of their basic skills so that they can continue to make that contribution.

In my first reading speech I outlined the experiment that had been conducted by BMW in Germany in listening to their workforce in an attempt to retain their mature age workers. By listening to what they had to say and putting policies in place, they saw maintenance of that older workforce and a growth in productivity. There are lessons that can be learned. If the government is willing to get rid of its prejudice and its discrimination against older people in our community, we would start to see a truly inclusive society. We see here lots of phrases bandied around using the word ‘inclusive’ but there is no intention behind the words to actually see it occur.

When we look at the numbers of people who are staying in the workforce—and I will look at the figures for those people who are over 70—we have seen a dramatic increase and yet these people are being denied their compulsory superannuation guarantee charge being paid to them. If the government is fair dinkum about being interested in seeing an ending of discrimination and a truly inclusive workforce and society, it will start to agree with the coalition when we say that it has to be as offensive to act in an ageist manner as it does in a sexist manner or in a racist manner. Only by doing those things will we see real inclusiveness in our society and every individual truly being able to make a contribution in the way they wish to.

The government has said that it will increase the pensionable age to 67 over time but it will not go to the extent of saying that it values older people and their contribution within our society. This bill is a start. This bill removes that discrimination that is enshrined in legislation and sends a signal to senior Australians that we value the contribution they make at all levels. The OECD says that simply raising the pensionable age does not bring about a greater participation in the workforce—there has to be a change in culture. It is by signals such as this bill sends that we begin that cultural attitudinal change.

There are many other ways it can be done as well and the coalition, which has created the portfolio of shadow minister for seniors, shows that it is fair dinkum about addressing these problems. The government has no minister for seniors. The government tends always to talk about senior Australians in terms of the pejorative. It talks about them as being a burden, a problem, whereas in fact the fact that we are living longer and healthier lives not only is a cause of great celebration and joy but also flows into the economic world. If we are using all of the talents of all of our people, of those people who wish to retrain and remain in the workforce and continue to contribute in that way, we will see a benefit in the growth of individual incomes in this country of ours.

I cited a report done by Access Economics back in 2001 that predicted that incomes would grow if we started to utilise mature age workers and maintain their activity in the paid workforce. I would simply say to the Independents, to the government, to all those people in this chamber that if they are fair dinkum about seeing discrimination removed from legislation, if they are fair dinkum about sending messages to senior Australians about how we value them, if they are fair dinkum about having a truly inclusive society, then there will be nothing but support for this bill and not a citation of the attempted technical hitches or other extraneous arguments that they may try to dredge up to prevent this legislation from having a successful second reading.

John Murphy (Reid, Australian Labor Party) Share this | Link to this | Hansard source

Is the motion seconded?

Paul Fletcher (Bradfield, Liberal Party) Share this | Link to this | Hansard source

I second the motion. Sometimes discrimination can be so prevalent that we do not even notice it. A type of discrimination that we have tended not to notice as much as we ought is discrimination against older Australians. If it were the case that, for example, the superannuation guarantee charge were not payable to workers up to the age of 25 or 30, that would obviously be completely unacceptable to any fair-minded Australian. Why is it, then, that we have a policy today which says that we do permit discrimination against Australians over the age of 70? Under the law as it stands today the superannuation guarantee charge is not required to be paid to employees over the age of 70.

We acknowledge that it is the intention of the government to remove the discrimination in so far as it applies to workers between the ages of 70 and 75. We make this simple and obvious point, which underpins the logic of this bill that we are moving: why stop at 75? If somebody is in the workforce, if somebody is doing a job, then they are entitled to receive the superannuation guarantee charge payment just as workers of younger ages are entitled to receive it. The test as to whether you are entitled to receive the superannuation guarantee charge ought to be simply this: are you in the workforce, have you been employed or do you have a job? If yes, then you ought to receive that entitlement. There is simply no good basis to deny the payment of the superannuation guarantee charge to workers who happen to be over any particular cut-off age you may choose to nominate, be it 70 or 75. If you are in the workforce you are entitled to receive that payment. It is fundamentally an equity issue.

