Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

The Superannuation Legislation Amendment (Early Release of Superannuation) Bill 2011 does recognise that there should be a transfer of certain functions from the Australian Taxation Office and APRA to Medicare Australia, and following on from what the Minister of State at the table just talked about with the redesign of Human Services, I can say to you that nothing would be more emblematic of the redesign of Human Services than the fact that Medicare Australia is now providing back office superannuation processing. When I was the first Minister for Human Services back in 2004 and when I created the department, I would not have thought that it would ever have these sorts of functions or that it would totally incorporate Centrelink and Medicare. I must admit that I am agnostic at best about the thought that that integration should have occurred, but it is what it is and my colleagues have explained their position on it.

I would like to state at the outset that the coalition will not be opposing this bill. As with many bills that come into this place, we work together, contrary to some perceptions. This bill amends the law relating to superannuation. It transfers responsibility, as I said, from administration of early release of superannuation on compassionate grounds from APRA and the Australian Taxation Office to the chief executive of Medicare. This change will be of assistance to Australians who have already been granted early release of superannuation on medical grounds. These people would already be in regular contact with Medicare and it will reduce the number of government agencies with which they will have to deal. This change makes sense as Medicare Australia already undertakes the general administration associated with processing of early release of superannuation on compassionate grounds. It is expected by the government that there will be little additional cost associated with this change.

Amendments to the regulations under a number of acts will be required to enable the chief executive of Medicare to administer the early release of superannuation. Firstly, it is APRA which currently administers the regulations under the Retirement Savings Accounts Act 1997 which make the determinations on whether an amount of benefits in retirement savings accounts may be released on compassionate grounds. This responsibility will now be handed to the chief executive of Medicare, and I just reflect on the fact that it was the coalition that established retirement savings accounts back in 1997 to provide some level of comfort to people who had had multiple jobs at the time and wanted to have a single, consistent superannuation account. That was the background, in a sense, to the retirement savings accounts.

Secondly, APRA currently administers regulations under the SIS Act, the Superannuation Industry (Supervision) Act 1993. These apply to APRA regulated entities where funds may be released on compassionate grounds. Responsibility for administration of this will now be handed, again, to the chief executive of Medicare. Finally, the Commissioner of Taxation currently administers regulations made under part 3 of the SIS Act and determinations about whether benefits paid in self-managed superannuation funds will also be transferred to the chief executive of Medicare.

In providing support for this bill, I would emphasise that the coalition does not support any changes to the rules which determine whether superannuation can be released early on compassionate grounds. This is a very important point, because essentially there has been bipartisan agreement on having very strict rules about the early release of superannuation. It is often the case, as members of parliament, that people come to us and ask, if not beg, to have early access to their superannuation on the grounds that they have temporary financial troubles or due to an event that has occurred.

Accessing superannuation must be the absolute last resort, because that money is meant to get you through the days when you are essentially unable to work full time and fund your quality of life, and a dollar saved in superannuation today can represent multiple dollars in the future. The coalition supports the government's call that the limited circumstances for early release of superannuation on compassionate grounds be preserved and the criteria for early release not be changed. Superannuation must remain the savings for retirement, and it should only be in extreme circumstances that the funds can be withdrawn.

This week in the House the Assistant Treasurer ran through the government's proposal to increase the compulsory superannuation guarantee from nine per cent to 12 per cent and criticised the opposition's lack of support for this initiative. His criticism was misplaced and obviously rather political. The coalition strongly supports superannuation. Compulsory superannuation is a key pillar of a system which, along with the age pension and the incentives and voluntary savings, helps all Australians to prepare for a reasonable quality of life in retirement. The coalition will continue to support changes that make our superannuation system more efficient, transparent and internally competitive and that deliver better value to superannuants across Australia. In particular, sensible changes to streamline super fund operations and to strengthen corporate governance arrangements should be progressed by the government as a matter of priority. My colleague Senator Mathias Cormann, in the other place, has said that on numerous occasions.

Having said that, we do not support the proposed increase in compulsory superannuation as it stands as part of the government's offset to the mining tax. That is because it will be funded by the increase in the mining tax and the coalition is opposed to the mining tax. We have said before that, as it stands, we will rescind it in government and we will unwind the expenditure linked to it. Rather than increase compulsory superannuation, our preference is to look at other areas of voluntary savings to complement the nine per cent in compulsory super. We have been very concerned about the lack of trade-off. Although the former minister for finance was more willing than the current minister to state that the increase from nine to 12 per cent would come out of business rather than out of the net salary of workers, the fact is that the government has not been clear on where the extra three per cent is meant to come from. Is it meant to be a trade-off for increased wages? Will employees have less money to take home? Is it going to mean a greater cost burden on small business in particular?

This is a very important point, and I suspect what heavily influences it is employment pressures. If the unemployment rate is around 4½ to five per cent then of course there is greater pressure on employers to stump up the extra three per cent. But, should there be rising unemployment, this may well represent a further incentive for employers to reduce their workforce, because this increases the cost of employing people. Alternatively, and perhaps even more realistically, increasing compulsory super with a rising unemployment rate may well mean that people will have less money to take home. Given that the government are introducing a carbon tax and have in place a flood levy, and given that they will not pay for the $4.2 billion black hole associated with the carbon tax—a $2.9 billion hole this year alone—I would say that the Australian people know, and they are instinctively right, that when the government cannot make their sums add up they inevitably go back to the Australian people to try and make up the money.

Instead of forcing workers to defer extra wages, the government should be focusing on improving the performance of the super industry, although competitive pressures themselves should do that. It should not be up to the government to improve the performance of the industry; the industry should be competitive enough to do it itself.

We are looking at, and considering carefully, a number of different areas of superannuation in the lead-up to the next election. For example, the coalition will make sure that the process of selecting default workplace superannuation funds under modern awards is open, transparent and competitive—something that the government promised to do but failed to deliver. The Henry report identified that nine per cent superannuation was a sufficient level for compulsory super guarantee contributions but recommended a series of changes to the taxation of superannuation. Dr Henry made the point in the report that increasing the superannuation guarantee beyond nine per cent would most heavily impact on low- and middle-income earners. The additional burden of the payment would not be borne by business but would, rather, be funded by reducing the growth in take-home pay. So more of a worker's income would be put aside in superannuation rather than be paid today. Effectively that means that there would be a reduction in the take-home pay of the lowest paid workers if they had this increased contribution. That was Dr Henry's take on it. He is now a special and rather privileged adviser to the Prime Minister.

Out of all that, where are we? Before the 2007 election the Labor Party promised not to change superannuation laws. It, of course, broke that promise by changing the rules regarding concessional super contribution caps over the last three budgets. Labor halved the concessional contribution cap from $50,000 to $25,000 for Australians under the age of 50. Australians under 50 can no longer save over $25,000 in superannuation each year without being charged excessive tax rates. Labor also halved the concessional contribution cap from $100,000 to $50,000 for Australians over 50 years of age. The changes for over-50s have particularly concerned older workers nearing retirement. The changes have discouraged them from making sufficient contributions late in their working lives. These changes were simply made as a revenue measure; they were not made for any other reason. This government is a big-tax, big-spend government. Wherever it can get money and then go and spend it to control people's lives it will do so.

