Chris Bowen (McMahon, Australian Labor Party, Shadow Treasurer) Share this | Link to this | Hansard source

Here we are in the final sitting fortnight of this year and we are finally debating the government's superannuation legislation, the Superannuation (Objective) Bill 2016 and related bills. I guess it is surprising that we are debating it at all, given that it was the position of the government until budget day that they would never tax superannuation differently.

It is worth a brief recount of how we got to this point. In April 2015, the Labor Party announced a superannuation package to better target tax concessions in superannuation. It was a substantive policy announcement on behalf of the opposition, raising a considerable amount of money and making the superannuation system fairer. Of course, the government responded strongly when we announced that policy, and one person in particular led the fight. He was at the time the Minister for Social Security and, since then, he has been made the Treasurer. He has had a lot to say about superannuation in both portfolios. He said, following our announcement, that the Labor Party would change the superannuation tax arrangements if we were elected to government. He said, for example:

That is why we are so adamant about not having adverse changes to superannuation, that’s why we aren’t going to increase taxes on superannuation …

That is what the Treasurer said. There is a pattern here. When the Treasurer says he is adamant about something, it is a cause for real concern.

He said he was adamant that he would never change taxation rules for superannuation. He said it was a matter of great passion to him and that he was going to introduce 'big and broad and sweeping' personal income tax cuts. Of course, he did not do that, because that was going to be funded by the increase in the GST, and the Prime Minister cut him off on the issue of the increase in the GST. But the quotes go on from the now Treasurer. He said:

Well we do want to encourage everyone Dale to be saving for their retirement and particularly when you are drawing down on that when you are retired we don’t want to tax you like Chris Bowen does.

That is a direct quote from the Treasurer. He then said on 5 May 2015:

It’s the Labor Party who wants to tax superannuation, not the Liberal Party, particularly the incomes of superannuants and I think that’s a fairly stark contrast that’s emerging.

It is interesting that he said that on 5 May 2015, because a year later, in May 2016, he stood at the despatch box and brought down his first—and quite possibly only—budget, and that budget that he introduced contained substantial changes to the taxation treatment of superannuation. These are things that the Treasurer said he would never do. But this budget announcement was far from being a matter for congratulations for the Treasurer—though, at least he came around to the Labor Party's way of thinking; we accept that. The Labor Party led the debate, and he eventually saw the merit in what the Labor Party was putting. But, as he did so, he completely botched the delivery of this superannuation tax package. He got it wrong and it had to be revised and redrafted post-election, because he had announced in the budget a retrospective tax measure. We can have our arguments in this House—and I would argue that you do not expect the Liberal Party to believe in much—but you do expect the Liberal Party to stand against retrospective tax changes. The one thing that you would expect the Liberal Party of Australia to be consistent on is that we should not change tax retrospectively. It is an important principle—and I tell you what, Mr Speaker, the Labor Party believes it too—because if Australians are complying with the law of the land at the time, acting in good faith, they should be able to invest, make their decisions and plan their future knowing that a future government will not come along and fiddle with those laws retrospectively.

There have been a very small number of instances where a retrospective tax change was justified. The only one I can think of was in 1982, when then Treasurer Howard changed the tax laws retrospectively to deal with bottom-of-the-harbour tax evasion. That was justified. But that was one of the very rare instances where you could say that principle could be breached, in that case because of the egregious behaviour of people engaging in tax evasion. It certainly was not justified in this instance.

The Treasurer had a unique response to the concerns raised—in fairness, in his own party room, the Nationals' party room, by us, by superannuants and by the sector—about this retrospective tax change: he said it is not retrospective. He just denied that it was retrospective. There was a dead giveaway in the budget papers, because the 2016 budget said this measure applied from 2007. It was a dead giveaway that it was retrospective. The giveaway was in the budget measure itself. When a budget measure in the 2016 budget applies from 2007 it is retrospective.

Of course, the Treasurer was, in a humiliating backdown, forced to change that post-election. We had suggested that the measure be changed to a cap of half a million dollars prospectively. He did not do that. He took a slightly different approach. He made the cap annual. I have no problem with that in principle. Showing the sort of bipartisan approach we can when the government admits it got it wrong, we said: 'Yes, we think an annual cap prospectively works. We can deal with that.' He then dropped two other measures. He dropped the measure relating to the harmonisation of contribution rules for those aged between 65 and 74, and he delayed, in fairness, another measure relating to catch-up concessional contributions. They are three changes. The Treasurer came out and said he had made just one change to the election package. He said, 'Yes, we changed the package we took to the election, but it was only one small change.' In fact, there were three changes. That is what you get from a Treasurer who has octupled the budget deficit on his watch: you get a Treasurer who is just not up to the task of managing Australia's economy or superannuation system. What we get is this sort of bad policy on the run.

Let me be very clear: This package is better than it was. This package is better than nothing. We are glad the government have finally acknowledged the need for superannuation tax reform. What we will do, in this debate and in the other place, is make sensible suggestions as to how it can be improved. The government lecture us about the AAA rating. They lecture the Australian people, pensioners and students about the need to tighten their belts. They lecture families. Then they introduce these measures, which will cost money, and they introduce them in a way which could be improved. The suggestions we make would add $1.4 billion to the budget bottom line over the next four years and more than $18 billion to the budget bottom line over the next decade.

The Treasurer says that these new measures are vital and necessary, but he has already dropped one. He says they took them to the election, they are going to continue with them and the measures are absolutely vital, but he has already dropped one. If he has dropped one, he can drop more in the interests of budget fairness and budget repair. The Treasurer seems to think that he can breach election promises but he will choose which election promises he breaches and the circumstances in which he breaches them.

Well the fact of the matter is this parliament can say, given the pressure on the budget, 'we have a better way', and that better way goes to keeping the annual cap but making it $75,000 instead of $100,000. That is a better measure. I recognise it is not the biggest change that has ever been suggested in the course of this parliament. It is not a revolutionary change but it slightly better targets the measure. The number of people who would contribute between $75,000 and $100,000 is small and of course it is primarily focused on those who have higher incomes.