There are, in addition, good arguments based on efficiency, which underpin this legislation, which the coalition is putting forward, the Abolition of Age Limit on Payment of the Superannuation Guarantee Charge Bill 2011. It is well known that our workforce is ageing. It is well known that the demographic changes Australia is experiencing mean that the cohort of workers coming into the workforce at the lower end of the age band is now lower than the cohort of workers who are leaving the workforce. We have a demographic issue. It is clear that one important part of the policy response is to encourage older workers to stay in the workforce and, indeed, to encourage those who may not be in the workforce to return to the workforce, should they be minded to do so. That is an efficient thing to do. We have a stock of well-trained, capable people with many years of experience in the workforce, who today face this disincentive to return to work, the disincentive that if you are above the age of 70 today you do not receive the superannuation guarantee when the person standing next to you, doing exactly the same work, who happens to be aged 69 or 59 or 49 or 29 will be receiving that payment. Is it any wonder that people react rationally to that disincentive and say, ‘Why should I stay in the workforce if all of a sudden, simply by reason of having reached a certain age, I am no longer entitled to receive a payment which others in the workforce right alongside me are receiving?’

We say there is a strong efficiency argument in favour of the legislation we are putting forward. Let us get the best out of our nation’s workforce. Let us encourage people to come back into the workforce or to remain in the workforce. But even more fundamentally, this is about equity. This is about fairness. This is about drawing upon the potential of every Australian, no matter their age. That is why we are putting forward this legislation today.

Andrew Leigh (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

Thoughts of superannuation naturally lead us to thinking about the future. When I think about the superannuation system of the future I think about my one-year-old son, who will probably enter the labour market somewhere around 2030 and work until maybe 2070 or 2080, a year when most of us in this chamber will have shuffled off this mortal coil. Superannuation involves thinking about the retirement savings that my son will accumulate. It involves thinking about the retirement savings that I will accumulate and how that will impact on him and his brother.

Why do we have superannuation? We have it for two simple reasons. The first is that, as a spate of studies from behavioural economics has shown us, human beings have a tendency to undersave. We have a tendency to focus too much on the present and not enough on the future. Therefore, we can make people better off through a system of compulsory retirement savings. The other reason is to reduce the impact on the age pension. We want to encourage Australians to save for their retirement, if they can, so that the public purse does not have to pay for those who can afford to support themselves in retirement.

The history of superannuation reform, therefore, has been in two parts. There have been great reforms brought about by the Labor government, first through the introduction of the superannuation guarantee in 1992 and now through the important package of My Super and the increased compulsory contributions. Then there have been tinkerings—and I will go to some of those tinkerings in a moment. The tinkerings are the approach that those opposite take to superannuation.

But it is important also to recognise what those opposite do when big reforms are put up. Those opposite will place themselves in this debate as the friends of older Australians, as supporters of a strong retirement saving system. But that is not the history. Allow me to quote from Senator Bishop, as she then was, addressing the other place on 18 August 1992:

On this side Opposition members argued very logically and meaningfully that the imposition of this compulsory superannuation tax is a de facto federal payroll tax.

They were running their ‘great big new tax’ argument against compulsory superannuation. And then Senator Bishop, as she then was, told the Senate of a conversation with a small business person, who had said:

But now that this compulsory superannuation payment has gone through, yesterday I had to sack a part time employee and turn a full time employee into a part time employee.

The late Senator Peter Cook was moved to interject by this statement that, because the law had not yet come into effect, it was difficult to see how small business people would be affected by it. But Senator Bishop, as she then was, was unmoved. Senator Bishop finished up the 1992 debate as follows:

I heard Senator McMullan say, ‘The difference between our systems on superannuation is that ours is compulsory and theirs is voluntary’. That is very true. That is an essential difference. Our policy is designed to make it attractive for people to provide for themselves in later life whereas this Government’s is designed to penalise business, to regulate it out of existence.

Of course, if you carry on with that logic then the member for Mackellar should today be saying to this chamber that superannuation is penalising business—and, if it is penalising business, why would we want to extend it?

But of course such an argument is nonsense. As we know, superannuation does not penalise business, and that is why the government announced in May last year that we intend to raise the superannuation guarantee contribution age to 75 from 2013. We intend to do that to provide certainty for business in transition and to recognise that there are costs associated with this. An initial upper age limit of 65 was increased to 70 in 1997. There has been an argument by the member for Mackellar that the abolition of the age limit on the superannuation guarantee will encourage older workers to remain in the workforce. However, done in this manner, there is a high chance the opposite will occur. It is possible workers may be enticed to work longer but it is also possible that employers may be less willing to hire older workers. The bill provides no adjustment time for employers, resulting in a $150 million immediate cost to employers of workers over 70 years old. Secondly, the bill requires that the payments of the superannuation guarantee charge are not tax deductible for businesses. It is estimated that corporate profitability could therefore fall by up to $150 million in 2011-12 were this bill to be passed.