One initiative the coalition will support is the Cooper review recommendations for improving the administrative efficiency of the super industry. These initiatives are collectively called SuperStream. SuperStream is a package of measures designed to improve the back office of superannuation. It proposes the increased use of technology, uniform data standards and the tax file number as a key identifier of member accounts. That is a good thing. The coalition's support of SuperStream is consistent with our commitment to facilitate improvements in industry efficiency.

Another area where the government action is welcome, although overdue, is in changes to excess contributions tax penalties. ATO figures reveal that more than 65,000 Australians will be hit with penalty tax after inadvertent breaches of the concessional super contribution caps during the 2009-10 financial year. The problem obviously has escalated during 2010-11. Since 2007, Labor has collected $180 million in excess contributions tax at an estimated administrative cost of $60 million to the Australian Taxation Office.

In the 2011-12 budget the government announced that it will provide eligible individuals with the option to have excess concessional contributions taken out of their super fund and assessed as income at their marginal tax rate rather than incurring the tax penalties. Well done. The measure will apply where an individual has made concessional contributions of up to $10,000 in a particular year. It is only available for breaches in respect of 2011-12 or later years, and only for the first year in which a breach occurs. The coalition says this is common sense. However, I do recognise the efforts of my colleagues Senator Mathias Cormann and the member for Casey, who have been prosecuting the arguments.

Returning to the bill before the House, the transfer of administration responsibilities for the early release of super on compassionate grounds from APRA and the ATO to the Chief Executive of Medicare is a reasonable change. The coalition will not be opposing this bill.

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

I speak in support of the Superannuation Legislation Amendment (Early Release of Superannuation) Bill 2011. About 20 years ago, the Keating Labor government introduced one of the most significant economic reforms in the history of this country, the superannuation guarantee, which started at three per cent. It increased progressively to the current level of nine per cent, where it has stayed since 2003.

I was listening to the member for North Sydney's contribution in relation to this bill. It took me back. His forebears used the same arguments opposing Labor's reforms with respect to superannuation. In fact, all the way through, the idea of compulsory superannuation was denounced by the coalition as a job-destroying, antibusiness measure and a damaging, economy-destroying measure. Compulsory superannuation was opposed fiercely even though it would create financial security and dignity for older Australians. These are the same sorts of arguments that we hear today: 'We're all ruined,' is what they say—constant fear and smear.

That is all wrong, of course—wrong, wrong, wrong. In fact, in the year the nine per cent superannuation was introduced and in the years since, unemployment fell, productivity was higher and small businesses were started and prospered. The truth is that we have a superannuation sector worth about $1.4 trillion in retirement savings, which means that Australians will be able to enjoy income security in their retirement.

(Quorum formed) The coalition are truculent, obstinate and belligerent with respect to superannuation. All they do is oppose every reform. They took no policy into the last federal election campaign to increase superannuation from nine per cent to 12 per cent. The shadow Treasurer comes in here today and says that they will find it through savings. They could not find the savings to rebuild Queensland. It took them weeks to do that. Then they ended up with the One Nation playbook in relation to foreign aid to find it, which would have left a black hole of $1 billion in the budget if their policies on the flood levy had been adopted. That $1 billion black hole would have been on top of the $11 billion black hole they took to the last election. They reckon they will find the savings for it. They will not find the savings for it. They should be supporting Australians in their retirement. They have opposed every superannuation reform we could possibly have.

The shadow Treasurer does not even know why we are doing this. The review of this matter undertaken by the Treasury, by the Australian Prudential Regulation Authority and by the Department of Human Services found Medicare Australia to be the agency best placed to carry out this function. He does not even know that. He has not even looked at the review. He says, 'We are not opposed to it.' We know that some opposite are in support of an increase in superannuation for Australian workers. Federal politicians get 15.4 per cent. Why shouldn't the Australian public get an increase? Some 43,500 people in my electorate of Blair in South-East Queensland would get an increase in superannuation. They would get more money when they retire. This is important.

This reform comes as a result of a review. We are undertaking significant reviews in relation to these matters. This is a two-stage process. Since 3 February 2011 Medicare Australia has been performing this function under delegation from APRA. That was the first stage. The second stage will take place when this bill is given effect to and formally transfers the functions from APRA to Medicare Australia. This is an important reform because there are efficiencies here and we have customer service obligations. It will assist in better managing electronic business transactions.

Over $122 million was released on compassionate grounds in the year 2010-11, with an average of $11,316 being released on compassionate grounds. The circumstances in relation to compassionate grounds include: medical treatment, medical transport, modifications necessary for the family home or a motor vehicle due to severe disability, palliative care and funeral expenses. Funds can also be released to prevent the foreclosure of a mortgage or exercise the power of sale over the member's principal place of residence.

In relation to self-managed funds, the Commissioner of Taxation is the appropriate person. What is happening here is that, in relation to other superannuation, the general administration of superannuation funds on compassionate grounds that currently resides with APRA will be transferred to Medicare Australia. I think that is an appropriate reform because we have seen the benefit of Medicare Australia and the Department of Human Services in my electorate of Blair. When Australian people go through hard times they need to access some of the funds in their superannuation. In January 2011, when my electorate was devastated by the floodwaters from the Wivenhoe Dam, the Lockyer Creek, the Brisbane River and the Bremer River, my electorate office had numerous requests from residents to get access to their superannuation to assist them to move back into their homes and to help them to rebuild their homes. I had dozens of calls and requests from residents who wanted assistance through their superannuation funds. There were families and individuals who lost their homes in the floods—there were 3,000 homes in Ipswich and about 600 in the Somerset—and 279 agribusinesses were also damaged. They had been fighting insurance companies for months and had often been rejected. They needed a bit of a helping hand.

When dealing with the emotional trauma of evacuating their families and wondering how they could rebuild and move on they had to deal with myriad bureaucracies with various requests for information and different conditions of assistance and support. It was traumatic and it traumatised those people yet again. I know the benefit of the Department of Human Services. The Green Army was so important. The flood recovery people who wore dark green T-shirts and the people from Centrelink were symbols of hope for people. They were giving a helping hand and providing financial assistance. Most of those who turned to their superannuation funds for assistance either were declined or simply gave up because the process of applying on compassionate grounds was anything but compassionate. I need to stress that those residents in flood affected Blair would not necessarily have been able to access their funds courtesy of these amendments. The criteria for assessing early release of superannuation on compassionate grounds will remain the same. But putting this responsibility into Medicare Australia in the Department of Human Services I think creates a compassionate response. These are people who know how to deliver services and whom people who have been flood affected and are in hardship can identify as the people who provide help to them every day, every week, every month and every year.

This is not to say that APRA has not been an effective prudential regulator. But it does not have the support platform that Medicare Australia does to deal with clients—the shopfronts, call centres, customer support professionals and the like. And Medicare is more effective at dealing with people. This is why on 1 July 2011 we formed a new Department of Human Services—and it really is a new entity in many ways—to integrate Medicare, Centrelink and child support services. This is a key component of the federal Labor government's commitment to and focus on delivering services efficiently and effectively and making the whole service more client focused. I think that is good for people in my electorate. In Ipswich we are very fortunate to have a one-stop human services shop, effectively combining Medicare and Centrelink with the Local Connections to Work. I have seen firsthand the benefit to individuals and families as a result of this focus on clients rather than bureaucracy.