We have a situation here where we are saying our other proposals, which were in fact first outlined by the Leader of the Opposition in the Press Club earlier this year, would also improve the budget bottom line. We are glad that the government has adopted Labor's position of targeting the division 293 tax threshold better. The contribution tax was originally at $300,000, but the government has now agreed to bring that down to $250,000. But we again argue in this time of fiscal restraint, in this time when the budget is under pressure, in this time when the government may lose the triple-A rating before Christmas or next year that it would be better to target that at a level of $200,000. Again, I accept that not everybody will be wildly enthusiastic about that idea, but we do need to ensure the priorities of the system and we need to ensure that the tax concessions are properly targeted. We need to do that because we know that the current system sees half of all superannuation benefits flowing to the top 20 per cent of income earners. In fact 40 per cent of the benefits of superannuation tax concessions go to the top 10 per cent of income earners alone.

We will have a discussion later about the objective of superannuation, but I would have thought we could all agree that one of the objectives of superannuation is to lift as many Australians as possible out of the age pension so that they can have a dignified retirement based on their own savings through superannuation. It is better for the budget and better for them. But if you have the situation where 40 per cent of the benefits are going to the top 10 per cent of income earners, that is not achieving that objective. Superannuation was not designed by the Labor Party in the 1980s and 1990s as a high-income estate planning mechanism. It was designed to lift people out of poverty and to give as many Australians as possible a dignified retirement without recourse to the full age pension, taking pressure off the federal budget and giving Australians a chance to share in the wealth creation of this nation.

With all due respect to Australia's top 10 per cent of income earners, it does not matter what the tax concessions are on superannuation. If you are in that bracket no doubt you have made smart decisions and worked hard during your life but you will not darken the door of the Centrelink office regardless of what the tax concessions are in superannuation. You do not need those tax concessions to ensure that you do not fall back on the age pension in retirement. So we do need to better target those tax concessions.

Also we do not propose to support proceeding with the other new measures that the government is implementing via this legislation—the tax deductibility for personal superannuation contributions and the catch up concessional contributions. Again, this is not a matter in which we say we have an in-principle objection, an ideological objection or an objection which would withstand all time but we say, if we are having this discussion about how to improve the budget, these two new measures combined come up to over $12 billion over the next decade in new tax concessions.

So we are taking the responsible approach and saying to the government, in effect: 'We will release you from your commitments; we will not criticise you for dropping these measures because the budget is under pressure since the election.' The triple-A rating has been put on negative watch. Since the election, the pressure on the budget has grown, and so we are, in effect, saying to the government: 'We will release you from the obligation. We will not hold you to it. In fact we will support you dropping those measures as a measure of bipartisan support for budget repair.' You would think that the government, with the budget under such pressure, would accept that offer. It appears they will not. They have said they will not. That is a matter for them, but we will pursue that through the appropriate mechanisms of the parliament. Whether they are adopted or not by the government or by the other place, I cannot predict. But they represent Labor policy. If they are not adopted, we will take them to the next election and they will be reflected in our commitments at the next election whenever that may be.

I want to make it clear that we will move the appropriate amendments, and I will move a second reading amendment at the conclusion of my remarks today—and I hope the government will support it, as they have done on previous occasions. They have supported second reading amendments which are sensible and well crafted. I see no reason why the government would not support this one. It is a very good one. In the Senate we will also pursue amendments.

If the government refuse, at the end of the day, to accept those amendments, we will not give the government an excuse to walk away from this legislation. I will not give this Treasurer an excuse to walk away from what he has been dragged kicking and screaming to do. We will not let the perfect be the enemy of the good, and we will facilitate the passage of the legislation. I hope the Treasurer goes to the ratings agencies and says, 'Look, we can pass legislation which improves the budget bottom line. We can do so with the opposition's support.' And he is free to say, 'Look, the opposition even moved amendments which would have improved it by $1.4 billion but we chose not to accept them.' He is welcome to do that too.

And I will point out, in my interactions with the ratings agencies and in the public discussion about budget repair, that we have a superior position, which would have improved the budget more if the government had adopted it, and it will reflect our policy at the next election. But we will not seek to frustrate the passage of the legislation, because good is better than perfect. While the government, in their own stubborn fashion, are refusing to accept Labor's sensible suggestions, we will not allow the government to use that as an excuse for them to walk away.

I also want to flag, given that this is a cognate debate, the matter of the superannuation objective. The superannuation objective which the government is seeking to legislate arises out of the Murray review. The Labor Party responded positively to the recommendation in the Murray review that superannuation should have an agreed, legislated objective. I have said publicly that it is an idea arresting in its simplicity. Many people would think that we already had one, but we do not. Superannuation means different things to different people, in terms of what it is designed to achieve.

I sometimes joke that in 12 years in this House, with about six years in the ministry and five years in the cabinet, I have never heard a public policy problem which has not had one of two solutions suggested for it: either teach it in the curriculum or force superannuation funds to invest in it. That answers all problems. The Minister for Infrastructure and Transport knows that that answers all problems—force superannuation funds to invest in infrastructure. But the thing is: that would not meet the objective of superannuation. The objective of superannuation should be a dignified retirement for as many Australians as possible. Whilst many superannuation funds do invest in infrastructure—and it is a very good thing that they do, and, if they can get good returns, that should be welcomed—it is not what the system is designed for.

So we should have a bipartisan agreed objective. I am sorry to say that, at the moment, we do not. In fairness, I give credit to the government and I give credit to the Minister for Revenue and Financial Services, in particular, who reached out to the Labor Party before the last election, before the last budget, and asked for discussions about reaching an objective for superannuation—and we had those discussions. Without going into the detail of those discussions, those discussions were going fairly well. I think it was well within our wit to find an agreed objective for superannuation, in a bipartisan fashion. But then what happened? I am not critical of the minister for revenue in this instance, because she was trying to reach agreement with the Labor Party—we needed more time to do so, but we were getting close. Then, lo and behold, the Treasurer on budget night got up and announced that he would legislate an objective for superannuation.

The objective that the government announced is not bipartisan and has not been agreed with us and will not meet with our support. If the government wants to continue those discussions which the minister and I had before the election, I am very open to that idea. I think we could reach a bipartisan objective for superannuation. That would be better. But we are not simply going to sign up to an objective which the government decides and which we think could be improved and which many in the sector think could be improved. If you look at the comments on the objective by various groups, ranging from the Institute of Public Affairs to industry funds, they all have complaints about the government's proposed objective. We do not think it is fit for purpose, so we are not just going to blindly vote for something which has not been the subject of proper consultation and discussion with us and which could be done so much better.