The abolition of this age limit may also lead to a push for other limits to be abolished. It is important that there is an age limit on superannuation contributions. This stems from the significant tax concessions from saving through superannuation compared to other forms of saving. The purpose of these concessions is to encourage savings and maximise retirement income from superannuation. Were there to be no age limit, there would be an incentive for people to maximise tax payments through making voluntary superannuation contributions.

We have to be careful of inequity in the superannuation system. The Henry review went to some of these equity issues in superannuation, pointing out that a 15 per cent flat tax on superannuation contributions is one of the few flat income taxes that exist in our system. This tax is much lower than some taxpayers’ marginal rates—for example, a person earning over $100,000 faces a marginal tax rate of 45 per cent. The consequence, according to the Henry tax review, is that in 2005-06 only five per cent of taxpayers earned over $100,000 but those taxpayers accounted for 24 per cent of concessional contributions to superannuation. On the other hand low-income earners enjoy the least tax concessions. Most face effective marginal tax rates of zero to 15 per cent. That means they receive little or not tax concessions from superannuation. In 2010 over three million low- and middle-income earners did not obtain any tax concession, so abolishing the age limit would only worsen their position.

Another source of inequity is the much lower cap on tax concessions for co-contributions than on salary sacrifice contributions. Although co-contributions provide a higher rate of concession, it only applies to the first $1,000 of voluntary contributions as compared to the $25,000 cap on salary sacrifice contributions. That means that low-income earners still receive much less in tax benefits than high-income earners.

I spoke about the reforms that we on the Labor side implement on superannuation compared to the tinkerings that those on the opposition benches tend to put in place. These tinkerings can have substantial equity implications. I will mention in the context of this debate the changes in 2007, when the Howard government allowed most workers of age 60 and above to withdraw their superannuation tax-free. Retirees who previously earned high incomes were the ones who benefited. In addition, people were allowed to transfer up to $1 million in their superannuation accounts before 30 June 2007. Wealthier people took advantage of this, topping up their accounts with large amounts of funds so they could later be claimed back tax-free. The result was $22.4 billion transferred to superannuation accounts by individuals in the June quarter of 2007—triple the amount transferred in the June quarter of 2006. Many commented at the time that that was doubtless going to lead to a substantial redistribution of income towards richer individuals. So, while the coalition place themselves in such debates as the friends of older Australians, as supporters of the superannuation system, history tells us quite the opposite.

What the government will be doing instead is implementing a package of reforms that builds on our legacy in superannuation. We will be increasing the superannuation guarantee rate from nine to 12 per cent and introducing a new contribution for low-income earners—reforms that those opposite oppose.

The government’s Stronger, Fairer, Simpler superannuation reforms and the reforms flowing out of the Cooper review into superannuation will see an increase in replacement rates for a worker on median wages, who is currently aged 30, from around 71 to 76 per cent. Put in dollar terms, that worker could expect an additional $108,000 in their retirement benefits.

These are reforms which are holistic and which take into account the entire superannuation system. These are not reforms that are opportunistic, that are tinkering or which potentially introduce inequities into the system. These are reforms that reflect Labor’s ongoing commitment to a fair superannuation system for all Australians.

Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

The hypocrisy with which this Abolition of Age Limit on Payment of the Superannuation Guarantee Charge Bill 2011 is brought here is absolutely staggering. If one wants to look at the records of the two parties in relation to what they have done for older Australians, the record is absolutely stark. The fact that it was brought to this place by the member for Mackellar absolutely highlights even further the hypocrisy that those on the other side have sunk to.

If the opposition in its history had ever been fair dinkum about older Australians, they would have supported compulsory superannuation in the first place and, of course, they did not. They screamed about the effects it was going to have on business. They went up and down about this being the end of the world—very similar to the sorts of debates we have at the moment about any proper reforms in the economy. They cry time and time again about a big tax. What the Labor government did in 1992 was make sure that older Australians would have money that they would be able to look to in their retirement funds. This was something those opposite opposed.

Right now, the government has a proposal that is going to affect 8.4 million Australians, by raising the superannuation level from nine to 12 per cent. Listening to the member for Mackellar, you would think, ‘Well, of course, the opposition must be supporting this amendment because they are so in favour in making sure that older Australians are looked after in their retirement.’ But this is not the case. This is not the case at all. They are opposing this legislation; they are opposing the move for Australians to have their superannuation rise to 12 per cent. I ask the member for Mckellar: what does she say to the 57,000 people in her electorate who are going to be denied this access to increased superannuation because of the opposition for opposition’s sake on the other side? The opposition are not in favour of a fair go for older Australians in retirement.