As a function of the Department of Human Services, it is my hope, and it is certainly my expectation, that Medicare will take a more benign and charitable approach to those wishing to access their superannuation early on compassionate grounds. Medicare personnel are already dealing with Australian Taxation Office and Centrelink personnel. They have better access to information to assess the needs of people. There are structures, systems and personnel in place to deal with them. Medicare has the experience, as I said, in electronic business transactions, and there is considerable technological infrastructure to process claims, and I saw that firsthand in January with the floods. There is significant potential to streamline this procedure, with the ultimate beneficiaries being people across the country, and certainly people in cyclone and flood affected Queensland.

Superannuation has been a concern of the Labor Party for 20 years. We have been strongly committed to compulsory superannuation. Those opposite mouth the words, but we have seen the history of the coalition parties: they have been opposed to superannuation reform, from their forebears in the 1990s all the way through. The key reform to increase superannuation from nine per cent to 12 per cent will make a very big difference. With an ageing population it is vital to ensure that Australians have enough money to retire on in the future. And, given that life expectancy is increasing and retirement is more an experience of decades rather than of just a few years, nine per cent is simply not enough and we need to go to 12 per cent. This is especially the case for women, who often have child-rearing breaks in their careers and have a longer life expectancy than men.

It is simply a shame and a disgrace that the coalition had no policy in the last election with respect to increasing superannuation and have steadfastly opposed, for 20 years, increases in superannuation. They have put the retirements of millions of Australians at risk and forced taxpayers to pay more for the aged pension.

We believe that this is an important reform. This amendment is just one of the steps that we are taking to make sure that superannuation continues to meet the needs of Australians in the future. It should be welcomed across the country and will certainly be welcomed in my community.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

I rise to speak on the Superannuation Legislation Amendment (Early Release of Superannuation) Bill 2011. As speakers before me have said, this is really only a shifting of the deckchairs on something of a Titanic. In reality, the move of the administration of superannuation early release from APRA to Medicare may claim to have some streamlining benefits, but it does not address part of the key issue for people who are applying for early release and delays in having that approved. In the Bills Digestfor the bill, it says that in 2009-10 there were 16,331 applications and 10,539 approvals, the total amount being just over $111 million, or about $10,544 per account.

That is not the issue. On the criteria for early release of superannuation, which are not addressed by this bill, the Bills Digest says that superannuation benefits generally cannot be accessed before 55 years of age, and I think that that is good in general terms. It goes on to say:

In some specific circumstances, persons are able to apply to their superannuation fund/retirement saving account provider for the early release of superannuation benefits, including financial hardship, permanent incapacity (permanent and total disability), terminal illness, where the preserved benefit balance is $200 or less, and in cases of permanent departure from Australia.

It also goes on to say:

Superannuation benefits may also be released early on 'compassionate' grounds by application to APRA for superannuation and retirement savings accounts or by application to the Commissioner of Taxation for Self Managed Superannuation Funds. The changes proposed by the Bill relate only to the administrative arrangements for applications about early release of superannuation on compassionate grounds.

It does not address the key issue. It further says:

The circumstances under which an application for the early release on compassionate grounds can be granted are specified in the Superannuation Industry (Supervision) Regulations 1994 and Retirement Savings Accounts Regulations 1997 and include:

and I want to emphasise that because I will come to it in a minute—

and it is important that I also highlight that—

or

I wanted to speak on this bill due to a number of representations that I have made on behalf of constituents on concerns raised by them. I will not go into individuals' names. The minister is aware of these, because I have had responses back from Minister Shorten. One was a person in Woodbury who struck severe personal and financial hardship. Her house burned down and her granddaughter was killed. She was unable to access money to repair the house as, I understand, it was not insured. She wanted to be able to access her superannuation so that she could at least keep the property and undertake some repairs to it. As I understand it, an application was put in last year. In February representations were made to the minister because she was not having any joy. I received the response from the minister on 5 July. By the way, that person has now lost her house.

These conditions by which people can supposedly access their superannuation in times of financial hardship are an absolute farce. The lady is not my constituent, by the way—she is the member for Newcastle's constituent but found no joy there. Here is a case where a lady has lost her granddaughter and her house in a fire. Subsequently, because of her economic situation and not being insured, she has lost the property on which that house stood because she could not meet the payments. Had she been able to access the amount that she had in superannuation, it may have been different. This bill does not address part of the core issues.

I received a massive number of representations arising out of the global financial crisis when the Labor government sought to protect the deposits in the four major banks. The flow-on effect of that was that businesses such as Colonial First State Investment and AMP Capital Enhanced Yield Fund froze the finances they had. People who had their money invested in those and other funds found their funds were frozen because of the rush on those funds arising out of the government's ill considered bill and an absolute refusal to think through the process and the ramifications of their actions. People had no income coming to them by which to live, they were denied social security because they had the money held in these funds and they were not sure whether these funds would collapse. We are not talking about huge amounts of money. For most of these people it was a small amount. This has led to situations where people who are applying for relief are starting to lose their homes because banks are foreclosing.

The response from the minister on the various submissions that we made to him on behalf of these people who were applying under financial hardship was basically, 'This is a problem of the global financial crisis.' In his letter he referred to all the reasons for which a person can access their superannuation and then turned around and said that it was a problem created by the global financial crisis and that it was just tough luck. I say this to the minister: the problem was not created by the global financial crisis; it was created by your decision to provide an unlimited guarantee on bank deposits. The coalition put forward a bill limiting that guarantee to $100,000. The unlimited guarantee saw a rush from investors in these funds withdrawing their money to put it into the banks. What you did was cause a collapse in that financial market. Whether it is APRA or Medicare, because of your integrity as a minister and your lack of action and understanding of these situations, you placed these individuals into financial hardship. You placed them into situations whereby their houses were in jeopardy. In fact, in one of those cases—and I will read from this person from Forster's letter without mentioning their name—they had $19,304 in one account with Colonial First State and $34,179 in another and they needed to access it. I will read from their letter:

After I retired aged 60 in Dec. 2009 Colonial advised us that these accounts were frozen due to the G.F.C. However as my husband was diagnosed in February this year with advanced renal cell cancer & bone cancer and is no longer able to work we will again attempted to close these accounts as they return only approximately 2%.

But they could not get access to their capital. Did they meet the over-55 criterion? Yes. What about financial hardship because of medical condition or life-threatening illness? I would say that if you have advanced renal cell cancer and bone cancer the long-term prospect for you is not as good as it could be. This government and APRA failed those people in this situation and that is disgraceful.

So it is not a matter of who will administer this, whether it is the head of Medicare or in part the Taxation Office or in part APRA; it is about having people that act and respond to avert the crisis that is occurring by these people not being able to access their money. At the end of the day it is those individuals' money. I know we need in superannuation to protect their investment as much as we can and we need to make sure that it provides for their retirement, but the actions of this government cost people the ability to access that money, even though they complied on a number of counts. I have another letter, this time from a person in Raymond Terrace. This and the other letter I read out are just a couple that I grabbed, instead of grabbing a huge ream of them, on the way out of the office to make this speech. This letter is about superannuation funds held by the AMP capital enhanced yield fund . This person needed to get access to the $25,000 of his superannuation that he had invested in the fund. The letter reads:

I have been diagnosed with prostate cancer and during the past five years have been having treatment for this terrible disease. These funds would assist and be vital for the medical expenses etc. which will be ongoing.