This is not time critical. I have accepted, in terms of passing the government's legislation, that it would be better done more quickly, to provide the certainty for the sector and for superannuants and to allow people to make the necessary plans for the changes. But that does not apply to the objective. The objective is not time critical. The objective could be handled through discussions and could be an agreed objective going forward. It is important that it be an agreed objective. Murray recommended that it had broad political agreement, for good reason. Governments change from time to time. The government may change at the next election. And what we do not want is a situation where a new government comes in and fiddles with the objective because they did not agree with it when it came in. It would be better if we had one agreed objective. Agree on it now. Get it right the first time. And then, if the Labor Party comes to office at the next election, we will not have to change it because we agreed to it now, and then the Liberals will not have to change it when they eventually retake office 20 or 30 years after that, because they will have agreed to it now.

Jim Chalmers (Rankin, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

Under an O'Dwyer prime ministership.

Chris Bowen (McMahon, Australian Labor Party, Shadow Treasurer) Share this | Link to this | Hansard source

Steady on! Don't push the envelope, Member for Rankin! But what we see instead is the government, in a bloody-minded fashion, just attempting to ram through legislation to get an objective for superannuation. I do not think the minister was in the House when I said that she, in good faith, reached out to the Labor Party. I commended her for it. I do not blame her for the current situation. She was trying. I was trying. We just needed a bit more time. The budget and the election intervened, and we could not reach agreement. But we should attempt to now. I had already outlined previously a proposed objective for superannuation, but I was not wedded to those particular words. We were not being obstructionist about it. We could have changed those words, and that is what the minister and I were discussing; we were getting very close, but, alas, the Treasurer decided to come in over the top, to intervene and stop those discussions, in effect, by announcing his own legislation. Well, that is not legislation that we would support in this House or the other, and I dare say that that will be the subject of some debate in the other house.

As I conclude my remarks, I move the following second reading amendment which has been circulated in my name:

That all the words after "That" be omitted with a view to substituting the following words:

"whilst not declining to give the bill a second reading, the House notes:

(1) the Budget is under threat due to this Government’s poor economic leadership, which is hitting the pay packets of Australians and risking our triple-A credit rating;

(2) the Opposition has been leading the debate on reforming superannuation tax concessions for over a year;

(3) while the Government’s superannuation package goes some way to reforming these concessions, they could go further;

(4) the Opposition has outlined a clear position for sustainable and fairer super tax concessions that includes:

(a) lowering the High Income Superannuation Contribution threshold to $200,000;

(b) lowering the annual non-concessional contributions cap to $75,000;

(c) opposing the introduction of catch-up concessional contributions; and

(d) opposing the changes to tax deductibility for personal superannuation contributions; and

(5) the Opposition’s position on the super package would improve the budget by $1.4 billion over the forward estimates and $18.9 billion over the medium-term".

I hope the government can support that second reading amendment in good faith, as they have supported good, well-drafted second reading amendments in the past. This is a very good one.

That would see bipartisanship reach new levels when it comes to superannuation—because the government has moved in this debate. They have moved to accept our argument that tax concessions could be better targeted—not just by dealing with them at the top end but by dealing with them at the bottom as well, for low-income earners. And the government expects praise for that. Well, only to a certain degree, because what they have done is to reinstitute something that they abolished. They inherited a low-income superannuation contribution. They abolished the low-income superannuation contribution, against the votes and complaints and objections of this side of the House. We said: 'Why would you abolish the one tax concession for low-income earners in superannuation—the only bit of support that low-income earners get to build their retirement? Why would you abolish that?' This government was adamant that it had to go. They rammed it through the parliament with the support of the then Palmer United Party. And, before that abolition has even been implemented, they bring it back through this measure. Well, we are glad that they saw the error of their ways. They took decisive action, and changed the name from the 'low-income superannuation contribution' to the 'low-income offset'. I mean, that is a massive change! But everything else is effectively the same.

So we support the better targeting of superannuation tax concessions. We say it could be done better. We say it could go further. That is what our amendments will seek to do. At the end of the day, we will facilitate passage of the legislation because that is the right thing: to provide the certainty that the sector needs. It is the right thing to do to provide at least some budget repair, even though there could be more. And we will continue to lead the debate on superannuation, as this side of the House has done under the leadership of the member for Maribyrnong since April 2015. We will continue to provide that leadership. We will continue to prosecute the case. And, I dare say, we will continue to win those arguments.

Tony Smith (Speaker) Share this | Link to this | Hansard source

Is the amendment seconded?

Stephen Jones (Whitlam, Australian Labor Party, Shadow Parliamentary Secretary for Regional Development and Infrastructure) Share this | Link to this | Hansard source

I second the amendment.

Tony Smith (Speaker) Share this | Link to this | Hansard source

And reserve your right to speak?

Stephen Jones (Whitlam, Australian Labor Party, Shadow Parliamentary Secretary for Regional Development and Infrastructure) Share this | Link to this | Hansard source

Yes.

Tony Smith (Speaker) Share this | Link to this | Hansard source

The original question was that this bill be now read a second time; to this, the honourable member for McMahon has moved as an amendment that all words after 'that' be omitted with a view to substituting other words. If it suits the House, I will state the question in the form that the amendment be agreed to. The question now is that the amendment be agreed to.

Kelly O'Dwyer (Higgins, Liberal Party, Minister for Revenue and Financial Services) Share this | Link to this | Hansard source

I am very glad to rise to speak on these three important bills, the Superannuation (Objective) Bill 2016, the Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016 and the Superannuation (Excess Transfer Balance Tax) Imposition Bill 2016. Superannuation is a $2-trillion—and growing—industry. But even more important than that undoubtedly very impressive figure is this. Superannuation in large part determines how most Australians are able to live for about one-third of their lives. It means our superannuation industry must look to the future.