The member for Mackellar also raised the issue of the pension. Those opposite were in government for 12 years and what did they do for the pension? Absolutely nothing. It took this government to make real reforms, real changes to the pension. It was this government that put the historic increase in the pension through. Again, what did they do on the other side? They blustered. They said, ‘We care for the elderly,’ but they did nothing for 12 years. It was another one of the issues that, apparently in the 13th year, they were going to get to. There is a long list of issues. Gosh, that 13th year of government was going to be a beauty for you guys! This was another thing that you did not do in 12 years of government. It again took the Labor Party to look after older Australians.

The record on this side of parliament is a very strong record. We introduced compulsory superannuation in the first place. We made sure that Australians would be looked after in their retirement by having access to compulsory superannuation. Before we did that, who got the benefits of superannuation? It was generally those who were well-off and those who were men. We found very few women who were able to get superannuation until compulsory superannuation came in. What did the member for Mackellar do when that bill was introduced? She opposed it. She opposed compulsory superannuation. The rhetoric she comes out with about the coalition being the friends of the elderly is merely a front. This is another attempt to try and hoodwink the Australian public.

What the Australian public need to do is look at the record of the two parties, because the two parties have starkly different records when it comes to superannuation. On this side, we support an increase in superannuation. We support making sure that all Australians get adequate superannuation in their retirement. We support making sure that the pension is raised to levels that people can exist on. On the other side, what do we have? We have opposition to compulsory superannuation; we have 12 years of doing nothing for pensioners with no changes in the pension rate. On this side of the House, this government are the friends of superannuation. This side of the House, this government are the friends of older Australians. It is only a Labor government that has ever stepped up to the plate for older Australians, making sure that we look after them when they retire and making sure that those on pensions get proper pension increases. From the other side all we have is opposition, bluster and bravado but no real action in looking after older Australians, ever. This is a bill that fails to deal with the real issues of superannuation. (Time expired)

Bert Van Manen (Forde, Liberal Party) Share this | Link to this | Hansard source

It is interesting listening to the last two speakers, the member for Fraser and the member for Dobell, saying they are the friends of super. I remember in the last couple of years they decided that super was not okay for older Australians if they could contribute more than $25,000 or more than $50,000. They have cut the ability to make those contributions right back. Where are the savings there? Where is the benefit to the older Australians where they have capacity to contribute to super?

This Abolition of Age Limit on Payment of the Superannuation Guarantee Charge Bill 2011 is based on the notion that we want equality for everybody in the workforce. In Australia there is a notion of gender and ethnic diversity and equality. Therefore, it is time we embraced equality between the ages. Mature-age workers contribute greatly to our workplaces and society with the skills they possess that are unique to their working environment. With these skills they can teach younger colleagues. The government should be encouraging those with this experience to continue in their profession because this aids businesses in the community as well as the nation’s workforce participation. It will remove this inequity from the system.

Currently, the superannuation guarantee is payable up to the age of 70 and the government promised in the last election that they would raise it to age 75. As the member for Mackellar has pointed out, the purpose of this bill is to abolish that age limit altogether. Retaining an age limit on the superannuation guarantee only succeeds in discriminating unfairly against older workers, forcing them into retirement. (Time expired).

Debate adjourned

John Murphy (Reid, Australian Labor Party) Share this | Link to this | Hansard source

Order! The time allotted for this debate has expired. The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting.

Mrs Bronwyn Bishop (Mackellar, Liberal Party, Shadow Minister for Seniors) Share this | Link to this | Hansard source

Mr Deputy Speaker, I would like to make a point on indulgence for the speaker who has been interrupted. You took the speakers out of order, and then it was decided on the clerk’s advice that we would hear the last government speaker instead of hearing the opposition speaker. It was not put to me that it would limit his speaking time, and I think it is really untoward. If there is some way that you could find an extension of time to allow the member for Forde to continue his contribution in light of your earlier error that would be a fair thing to do.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

No, it was not out of order in calling the member for Dobell. The time for the debate has expired.

Joel Fitzgibbon (Hunter, Australian Labor Party) Share this | Link to this | Hansard source

by leave—I move:

That the Electronic Transactions Amendment Bill 2011 be referred to the Main Committee for further consideration.

Question agreed to.