As I said at the very start of my speech when I talked about the criteria in the legislation, if money is to be used for life-threatening medical expenses, its withdrawal should be approved. But the responses from this minister have been absolutely appalling—letters written in May and responses received in August. In a letter to me of 9 August about the representation by the person whose letter I just read out, the minister said:

Frozen accounts stem from the ongoing turmoil in international financial markets. While Australia has weathered the financial storm better than any other developed nation in the world, the global financial crisis is still having a significant impact. As a result, some investment funds are still having difficulty attracting fresh investment inflows.

Because of this, many funds have not had sufficient liquid assets or cash to be able to pay out redemption requests and those funds have chosen to put a freeze on redemptions as allowed under law, until the liquidity position of the fund improves. The decision to freeze redemptions is one taken by each individual fund and is not a decision taken by Government.

Minister, the decision to freeze the fund came about directly because of your unlimited guarantees of deposits with the four majors. This caused the flow of cash from these investment houses to the major banks as people naturally went to protect their financial returns. Minister, you have not only failed this nation economically but also failed these individuals, who, in their hour of absolute need, needed access to their money either to save their life through payment for proper and expedient medical assistance or to save their property threatened by circumstances beyond their control. Withdrawal of funds to do either of these things is completely within the guidelines listed in the legislation. Minister, you have failed those people, and for that you should be condemned. It is a good idea to control the money in question by moving it to a single house such as Medicare, but we need to see fast and responsive action to genuine claims so that people can access their money as per all the criteria stated in the legislation and avert long-term situations which always end up negative.

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

I am pleased to speak on the Superannuation Legislation Amendment (Early Release of Superannuation) Bill 2011. I have already made some comments on this bill, but I made them in another form: a report made in my role as Chairman of the Parliamentary Joint Committee on Corporations and Financial Services. This is a non-controversial bill—it is about acknowledging a practice that currently exists and tidying up the legislation.

The bill proposes to move the responsibility for the administration of the early release on compassionate grounds of benefits in a retirement savings account or of superannuation benefits in an entity regulated by the Australian Prudential Regulation Authority from APRA to the Chief Executive Officer of Medicare. Similarly, the bill proposes to transfer the general administration of the early release of superannuation funds on compassionate grounds from the Commissioner of Taxation to the Chief Executive Officer of Medicare. The bill formalises an arrangement that has been in place since 3 February this year, when APRA and Medicare Australia entered into a service delivery agreement for Medicare Australia to carry out the day-to-day functions of the administration of the early release of superannuation in APRA-regulated superannuation entities under delegation from APRA. At the same time, the day-to-day functions of the administration of the early release of superannuation and superannuation funds under delegation from the Commissioner of Taxation was transferred from APRA to Medicare Australia.

There is no extra cost associated with this bill. Part 2 of schedule 1 of the bill amends the APRA Act 1998 so that the industry levy associated with the administration of the early release of superannuation benefits currently paid to APRA can be properly transferred to Medicare Australia to meet administrative costs. To support this arrangement, APRA officers were transferred to Medicare Australia in February this year to undertake the administration of the early release function.

The bill was referred to the Parliamentary Joint Committee on Corporations and Financial Services for consideration. The committee supports and endorses moves to formalise the interim arrangements that have been in place for over six months now, and after consideration of the evidence the committee agreed not to inquire further into this bill and recommended that the House pass the bill—it is non-controversial. This bill is simply a formalisation of arrangements that are currently in place, and I recommend it.

(Quorum formed) In respect for my colleagues, rather than give them the full 15 minutes I had left of my speech, can I just say that this is a good amendment, it is a good bill. It actually is supported by the other side. As to why they would want to interrupt the debate, I am not sure. I recommend the bill to the House.

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

The Superannuation Legislation Amendment (Early Release of Superannuation) Bill 2011 will transfer the responsibility for administration of the early release of superannuation on compassionate grounds from APRA and the ATO to the Chief Executive of Medicare. This is a bill that the coalition does not oppose and, given that the bill also effectively transfers the relevant component of fees currently collected by APRA from APRA regulated funds to cover the cost of administering the early release of superannuation to Medicare, there should be no budget or financial impact on Medicare.

As noted, the bill transfers the responsibility for administration of the early release of superannuation. The administration of the early release of superannuation may not have sat well with APRA's role as the prudential regulator. Certainly, as the member for Paterson very rightly pointed out earlier, the time taken to process applications and get payments made—I know, from my previous experience as a financial adviser—has taken significant periods and has created additional financial burdens for the people involved. In view of that, it is probably quite appropriate that this function is administered by an agency that has other elements of income support and an efficient customer support infrastructure.

The circumstances under which superannuation can be released prior to age 55 is clearly defined in the SIS Act and allows, in specific circumstances as defined, people to apply to their superannuation funds or retirement savings account provider for the early release of their superannuation benefits. Early release of superannuation benefits may be applicable for people facing financial hardship, permanent incapacity, terminal illness, where the preserved balance is $200 or less and in cases of permanent departure from Australia. The provision where the balance is $200 or less was used a number of times in my practice, because it is one less thing that people had to worry about and it saves a lot of administration costs for superannuation funds for those small account balances, which frequently get lost or misplaced.

Superannuation benefits may also be released early on compassionate grounds by application to APRA for superannuation and retirement savings accounts or by application to the Commissioner of Taxation for self-managed super funds. This bill will not change that. The changes proposed by the bill relate only to the administrative arrangements. Some of the things that superannuation can be released for under compassionate grounds include payment for medical treatment and transport for a person or a dependant; enabling a person to make a payment on a loan in the event of possible foreclosure of a mortgage on a person's principal place of residence, or exercise by the mortgagee of an express or statutory power of sale; or to modify a person's principal place of residence or vehicle to accommodate the special needs of the person or a dependent arising from severe disability. It can also be released to pay for expenses associated with palliative care in the case of impending death and to pay for expenses associated with dependants with palliative care needs in the case of impending death, funeral or burial.

The member for Paterson very rightly pointed out some of the issues with these regulations. It is important to note that, while individuals may apply to APRA for the early release of superannuation benefits on the compassionate grounds that I have just listed, a superannuation fund trustee or retirement savings account provider ultimately decides what benefits they will or will not release, subject to the governing rules of the fund. As the member for Paterson also pointed out, in the global financial crisis there were a number of people, even those who had passed age 55, who had extreme difficulty in having funds released from their superannuation accounts because funds were frozen.

In assessing applications for the early release of superannuation, APRA is required to adhere to specific assessment criteria, and it is important that that process is properly followed. That is where we find that a lot of the time is taken up in getting the process completed. The applicant does have the ability to appeal a decision and, if they are not satisfied, they may request an internal review by an independent APRA delegate or an external review of the process by the Commonwealth Ombudsman. But, at the end of the day, if the superannuation fund trustee or the retirement savings account provider decides that the funds are frozen, people seeking access to those funds will still not be able to get those funds.