Let me underline that point with a bit of history. It was in 1908 that the Deakin government established the old-age pension in Australia. It was a move that had enormous significance—then, obviously, but also for the political and policy debate today. At that time, the life expectancy for men was 55, while for women it was 59. Few Australians at that time were likely to reach the age 65 pension milestone. Indeed, in 1911 it was only about four per cent. Despite that, however, it was still means tested and character tested—and it had to be. Even then the government was struggling to pay for the scheme's limited reach.

The challenges of those times resonate today. Last year's Intergenerational report showed that by 2055 the number of Australians aged 65 and over will more than double, while one in every 1,000 people will be 100 years or older. At the same time, the number of people of working age for each person aged 65 years and over is decreasing. This dynamic will put pressure on our retirement income system, a system that today includes the age pension, superannuation and other savings. It will also burden younger generations with increased taxes to pay for the retirees of today and then their own retirement in the future—if we do nothing. These bills provide us with an opportunity to modernise our retirement income system, to make sure it works for everyone, to ensure there is a clear and unambiguous objective enshrined in law, to ensure that the tax concessions that apply to superannuation are sustainable and that the system is fair and has integrity, and to ensure the system is flexible, accommodating the wide range of working arrangements and patterns people follow across their lifetimes.

Despite its critical importance, there has never been a clear legislated objective for superannuation. This has meant that it has been too easy for different governments to make ad hoc changes to the superannuation system and, ultimately, undermine confidence in it. That is why the financial system inquiry, a root-and-branch review of the financial system, recommended that the government enshrine in law the objective of superannuation—that is, to provide income in retirement that substitutes or supplements the age pension. It means we now have a clear definition of what our superannuation system is intended to do and what it is not intended to do. I believe that this clarity will promote confidence in the system overall and provide a framework for evaluating future changes. And it is important that we do not introduce new subjective measures into this definition, because that, of course, would lead to future governments potentially politically interfering in superannuation, which is what we want to avoid with a very clear objective.

Let me now turn to the flexibility measures in this legislation, which will help people to save for their retirement. Australians are hardworking and aspirational, and the government does not want to put a handbrake on that aspiration when it comes to people saving for their retirement. For instance, we know that people have very different work patterns. Some might have multiple jobs and several careers across their lifetimes. Others might take breaks from work to look after children or to care for an elderly parent. As it stands, the system offers little in the way of flexibility for these Australians. It is structured in such a way that favours higher income earners who work full time, without breaks, for the entirety of their working lives. And that must change.

It is easy to talk about these bills in a very abstract way and lose sight of how legislation can help everyday Australians. So let me give an example of how the government's flexibility measures will help an individual going about saving for their retirement. Let us use the example of Sarah. Sarah is 32 and runs and owns her own baby clothing business from home as a sole trader. She also works part time in the hospitality industry while raising two children. 'Busy mum' does not even begin to describe her situation. At the moment, Sarah has a superannuation balance of $25,000 and, over the last year, she has earned about $20,000 in her hospitality job, including $1,900 in a superannuation contribution from her employer. In addition to this, Sarah has made $60,000 from her business, giving her an assessable income of $80,000.

So what does the current system hold for Sarah? She would not be able to make deductible personal contributions from her business income because she receives more than 10 per cent of her income from employment. Not only that; because her employer does not offer salary sacrifice, she would not be able to make any voluntary concessional superannuation contributions. In other words, Sarah's only concessional contributions would be the superannuation guarantee on the one-quarter of her income that comes from wages. Furthermore, because she cannot make voluntary concessional contributions, she also cannot reach a rate of contributions anywhere near the superannuation guarantee rate of 9.5 per cent, let alone exceed it.

However, under the government's legislation before the House, Sarah's outlook in 2018-19 is a lot brighter than it is today. For instance, Sarah would be able to make a $10,000 personal contribution and claim a tax deduction for it. This amount will then be taxed at 15 per cent in the fund, rather than at her marginal tax rate of 32½ per cent, making the contribution concessional. From 1 July 2017, the annual concessional cap will be $25,000. This means Sarah will have the unused concessional cap space of $13,100, which is available to carry forward for up to five years starting from 1 July 2018. Additionally, because her superannuation balance is below $500,000, Sarah can contribute up to $38,100 in concessional contributions the following 2019-20 financial year. Because Sarah's business income varies significantly from year to year, this will allow her to make larger contributions in the good years when she can afford to do so. It is a big change, and it is an important change for the many hardworking Australians who are in similar situations to Sarah. They are the Australians who come to mind first when I say that I want a superannuation system that works for everyone.

I also want to highlight some numbers to show the reach of these changes. By removing the 10 per cent rule, this alone will improve the superannuation balances of more than 800,000 Australians. The one-third of hospitality workers and around half of farm workers who do not have salary-sacrificing arrangements, and are therefore limited by this rule, will have a door opened for them. Meanwhile, the unused concessional cap carry-forward, to take effect from 1 July 2018, is expected to be used by around 230,000 people in the 2019-20 financial year alone. And it is worth noting that this measure will be available to anyone with a balance of less than $500,000, which in 2013-14 was up to 14 million individuals. It could include mums, dads, carers, those who have taken extended leave because of illness and those whose circumstances have changed, such as when children are no longer at school and those expenses can be redirected.

These numbers I have mentioned are worth reflecting on. It is amazing then that Labor come into this House and oppose these very flexibility measures, citing affordability to the budget, at the same time that they are trying to punch a bigger hole in the budget with tax cuts for Swedish backpackers. Together, these bills play an important part in giving Australia a superannuation system that achieves its objective, is equitable, sustainable, flexible and has integrity. So I commend these bills to the House.

Jim Chalmers (Rankin, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

Thank you very much, Deputy Speaker, for the opportunity to speak on the Superannuation (Objective) Bill 2016 and cognate legislation and to support the amendment moved by the member for McMahon. Our superannuation system in Australia is the envy of the world, but it has some imperfections, and, whether it is the enviable bit or the imperfect bit, the public policy that we make in this building is part of that story. When we consider the imperfections in the system—the ones that we have a responsibility to carefully address in a considered way—there is a lot of work that needs to be done: firstly, when it comes to adequacy; when it comes to issues like the substantial gender gap that exists in superannuation; and also when it comes to issues around compliance, with something like 690,000 Australians not even getting paid the superannuation that they have earned and that they deserve, missing out on something like $2.6 billion a year—a big and growing problem in compliance in superannuation.