A concern with respect to the proposals in this bill is that there does not appear to have been any great public announcement prior to the introduction of the bill. Certainly, the financial planners that I still deal with and speak to inform me that they did not have any idea that this had been proposed or was on the drawing board. That is a major issue of concern: the lack of information in an industry that would be primarily responsible for dealing with clients in this situation.

As the member for Oxley pointed out, it appears that Medicare Australia has been managing these claims since February 2011 under delegation from APRA. I have not been able to find where the details of this delegation have been made public, including the amount of funding transferred to Medicare Australia to enable it to perform this task. Given that this is a government that apparently prides itself on openness and accountability, that is a serious issue of concern. There is no information in APRA's annual reports, or in other public resources, on the value of the revenue raised by the levy that APRA currently charges on superannuation funds under its regulation, so we cannot verify that the amount of money being transferred to Medicare to provide these additional services is in reality sufficient for what they require. It is important, given the increasing range of non-health related programs that Medicare Australia is now administering, that it is adequately resourced financially to meet this increasing workload. An example of other increased services provided by Medicare Australia is its assumption of responsibility, since July 2010, as the small business clearinghouse for superannuation—again, a service that the majority of small businesses that I have spoken to did not even know about. It is shown in the figures that less than one per cent of small business have taken up the service.

Given the stringent guidelines surrounding the early release of superannuation benefits, it is important that Medicare Australia is properly resourced and staff are properly trained, as many people who are seeking early release of superannuation funds are facing stressful circumstances and require compassion and understanding when dealing with this difficult issue.

As I noted at the outset, the coalition does not oppose the bill, but we trust that this transfer of responsibilities is implemented smoothly and in an efficient manner to minimise any impact on people who may be seeking to access their superannuation benefits. Given the track record of this government over the past four years, we have some serious concerns, and the issues that the member for Paterson raised earlier in terms of responses from the relevant minister also raise concerns.

Nola Marino (Forrest, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Superannuation Legislation Amendment (Early Release of Superannuation) Bill 2011. In the current economic times, the value of people's superannuation is a constant conversation in workplaces, around dinner tables and at social gatherings throughout Australia. People are very concerned. For many people the only exposure they have to the share market is through their superannuation fund, while others have both private investment and superannuation in stocks and bonds. That is part of the reason the current market volatility is being watched—specifically by those who are close to or at the point of retirement—so closely around the country and why the calculators are out, with people trying to work out the impact on individual accounts and the amount they have available to them. In fact, Australians are extremely concerned about exactly what their superannuation will be worth when they need it.

In the past few years, all forms of financial advisers and accountants have constantly dealt with concerned clients and new clients—people who, for the first time, are taking a direct interest in their superannuation. It is in this environment we find ourselves discussing superannuation legislation in the bill before the House. As we know, the bill amends the Retirement Savings Accounts Act 1997 and the Superannuation Industry (Supervision) Act 1993 to facilitate the transfer of the administration of the early release of superannuation on compassionate grounds from the Australian Prudential Regulation Authority to the Chief Executive of Medicare. Generally, as we know, superannuation cannot be accessed before you are at least 55 years old. That is so that Australians can fund themselves in retirement. However, in some very specific circumstances, the law allows the early release of benefits that are held in a retirement savings account or superannuation benefits in an APRA regulated entity.

Also, the bill transfers the general administration of the early release of superannuation benefits in self-managed super funds on compassionate grounds from the Commissioner of Taxation to the Chief Executive of Medicare. In most circumstances, these benefits are taxed. Even though the government gives permission to access superannuation early, the super fund trustee does not have to release those benefits to the individual concerned. The superannuation fund trustee or RSA provider decides what benefits they will and will not release and may charge fees for the early release of the funds. This is a concern to some of my constituents. Several of my constituents have needed to access part or all of their preserved benefits and savings prior to actual retirement for a range of compassionate reasons covered by this bill. It is never an easy decision. It is often a decision of last resort, according to the circumstances that people find themselves in. Generally, a constituent and their spouse, partner or dependent children are in extreme distress and under a great deal of personal as well as financial pressure when they have to make this decision. They may be suffering from a medical problem. It may be a life-threatening illness or an injury. They may be desperate for the funds to alleviate acute or chronic physical pain or be suffering from acute or chronic mental conditions, and that makes this process quite difficult. They may need it to pay for medical transport, which is really a major issue in regional and rural areas such as those in my electorate. It is a critical issue, made worse for people who live in very small communities, in isolated areas or on isolated properties. They might live in a very small community or on an isolated rural lot, and they will have to deal with this issue of medical transport. Increasingly we are finding that there are people who may not have relatives or friends to assist them at that time, so the issue of medical transport in regional areas is a very important one to the people affected.

Most of these circumstances, for people who find themselves in this position, are totally unexpected. It is a real shock for the person affected and for their whole family. It is always extremely difficult to manage and, of course, you do not really plan for this—you do not expect it to happen. It depends entirely on each person's individual circumstances as to what they are facing and what their financial situation is. It is for these sorts of reasons that some people need to access their retirement savings to prevent mortgagees from selling their homes, for example, because of overdue loan repayments, something I have certainly seen an increase of in recent years.

The early release of superannuation funds and retirement savings can also occur on compassionate grounds to fund the funeral expenses or palliative care that often follow the instances I mentioned previously. If a person or one of their dependants is severely disabled, he or she can apply to access their superannuation or retirement funds if this disability requires their home or car to be modified because of the disability. For those who have lost their jobs or who are in extremely difficult financial situations—and I would think many members in this House would, like me, have dealt with people who have found themselves in that position in recent times—it can be a difficult situation and they may also be able to access a portion of their benefits, subject to certain conditions. This can be that they have been receiving Commonwealth income support, such as unemployment benefits, for at least 26 continuous weeks and the trustee of their super fund is satisfied that the person cannot meet their immediate family expenses. This adds to the pressure that the individual finds themselves under. A payment is for the purposes of meeting everyday living expenses and can be one payment of no more than $10,000, including tax, in any 12-month period. The other condition is that when the person has reached their preservation age they may be able to receive their entire superannuation benefit, provided that they have received government income support for at least 39 weeks.

It is reasonable to suggest that a body that understands income support, such as Medicare, would be able to judge the compassionate needs of superannuants in the situations that I have mentioned throughout my speech. As such, the move to make the Chief Executive Officer of Medicare responsible for the administration of the early release of superannuation is understandable. Given that this has been in effect under a delegation agreement since February this year, this bill will simply formalise existing functions. The transfer of fees collected as a levy to manage this administration will be progressed, but again, as the member for Forde and the member for Paterson said, we do not have information as to whether these fees will be sufficient to allow the administration that is required to be conducted efficiently by Medicare in this instance.

Many members will, like me, have been approached by constituents who have only limited superannuation as they approach retirement. We know that over the last 10 years the top-performing superannuation products are returning on average around five per cent. Many people who are now close to retirement are focusing particularly on the amount that is in their superannuation funds. There are those who have seen the value of those superannuation funds diminish. It has caused a number of people to investigate how they could make these funds more secure, because the volatility of the market has seen the value of those superannuation funds erode.