As I said, it is our responsibility to carefully address each of these challenges. Unfortunately, when you look at a lot of the measures implemented by those opposite, you see they are proving to be part of the problem and not part of the solution. I will give you a couple of examples. When it comes to adequacy, there were legislated increases to 12 per cent regarding the superannuation guarantee, but those opposite have frozen that three times now, so it is stuck at 9½ per cent. They flagged on the front page of a major newspaper earlier in the year that that freeze might be permanent, which would have devastating consequences for adequacy in superannuation. In relation to gender, one of the most important initiatives was the low-income super contribution—I will come back to that in a moment—being reinstated in this bill, with our support. But that was abolished by those opposite. Most of the people benefiting from the low-income super contribution were women, and that was a very disappointing decision taken by those opposite. When it comes to compliance and the 690,000 Australians I mentioned who are missing out on super, earlier this year those opposite tried to water down the penalties for those employers who do not pay their employees the superannuation that they have earned and they deserve.

In all of these ways, when we do have acknowledged challenges in our superannuation system and we do have a very substantial role to play in public policy out of this building, it is very disappointing to see that some of the government's measures have been attempted in some cases and put in place in other cases. When we think about the imperfections in the superannuation system, the main thing is the way that superannuation tax concessions are so horribly skewed towards those with the most money in the superannuation system. Even the financial system inquiry, initiated by those opposite, with a report written by David Murray with help from a lot of good people around the financial services community, concluded that those tax concessions were horribly skewed. Thirty-eight per cent of the concessions go to the top 10 per cent of earners—more than the combined benefit to the bottom 70 per cent of Australians. It was obviously not the original intention of superannuation to see tax concessions skewed in that way.

I think the original sin, if I may put it in those terms, was really during the Costello treasurership, when he took what was a progressive and well-designed retirement income system and sort of grafted on top of it an estate planning vehicle. What we really got from that big decision taken in the 2000s around the tax arrangements was a fair amount of fiscal vandalism and really the beginnings of this problem that we are addressing today. We do not agree with all the ways that those opposite are going about this, but it is important that we recognise that that original sin—the Costello change in the 2000s—has created this situation where tax concessions are now so horribly skewed towards the wealthiest people in the system. That was a policy failure by anyone's definition, and it is the main reason why we are debating these important bills today and why they are necessary.

It gives us no comfort to see the typical and characteristically shambolic way that we have got to this point, when you consider the history of this debate. It was the member for McMahon and the former member for Oxley—a great contributor to this place, Bernie Ripoll—who announced with the Leader of the Opposition in April 2015 that we would do something very courageous but very well considered, which is to begin to address these issues at the top end of tax concessions in superannuation.

Of course, those opposite said that that would be the end of the world, that that would be a terrible outcome and that we could not possibly change the tax concessions in super. But then, lo and behold, on budget night earlier this year, we had what were pretty dramatic and pretty drastic changes proposed by those opposite. Then we had the election, where it really blew up as an issue in lots of parts of the country, and then we had, of course, the shredding of the original policy and the rewriting of the policy by the member for Dawson and others, with what seemed to be, from our point of view, very little input from the Treasurer—that it was really rewritten by the backbench, who were so desperately unhappy with the first draft provided by the Treasurer.

What we then saw was what I like to call the five stages of shambles when it comes to policymaking on that side. It began with denial that there was a problem. Then it became a 'big surprise' policy announcement that they had not consulted on, followed by confusion over what it means, including from the Minister for Revenue but also the foreign minister and others who could not explain the basic details of the changes. Then we had the dishonesty about the retrospective elements of the policy. Then we had the division, as it was hastily rewritten on the back of a beer coaster by the member for Dawson. So we saw the five stages of shambles here in superannuation policy, which really showed us how not to go about superannuation reform in this country.

Unfortunately, it is the same sorts of ingredients we are seeing with the discussion around the superannuation objective as well, which was legitimately and genuinely supposed to be a bipartisan process, as the member for McMahon went through in some detail. There were discussions going on. I thought the discussions were healthy and a good sign of working together in this place, but then of course those discussions ended abruptly and we had the announcement on budget night. Nobody out in the broader community seems to support that objective, including the stakeholders. So we have the same problem that could have been avoided. But it has not been avoided because those opposite did not learn the lesson.

We have done our best to be constructive, not just when it comes to the objective but also when it comes to the broader policy sweep. In that context, in that vein, there are elements of the bills that we are debating today that we on this side of the House do support. It is worth noting that we support the $1.6 million transfer cap. We do support improving the super balances of low-income spouses. We do support removing the anti-detriment provision. We do support strengthening the integrity of retirement income streams.

Probably most notably, given what I said before about the low-income super contribution, we of course support the reinstatement of that. It should never have been abolished in the first place. It is a shameful episode when you consider the impact on women in particular. As my terrific colleague from the other place, Jenny McAllister, senator for New South Wales, said, if we had known your only problem was with the name of the thing, we could have resolved this two years ago, before you abolished it. It is good to see the policy intent of that measure. A new name, so be it, but it is back and is a feature of the superannuation system in this country. It is a very important measure, and we support it. There are other measures, of course, that we oppose, and those have been discussed at some length. The minister referred to them, as did the shadow Treasurer. The ones that we do not intend to support are the catch-up concessional super contributions, the tax deductions for personal super contributions and there is one other that I will not go into.

I think the most important contribution we can make, given the shambolic way that this policy has been made by those on that side of the House, is to play the type of constructive role that says that we have found ways to improve the policy. We have a substantial contribution to make on that front, given that we have led this debate over the last couple of years. So we are proposing some changes, including lowering the annual non-concessional contributions cap to $75,000 and further lowering the high-income super contribution threshold to $200,000. There are also the measures that we oppose and a couple of other odds and sods as well. What we are trying to do is say to the government, 'We think we can do a better job making superannuation even fairer.' We support some elements of what the government is proposing, because they do take tentative steps towards a fairer system, but we think there is no reason why we cannot take this opportunity to make it even fairer than what the government is proposing.

At the same time—and this is no small thing—we do have a situation at the moment with our AAA credit rating. This AAA credit rating was won from all three agencies under the former Labor government, proudly—a much coveted, highly sought after AAA credit rating from the three agencies. One of those agencies has said that that AAA credit rating is at risk. It has said multiple times now on Treasurer Morrison's watch that that AAA credit rating is at risk.

So what we have done here in this bill and in other policy areas as well, including negative gearing, capital gains and other measures too, is that we have said to the government: 'Look, you've got a big problem here. The AAA is at risk. The 2015-16 deficit blew out by a factor of eight from the PEFO in 2013 to the final budget outcome. We've got a 2016-17 deficit which has tripled. Our net debt has blown out by well over $100 billion, and, if we believe Deloitte Access Economics, that number is blowing out substantially more than that. We've got a big problem on Treasurer Morrison's watch, and we need to address it.'

So what we are saying—and over and over again we get the lectures from those opposite about playing a constructive role—is: 'Here, if you want to take it, is an extra $1.4 billion over the forwards and an extra $19 billion over the medium term. We want you to copy our homework. We want you to pick up this policy and run with it. Now is a good opportunity, having taken the tentative steps towards a fairer super system, for you to get it right and to pick up the suggestions that we are putting on the table. That is really an investment in protecting that coveted AAA credit rating, which is at serious risk after the midyear update on 19 December. So here it is. If you want us to be constructive when it comes to savings, pick up and run with the proposal that we are putting on the table for you to take and run with today.' We are proposing to make the superannuation system fairer. We are proposing to save more money in the process and to protect that AAA credit rating.

I had the privilege of being in this portfolio before the election. Over that period from 2015, all the way through the election and all the way through those opposite's budget announcement, there was really an enormous amount of goodwill and constructive contributions from all parts of the superannuation system and the broader financial services world. I want to acknowledge all of that input that I had over that period. It really has fed—not just with me but with the shadow Treasurer and with Senator Gallagher, who holds the portfolio now, and Bernie Ripoll, who held it before—into a tremendous amount of goodwill in the sector. People do genuinely want to get these things right.

The more that we in this place can listen to people in the broader community but also people from the peak organisations, the super funds and the consumer groups, the better chance we give ourselves of getting these big policy decisions right. It is no credit to this place and especially to those opposite that, when you announce these big changes as a surprise on budget night, having said for some months that they were not necessary, without consultation, without working through the retrospective elements and without working through the significant and genuine feedback that people have, you get this kind of shambolic process that has led us to this point today.

Superannuation is a precious, cherished policy achievement not just of our side of politics, though we are definitely proud of that achievement, but also of this parliament and also of the nation beyond these walls. Superannuation is something that other countries look at in Australia, and they wish that they had a system like ours. Our responsibility is to cherish it and to improve it in a careful way, in a considered way and in a consultative way, because at the end of the day, even though what we say here and do here has such a big impact on the superannuation system, it is, after all, all about a dignified and secure retirement for the people we represent, the millions of people who would rather have self-sufficiency in retirement than rely on the age pension, as the member for McMahon said before. Our responsibility is to get it right for them so that we give the Australian people the best possible chance of a retirement that is secure, rewarding and enjoyable, one that is based on the contributions that people have made throughout their working life. In our superannuation system, the benefits far outweigh the imperfections, but it is incumbent on us to get it right and to go about reform in the right way, not in the shambolic way that has got the government to this point to date.

Jason Falinski (Mackellar, Liberal Party) Share this | Link to this | Hansard source

It is with great alacrity that I speak on the Superannuation (Objective) Bill 2016, as it was one of those changes during the election campaign that excited many people in my electorate. In fact, my favourite piece of correspondence during the election came from a Mr Bill Snodgrass, who lives in Palm Beach. He reflected that he did not think the Treasurer was terribly smart because the Treasurer keeps saying that only four per cent of Australians are impacted by these changes to superannuation. So it made absolutely no sense, and he had proof that it made no sense, because everyone he spoke to in Palm Beach has been impacted adversely by these changes.

The government changes to superannuation is clearly an important issue for the people of Mackellar and for all Australians. But the fact of the matter is that this is what good microeconomic reform looks like. These changes are about ensuring that our economy allocates scarce capital as effectively and efficiently as possible to ensure our economy grows. Savings in super funds are usually and quite properly put into conservative investments. That is a good thing, not a bad thing, unless we start excessively saving in these vehicles to maximise tax benefits.

If we are too risk adverse in our investments of capital then we limit opportunities for new businesses and ventures that need to access risk capital. These changes to superannuation are not a numbers game. They are not purist, theoretical economics. They are about reducing inequality in our society at large. Removing disincentives to risk capital will secure jobs growth, wages growth, more competition in the market and better choices for consumers. This means employment for the unemployed. It means increased wages for hardworking Australians who aspire to a better future for themselves, their friends and their families. It means increased competition in the markets—so greater and better choices for consumers. It means producers that currently have limited avenues through which to distribute their products will have greater choices when choosing to market them. Everyone will be happier—well, everyone except for entrenched players; those with a vested interest from the business world or the union movement who have taken advantage of hardworking Australians for far too long.

For those who have saved for retirement and who do not want to rely on taxpayers—of whom there will be fewer as a proportion of those in retirement in the future—this is also a win. We cannot ignore that not changing the current system is leading to intergenerational problems. Tax incentives are benefiting savings for older, well-off individuals at the expense of younger and less-well-off people—in most cases their very own children. They have certainly aspired to a bright future and worked hard for what they have, but this cannot come at the cost of younger people and families in the workforce looking to save so that they can afford things like a home. This government's changes to superannuation will improve the fairness, sustainability, flexibility and integrity of the superannuation system. They will better position the superannuation system to meet the key challenges over the rest of the 21st century, including the ageing of our population and the need to return the budget to surplus. For the first time, the purpose of the superannuation system is defined in law to provide income in retirement to substitute, or supplement, the age pension.

These bills implement a specific recommendation from the financial services inquiry which found that while Australia superannuation system has considerable strengths it lacks efficiency in a number of areas. In particular, the inquiry said that the lack of clarity around the ultimate objective of superannuation lead to short-term, ad hoc policy making, added complexity, imposed unnecessary cost and undermined long-term confidence in the superannuation system. The changes this government has put forward will improve sustainability by better targeting superannuation tax concessions to hardworking Australians who aspire to be self-sufficient in their retirement.