My office would be similar to many others, with a number of constituents looking at where their funds are currently invested, how they are invested, what they are worth, what the changes to them are and how those changes are going to impact those people. It is a particularly relevant issue for people who are facing retirement in the immediate sense. The value of these superannuation funds is particularly critical to them. On that basis, Madam Deputy Speaker, I thank you for your time.

Don Randall (Canning, Liberal Party, Shadow Parliamentary Secretary for Local Government) Share this | Link to this | Hansard source

I appreciate the opportunity to speak on the Superannuation Legislation Amendment (Early Release of Superannuation) Bill 2011 because, like many members who have spoken on this bill, it has particular relevance to operations within my electorate and impacts a number of people. Let me say at the outset that superannuation is a very valuable tool for people's retirement. There is much debate on whether it should be nine per cent or 12 per cent et cetera, but it is obviously designed to provide retirement income for many Australians as compared to the pension, which is not a lifestyle remuneration but a safety net. That is why superannuation is so important. This bill does change the early release of superannuation on compassionate grounds in two ways. It transfers the responsibility for administration of the early release of super on compassionate grounds from the Australian Prudential Regulation Authority, or APRA, and the Australian Taxation Office, or ATO, to Medicare and it transfers the relevant component of fees currently collected from APRA-regulated funds to cover the cost of administering the early release of super by Medicare without any financial impact. This bill does not affect the criteria for early release of superannuation on compassionate grounds. This is important to my electorate because Canning has 40 per cent of voters aged 55 or above. It is quite an interesting demographic. Fifty-five years is the general minimum age that the early release of superannuation payments can be applied for. As we know 55 is not old—I am 58, which is not old at all; in fact, I suspect it is the old 35—but it is the trigger point.

I do not oppose the release of superannuation on compassionate grounds and I do not necessarily oppose the restructuring of the channels through which these moneys are distributed. But there must always be a sense of caution. My office is quite often contacted by people within the electorate saying: 'Look, I am in dire straits. If I don't get access to my superannuation funds, I'm going to lose my house.' There is a whole range of issues such as health care: someone has contracted a terminal disease, they need the funds for medicines et cetera. They are all genuine cases, but the word of caution is: should the funds be released without a lot of scrutiny, which then leaves nothing left for retirement? I suspect if you are not going to be here then it is not going to be any use to you, but if you get an early release of funds and that is all you have then it does not say much for the quality of life you are going to have some years later.

Another reason why I am cautious about this bill, and we do not oppose it, is the impact it is going to have on Medicare services. This government obviously is giving more responsibility to Medicare. We know that is the mechanism that the flood levy was going to be collected through. We had Centrelink as a one-stop shop, now Medicare will be a one-stop shop. The problem with that is Medicare will continue to be under continued pressure.

I am sure that members of parliament in this House would agree that whenever somebody has a problem with a government department, because it is too difficult for the officer at the front desk to give them a straight answer or is not the answer they might be looking for, they come to us as their elected representatives. We always get the too-hard basket ones. You know they have often shopped around before they come to us as members of parliament.

In the coalition government, the member for North Sydney, Joe Hockey, was responsible for public administration. In the case of Centrelink, he appointed electorate liaison officers. It really was fantastic. When Labor came to power they got rid of them. However, if you had a problem with Centrelink—and this is what I suspect the government might want to look at in loading more responsibilities onto Medicare—you discussed it with an electorate liaison officer and this person had the authority to sign-off. It stopped a mountain of paperwork and a mountain of delays because we had an electorate liaison officer in the local Centrelink office that we could go to and have problems solved. How sensible was that? They did not spend their whole time on it, they were doing other duties, but we had a go-to person.

People say, 'Oh, yes, but there are government liaison people in Medicare you can go to.' No, these electorate liaison officers were specifically assigned to our electorates and they knew our electorates. They were quite often in Centrelink offices within our electorates, so they knew the turf, they knew the people and they knew the issues. As a result, we could get some very good results for people who did not want a paper war—a letter to the minister, a reply that came back, essentially written by the department in any case, which said, 'Computer says 'no'', which meant we then had to take the lobbying process even further. I want put on the record that, as a result of loading up Medicare, this could be an alternative if the government really wants to ease the burden.

We know that the areas of responsibility shifted to Medicare include the administration of the Home Insulation Program on behalf of the Department of Climate Change and Energy Efficiency, and setting up the clearing house arrangements for small business—more extra duties for Medicare—yet the government's position on private health industry insurance is to limit the desire of people to have private health insurance. We know the government has tried several times to take away the private health insurance rebate. The effect of that will be to force more people onto the public health system. It will load up public health and the rebates and all that goes with it.

Yesterday, I stood in the courtyard here with other members and senators from Western Australia because the health insurer HBF had collected 32,000 signatures on a petition from their Western Australian members in a month saying that if the government, in conjunction with the Greens—we know the Greens have a particular view on this as well—were to remove the 30 per cent rebate, it is going to force many people off private health insurance and back onto the public health system. As a result, and we know anybody who goes to hospital or a doctor will be treated one way or another, it will load up the public system. In effect it is a cost-shifting mechanism. The effect of trying to do this is expected to cost an extra $3.8 billion to the public health system. In turn, this will put more pressure on these related services. For Labor to deny this is totally untrue. You cannot believe them. I will not use the three-letter word, but I can say it is not true. The health minister, Nicola Roxon, clearly stated in a media release dated 26 September 2007:

… on many occasions for many months, Federal Labor has made it crystal clear that we are committed to retaining all the existing Private Health Insurance rebates, including … the 35 and 40 per cent rebates for older Australians

What have the government done? They have tried to change that three times at least. It is a bit like: 'There will be no carbon tax under this government I lead. I have my fingers crossed behind my back; please believe me.' Research by the Australian Health Industry shows that under Labor's proposed health insurance rebate changes, 175,000 Australians would drop private health cover—putting pressure on the public health system, and putting pressure on Medicare, which is the office meant to deal with this early release of superannuation. Minister Roxon was forced to admit on 16 October 2008:

The projection of the number of people from Treasury that will drop out of health insurance is just under half a million—492,000 people.

And the Australian newspaper on 24 June 2011 reported:

MORE than 2.4 million Australians with private health insurance will be forced to find up to $935 extra a year for their premiums if the government can manoeuvre its means test for the 30 per cent rebate through parliament …

In fact, I have received correspondence from constituents who are very concerned about this issue as I speak today. Even they can see that Labor's proposed changes would increase private health insurance premiums, and put more pressure on the public health sector and systems like Medicare—but this is the agenda of the government.

I have a particular view on superannuation. As I said, I am very supportive of those who need a release of superannuation on compassionate grounds. Those who need early release for those reasons should be well heard, but with the caveats that I have put on it. But we have a massive amount of money tied up in superannuation funds throughout Australia. You have heard the dulcet tones of the former reserve bank governor, Bernie Fraser, 'Come to my industry fund and put the money in there so that we can purloin your money and help our organisation.' I say: use the money wisely. One of the ways I would like to see it used wisely, from a personal point of view and a policy point of view, would be for some of it to be released for first home buyers. Not young people necessarily; parents could get access to a deposit for their home through all this money tied up in superannuation. After all it is their money. If they can grow it by buying an asset like a house why should they not be given that sort of opportunity? That is my personal view, which is nothing to do with coalition policy, but there is a massive amount of money tied up, particularly in the hands of industry funds, which have a different agenda from some others, and it could well be used in a more effective way in the future.

In conclusion, the government does not have a competent record on administration. As I have said, what a farce the BER was. What has happened to the set-top boxes that were announced in the budget? Who is going to administer the set-top boxes? Is this going to end up in one of these departments as well? How many people are going to get a set-top box in one of the wackiest policies that this government has ever put out? Who is going to administer that? Is this going to go through Medicare as well? I have to say that in terms of public policy the people who thought that up were obviously the same people who thought up putting pink batts in your roof and how to burn down your house in a short while! At the end of the day I am not aware of anyone in my electorate who has come to me and said, 'I want a set-top box.' In fact, if you gave me a voucher for $300 or $400 I would probably go and buy a plasma TV or something at Harvey Norman but not a fancy set-top box.

As I have said, I agree with the need for early release of superannuation on compassionate grounds. Certainly, these payments are important and help people in often financially and emotionally tough situations. I do hope that the administrative changes will not cause any further costs or pressures to our healthcare system, as I have outlined, and Medicare services or any duress to administering payments to the people who need them most.

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Superannuation Legislation Amendment (Early Release of Superannuation) Bill 2011, which the coalition does not oppose. This bill deals with the administration of the early release of superannuation on compassionate grounds. I stress the point that it is the administration. In reading the bill I find that it does not speak of changing the wording or the intent. It does not speak of making the process for applying for early release of your superannuation any easier, it just shifts the administration from one body to another.

The bill transfers the responsibility for administration of early release of the superannuation on compassionate grounds from APRA—the Australian Prudential Regulatory Authority—and the Australian Taxation Office, which I will refer to as the ATO, to the Chief Executive of Medicare and allows APRA to include the cost of administration of this early release by Medicare in the annual levy it charges for superannuation funds. The rationale for the transfer from APRA and the ATO to Medicare as given in the explanatory memorandum is that this scheme is best administered 'by an agency that has other elements of income support and an efficient customer support infrastructure'. Predominantly what that means is that Medicare has more outlets around the nation—there is more accessibility to frontline staff—as opposed to dealing with APRA, who I am sure are competent but their areas of expertise probably do not include the frontline specialist skills that we require.

Before I go on, let us look at some of the comments we have heard from previous speakers who took the opportunity to drift into the topic of increasing superannuation amounts from nine per cent to 15 per cent. One of the examples that they brought up was that as a government we should not deprive the Australian people of an increase to 15.4 per cent because that is what the politicians get—why should we get it and not let the general public share the same superannuation levy? That is economic ridiculousness. Why not go one step further and say that everyone should be on the same money that the Prime Minister is on? This is the same economic rationale that that argument brings to this House.

The reason that these comments would be raised, in fairness, is that very few people from the other side of the House actually have any concept or fundamental understanding of how small business works, and this is where the cost would be borne in an increase from nine to 15 per cent superannuation. It would be borne by business. While the government says that there would be a one per cent decrease on their tax, from 30 per cent back to 29 per cent, I suggest that there is only so much money available in a business to try to make ends meet and when you have to trim costs, often one of your variable cost line items is your staff. So I fear that the silliness of the economic rationalism being used could potentially put Australian jobs at risk and I would encourage people to tread carefully when considering flippant increases to 15 per cent.

I also remind the government of the enormous pressures on small business and families at the moment with the basic cost-of-living pressures. One must consider the outrageous increases in energy costs since 2007. Don't shake your head, they have gone up. I have seen it at home—50 per cent they have gone up!

Luke Hartsuyker (Cowper, National Party, Deputy Manager of Opposition Business in the House) Share this | Link to this | Hansard source

Shame!

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

Shame! So do not shake your head, because you get energy bills as well!

Mr Shorten interjecting—

Mate, I love your work! So there are cost-of-living pressures—energy prices, gas prices—and these are all inhibitors on the Australian economy at the moment. Our fuel prices have gone through the roof.

And while we talk about economic vandalism and listen to some of the comments we have heard in the House with reference to the superannuation debate, I bring the attention to the flippancy with which this government refers to the 7.2 per cent of our GDP debt ratio as being relatively small in comparison with other nations. I suggest that the argument that it is relatively small compared to other nations begs the question: why is it that we cannot pay that back? Why is it that we are having so much trouble servicing—

Yvette D'Ath (Petrie, Australian Labor Party) Share this | Link to this | Hansard source

Order! This is a bill on superannuation and I ask the member to return to the bill.

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

Absolutely. It is strange to hear the words 'efficient' and 'infrastructure' used in conjunction with this government, because to date its record has been one of inefficiency almost across the board. From the pink batts debacle all the way through to the NBN, this government in all cases has managed to take the most inefficient approach possible.

While there are special circumstances in which superannuation can be accessed, including medical conditions and severe financial hardship, the Australian tax office has recently noted that a number of schemes are promising customers that they can help access super for reasons such as paying off credit card debt, paying bills, buying new cars or even going on holidays. Last year around 1,300 people were sprung by the Australian Taxation Office for participating in such schemes. I would like to remind anyone considering involving themselves in one of these dodgy schemes that not only are the schemes illegal, but they will also cost you a whole lot more than you expect and you could even potentially end up in jail.

In the current economic climate, while we remain vulnerable to the tremors and quakes currently disrupting global markets, while cost-of-living pressures are squeezing every last spare dollar out of ordinary hardworking families, while the government is planning on adding to the pain with the introduction of its illegitimate and pointless carbon tax—in times like this—it is no wonder that more and more people would be looking to get hold of their super. That is the point I was making earlier with reference to cost-of-living pressures. That was the point I was making about people wanting to get access to their superannuation just to make ends meet. I make the point that electricity prices are up 16 per cent, after going up another 10 per cent from the year before; gas is up 18 per cent, after a 13 per cent jump last year; and water is up 16 per cent, after another 13 per cent last year; and it just goes on and on.

In Queensland, power bills alone have increased by more than 60 per cent in less than five years. That is the point I was making earlier. What do you reckon will happen when the carbon tax kicks in? Is it any wonder that we are seeing more shonky operators out there trying to take advantage of people who are looking at the smashed remnants of their piggybanks and wondering what they are going to do next? Things are undoubtedly tough at the moment and when times are tough people want to know that their government is exercising the same sort of restraint and fiscal responsibility that they are having to undergo in their household budgets.

I also want to bring your attention to a case that we are dealing with in our electorate office at the moment that is relevant to the early release of superannuation. I am fearful that we will continue as a nation to see more and more examples like this as people try to get access to their savings funds. One of my constituents is a lady who has a small marketing business based in a regional part of the electorate. Regretfully, our constituent—and a wonderful woman she is—is suffering from cancer. Her illness takes her away from her business, and like most small businesses, as we on this side will understand, often you are the CEO as well as the truck driver, the sales team, the marketer, the accounting department and customer service. One- and two-man-band teams have huge pressures on them. Because of her illness, she has been unable to work, but the cost pressures still land at her feet. The cost pressures of the tenancy agreement that she has for her building, the cost pressure of leases on vehicles, and the cost pressures of the continuing commitment for photocopiers, fax machines and phones still exist. Often when these small businesses enter the market to try to contribute to the economy of the nation they also have to service a business loan. Often that business loan is secured by the family home, the very home which they have worked their entire lives for. So illness has grasped this lady, and she is struggling to get access to her superannuation.