All caps that form part of the government's superannuation reforms continue to be set at levels well above the average and median contribution levels. For example, the $1.6 million transfer balance cap is around twice the level at which access to the age pension ceases on account of an individual's assets. This illustrates that the transfer balance cap has been set at a level to support retirement income streams well above that provided by the age pension.

The median Australian worker currently makes annual concessional contributions to their superannuation of around $4,200 per year. For them, the concession cap will now be $25,000. The government is also ensuring that low-income Australians are not worse off, through the introduction of the low-income superannuation offset, to ensure most individuals with taxable incomes of $37,000 or less do not pay more tax on their concessional superannuation contributions than on their take-home pay.

The government's reforms not only improve the fairness and sustainability of the superannuation system; they also improve its flexibility and integrity. Flexibility will be enhanced by introducing measures to allow more people to claim tax deductions on personal superannuation contributions from 1 July 2018, making catch-up concessional contributions available to those with interrupted work patterns, like mothers returning to the workforce.

We have introduced measures to limit the superannuation system from being used for tax minimisation or estate-planning purposes and to ensure broadly commensurate treatment across the superannuation system between accumulation and defined benefit accounts. This package will make it possible for Australians to manage their superannuation and plan their retirement with confidence, while strengthening the foundation of the superannuation system for Australia's future.

When it comes to deductions for personal superannuation contributions, we are abolishing the so-called 10 per cent rule. This rule prevented anyone earning more than 10 per cent of their income from salary and wages from claiming a deduction for personal superannuation contributions. As a result, more people, not fewer, will be able to claim a tax deduction for personal contributions to superannuation. This reform will benefit up to 800,000 Australians, particularly self-employed contractors, individuals employed by small businesses and freelancers who are partly employed. It offers flexibility to people who are partially self-employed and partially wage and salary earners and in instances where employers do not offer salary sacrifice arrangements. It will also help small business compete on a level playing field for talented people. Currently, many small businesses just do not have the capability to offer salary sacrificing to their employees. This limits their ability to attract talented staff, particularly those who are moving closer to retirement age. Under this change, those employees will be able to access the superannuation concessions to the same extent as the rest of the community, without imposing red tape on the small businesses that they work for.

We have also introduced a low-income superannuation offset, to ensure that most individuals earning less than $37,500 will not pay more tax on their concessional contributions than on their take-home pay. This measure will boost the superannuation accounts of around 3.1 million Australians. The government are expanding the current spouse superannuation tax offset to help more couples where one partner makes contributions to their spouse's superannuation savings. We are extending it by making the offset available to those whose spouses earn up to $40,000 a year. This is up from the current threshold of $13,800 a year, and an additional 5,000 people can access this offset.

From 1 July 2018, people with superannuation balances of less than $500,000 will be able to access any unused component of their concessional contributions cap on a rolling basis for a period of five years. This is a crucial step in providing assistance to those, particularly women, who have interrupted work patterns, whether it be to raise children or look after elderly parents, or who seek to boost their retirement savings just before retirement. This gives hardworking Australians the flexibility to make catch-up concessional contributions when they can afford to do so. Annual concessional contribution caps can limit the ability for people with interrupted work patterns or variable incomes to make savings through superannuation. This goes to the very issue of fairness within the superannuation system. Over 90 per cent of Australians who have balances below $500,000 will be able to make these catch-up contributions if they have unused cap space to carry forward.

We are, of course, not forgetting the backbone of our economy: the small-business sector. Under the reforms, eligible small-business owners can make superannuation contributions that do not count to their non-concessional contributions cap where the contribution is the proceeds from the disposal of a capital gains tax asset that is exempt from CGT under the 15-year exemption or the retirement exemption. The 15-year exemption allows a maximum contribution of $1.415 million where it is an active asset that has been owned continuously for 15 years and the owner is over 55 years of age. The retirement exemption allows a maximum contribution of $500,000. Currently, both exemptions cannot exceed the cumulative total of $1.415 million. These contributions will continue to be available and will be in addition to the annual non-concessional contribution caps.

I am very proud that this government is implementing reform. It has listened to people who would be impacted by these changes to superannuation and has proposed a system that will benefit all Australians—for this is what good microeconomic reform looks like. This is how you grow an economy for everyone, not just the entrenched privileged few occupying positions of power.

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

I speak in support of the amendment moved by the member for McMahon to the second reading motion. It is a very sensible amendment that would improve the bills that are being debated here, the Superannuation (Objective) Bill 2016 and related bills, regarding the objectives of superannuation and a number of reforms to superannuation tax concessions. When I speak to my constituents about superannuation, the feedback that I generally get is that they are sick and tired of governments continually moving the goalposts around their retirement incomes. They are sick of governments changing the rules around superannuation. They think that superannuation is complicated enough. Just when they get used to a set of conditions that they can work with to save for their retirement, government comes along and moves the goalposts.

I appreciate that, when Labor were in government, we did make changes to superannuation. Some of those included the MySuper reforms for low-income Australian workers and the lifting of the statutory rate for employer contributions from nine to 12 per cent over the course of a 10-year period, but all of these reforms came from a series of recommendations in the Murray review, the most thorough investigation, consultation and review of the adequacy and the operation of Australia's superannuation laws since, basically, their inception—since the Keating years—to ensure that they were fit for purpose and that they met the objectives for which superannuation was established in Australia. Through that investigation, David Murray consulted with industry, Labor proposed reforms and we based those reforms on the recommendations of that inquiry. They were sensible amendments and conscious of the fact that Australians were tired of and had fatigue from some of the reforms that had been undertaken in the past. Nonetheless, we intended them to be a clear road map for superannuation to cover at least the next decade, based on the principle objective of sustainable retirement incomes for all Australians and removing the need to rely on the age pension in retirement.

Then, of course, the Abbott government were elected in 2013. They came along and completely changed everything. They undertook to stop a lot of the reforms suggested by the Murray review and put a freeze on the compulsory increase in superannuation contributions from nine to 12 per cent, basically because, as we all know, the Liberal Party do not believe in superannuation, never have and never will. They do not want to see retirement incomes for working class people in Australia increase. They do not want to see that pool of savings that is managed well—in fact managed the best—by industry funds increase so they put a stop to that increase in compulsory superannuation with no regard at all for the adequacy of superannuation balances, particularly for low-income workers, in this country and whether or not they are going to have enough to retire on.