As I alluded to in my opening comments, this bill does not inhibit this case because the loopholes in this legislation are not touched. The bill only speaks to the transfer of the administration. The point I make is that I am very fearful that there will be many more Australian small businesses—many more mums and dads—who, as cost-of-living pressures are put upon them, will be drawn to try to access their savings from their superannuation.

Under circumstances such as these, I believe it is worth while to reflect on the ways in which members of the public can gain early access to their superannuation. The circumstances under which benefits may be released are, quite rightly, extremely limited. The first of these, and one covered by this bill, is an early release on compassionate grounds. In most cases, compassionate grounds refer to an applicant who needs the money to pay for medical costs associated with life-threatening illnesses and/or acute chronic pain and/or acute or chronic mental illness. However, these grounds rely upon the necessary treatment not being readily available through the public health system and not being covered by any applicable private health insurance or workers compensation.

Compassionate grounds may also be considered to prevent the family home being sold by the lender with whom the applicant has a home mortgage. There are numerous further conditions, chief among which is that the applicant's mortgage must be sufficiently in arrears for the lending institution to have decided to sell.

In some circumstances provisions can also be made for assistance to meet palliative care costs and for the costs associated with funeral, burial or cremation. There are of course other circumstances under which people can apply for the early release of superannuation, including severe financial hardship. However, as they are not part of this bill, I will not go into them today.

Nevertheless, the rules and regulations surrounding the early release of superannuation are fiendishly complex and there is no guarantee of success. In fact, of the approximately 16,000 applications received in the 2009-10 financial year, only 10,000 were approved. Approval ratings over the past three financial years are somewhere around 65 per cent. That is why we on this side of the House are pleased that this bill will finally allow applicants to deal face to face with professional customer service staff who will, hopefully, make the process significantly less arduous and significantly less stressful than it previously has been. As I said in my opening comments, the coalition does not oppose the bill. The bill deals with the administration of the early release of superannuation on compassionate grounds, and we support it.

Bill Shorten (Maribyrnong, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

I thank all members for their contributions to the debate on the Superannuation Legislation Amendment (Early Release of Superannuation) Bill 2011, and I would like to take this opportunity to remind members of the broader context of superannuation. The shadow Treasurer today confirmed in the House of Representatives debate on the bill that the coalition support superannuation. In fact, shortly after 11:10 am, the member for North Sydney told the House that the coalition strongly support superannuation. But if one wants to make the large, grandiose statement of intent then surely the time has come for the shadow Treasurer to answer some questions about what support by the coalition actually adds up to.

If the coalition really support superannuation, what are their plans to increase every Australian worker's superannuation savings? For instance, do they support the Gillard government's plans to lift the universal superannuation guarantee from nine to 12 per cent? Do they support an increase in concessional caps for people over 50 which allows people to boost retirement savings without incurring excess contributions tax? If they support superannuation, do they support providing 3½ million Australians on incomes under $37,000 more superannuation by refunding their contributions tax? Sixty per cent of the beneficiaries of this measure are women. Given the profits of Australia's biggest resources companies and the records that are being set—the most recent today reported by BHP—why is it that the coalition will not support an MRRT which would help fund an increase in retirement savings of 8.4 million Australians, including 55,300 in the shadow Treasurer's own electorate of North Sydney?

If the coalition mean what they say, if the coalition actually strongly support superannuation, then it is time for those questions I have just enumerated to the House to be answered. I am prepared to provide every member of the House details of how many people in their electorate are set to benefit from an increase in the superannuation guarantee from nine to 12 per cent. The coalition have promised time and time again that they would provide a response to the Henry review recommendations on superannuation and thereby release a retirement savings policy. It is now well over a year since the Henry review was released. There are many more questions about the coalition's retirement savings policy—or should I say lack of a retirement savings policy by the coalition—than there are in fact financial service businesses in the shadow Treasurer's own North Sydney electorate—and there are, of course, many of those in that electorate.

This past Saturday, 20 August, we celebrated the 20-year anniversary of one of the great economic reforms of the modern era in Australia: the announcement in parliament of the tabling of the bill to lift compulsory superannuation from three to nine per cent. Superannuation works. We do not mind the coalition supporting it; we do not even mind them owning some of the achievements. We just wish that whenever they had the opportunity to vote for improvements in superannuation they would actually do as they say. Superannuation works; it has proven to be an idea in the best interests of the nation. It is a policy that is in the best tradition of what Labor governments should do.

The economic history books record that the introduction of compulsory superannuation coincided with the rise of all the major economic indicators. I reassure the member for Wright about his concerns. Somehow he viewed this as a tax on business. Throughout the period of the increase of superannuation from three to nine per cent in each increment, it was shown that it did not increase business costs and that it was offset against real wages movements. For workers, it was not a tax on them either, because what it allowed was compulsory savings that they might not have otherwise been able to make and which would have an anti-inflationary offset on the other wage increases they were receiving at the time of the mandatory increases.

I believe that in 2011 it is time for us to improve the rewards of hard work and to allow Australians to reach out confidently for the goal of lifetime income security. I believe that people who work hard all their lives should be able to view the prospect of retirement with some degree of comfort and certainty about the adequacy of the income that they will have saved. Given that the great gift of the 20th century is increasing life expectancy for Australians in the 21st century, and given that retirement now is much more an experience of decades for Australians than the experience of a few years, nine per cent is simply not enough. This is especially the case for women, who may have breaks in their careers to raise families and who indeed have a longer life expectancy than men.

This is why the Gillard government is committed to raising compulsory superannuation from nine to 12 per cent. Lifting the rate means that an employee aged 30 today on average weekly earnings will retire with an additional $108,000 in superannuation. A female aged 30 today on average weekly earnings with an interrupted work pattern could retire with an additional $78,000 in superannuation. Why on earth would any political party in this place want to encourage the idea that Australians should work hard their whole lives and then face retirement in an income environment which does not provide for an adequate replacement rate? (Quorum formed)

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

Mr Deputy Speaker, on a point of order: under standing order 91, I point out to all members of the House that the decision to pull a quorum on a minister when they are closing on important legislation just demonstrates how reckless this opposition is and how determined it is to destroy the standards of this place for its own political purposes.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

Order! I note the Government Whip's comments. I call the Assistant Treasurer.

Bill Shorten (Maribyrnong, Australian Labor Party, Assistant Treasurer) Share this | Link to this | Hansard source

This is why the Gillard government is committed to lifting the superannuation guarantee from nine to 12 per cent. The bills deal with the formal transfer of responsibility for the general administration of the early release of superannuation on compassionate grounds. The responsibility currently resides with the Australian Prudential Regulation Authority. The transfer is simply a change to the administrator of the function of determining eligibility for early release. I commend the bill to the House.

Question agreed to.

Bill read a second time.