The government had no regard at all for the future of the Australian fiscal position because, let's face it, if people have an adequate superannuation retirement fund, they do not need to rely on the age pension so that takes pressure off the fiscal position of the Australian government in supplying those aged pensions. They had no regard for that at all in that decision. They abolished the low-income superannuation contribution because, let's face it, the former Prime Minister, the member for Warringah, never really believed in superannuation and certainly did not believe in low-income workers, those on less than $37,000, getting a tax rebate to ensure that they had an incentive to save rather than remain on welfare. And they also sought to change the governance and the operation of superannuation bonds.

the member for Warringah of course was then rolled as the Prime Minister, and Turnbull, the member for Wentworth, was elected as the nation's Prime Minister. We then got another set of changes, another set of reforms, many of which were completely contrary to those proposed by the member for Warringah when he was the Prime Minister. I talk of course of the low-income superannuation contribution. The member for Warringah got rid of it; the member for Wentworth, the Prime Minister, sought to get back in this year's budget.

The government also proposed in this year's budget a number of changes to the taxation of superannuation, particularly the introduction of a very controversial retrospective lifetime cap for non-concessional contributions. Then of course the government's party room got angry. The government members all got battered from pillar to post during the election campaign and their party room got angry with the Treasurer. It became apparent that they did not like what the Treasurer was proposing and the Treasurer had a problem on his hands—he was not going to be able to get those reforms through the party room when it came to putting a bill to the party room for debate—so it was all put on hold. There was further confusion, uncertainty, disruption—stoked by this government—for Australians who were looking for some certainty about retirement incomes and the way that they could save for their future particularly in the context of being in the wake of the financial crisis where Australians were increasing the amount that they were saving. Australians were not encouraged to put it into superannuation funds by this government because of the uncertainty they had created.

The government announced that they were reviewing what was proposed in the budget. That is code for 'I cannot get this through the party room so I will announce a review of what is going on and further consultation'. By this time, the Australian people's heads were spinning. As if superannuation is not complicated enough but this government have once again—after two attempts at it—on the third go attempted to move the goalposts once again. All through this process, the stable, consistent and responsible approach has been taken by the Labor government. When the government again got themselves into this pickle of not being able to get these reforms through the party room, the member for Maribyrnong and the Leader of the Opposition announced at the Press Club earlier this year that Labor would offer a sensible compromise that would get the government out of its pickle, particularly in respect of retrospectivity, and raise additional funding on the back of targeting some of the tax concessions for the budget. The government ignored that sensible offer.

Finally, we get to these bills. It appears they have been amended once again. The Treasurer and the Minister for Revenue and Financial Services have been able to get these reforms through their party room. But the great shame is that the reforms reflect a political deal rather than good public policy. They have been rushed and are not in the best interests of many Australians, particularly when it comes to taking adequate action to target some of the superannuation tax concessions and, importantly, to raise additional revenue for the budget. There are some redeeming features in this bill—which I will go through in a moment—which Labor will support, particularly those amendments that will improve the adequacy and the effectiveness of superannuation and its impact on the budget, and those that target superannuation tax concessions for high-income earners.

In respect of those concessions, we do need to take action—and this is a problem that was identified a long time ago by the Labor opposition. Currently in Australia, 38 per cent of tax concessions on superannuation go to the top 10 per cent of income earners. It is inequitable, it is uneven and it is unsustainable. Those who are getting those superannuation tax concessions at the high end do not even need them. They are on high enough incomes to be able to save for their own retirement. If you are going to have concessions on superannuation, they need to be targeted, and well targeted, to the low end to provide the incentive for low-income workers to put aside an amount, hopefully additional to the compulsory contributions, to save for their retirement.

We can all thank the former Treasurer, Peter Costello, for these massive tax concessions on high-end superannuation. He introduced this massive wealth accumulation vehicle, which massively advantages those people on high incomes, by removing, in 2005, the superannuation surcharge which ensured that high-income earners paid a fair rate of tax on their superannuation contributions and earnings, rather than just 15 per cent flat tax. The government of the day got rid of that superannuation surcharge, and high-income earners paid just a flat tax rate of 15 per cent. Then, in 2007, they reduced the taxation on super to zero for Australians aged over 60. These are the two gifts that the former Treasurer Peter Costello left the Australian public. They cost the budget $2.5 billion in 2009-10, and they were unfunded. When they were introduced, during the mining boom, they were not offset by other reductions in expenditure or revenue-raising measures in the budget. They were accompanied by close to $50 billion worth of unfunded measures, which cost the Australian budget. Australians are now paying for the profligacy and inept management of Peter Costello as Australia's Treasurer. We are all paying for that at the moment, and that is why this parliament has to have a look at these tax concessions and take action. It is good to see that this bill rights some of the wrongs of the former Treasurer, but it does not go far enough.

Labor's package, in respect of the first measure in these bills, would support the government's $1.6 million superannuation transfer balance cap, which would apply on the total amount of accumulated superannuation an individual can transfer into the tax-free retirement phase. Any further contributions will need to be held in an accumulation account, where they are taxed at 15 per cent. We will support that first measure.

On the second measure, we would lower the annual non-concessional contribution cap to $75,000, rather than the $100,000 that this government is proposing, and we would also introduce a $225,000 carry forward measure. This, of course, replaces the government's controversial $500,000 lifetime cap in the government's original package. It significantly lowers the annual non-concessional cap, which is currently $180,000. Importantly, too, the ability to make any non-concessional contributions will be limited to people with superannuation balances of less than $1.6 million.

The third measure, the low-income superannuation tax offset of $500 for income earners on less than $37,000 a year, has Labor's full support. This puts back in place the low-income superannuation contribution that Labor put in, which was removed by the member for Warringah when he was the Prime Minister and put back in by the member for Wentworth. It perfectly represents the confusion of this government but nonetheless we are going to support it.

Labor would also seek to lower the high-income super contribution threshold from the government's $250,000 to $200,000. This would ensure that people earning above this amount pay 30 per cent tax on concessional contributions above $200,000—the same as someone on $80,000 a year. Labor will oppose the catch-up concessional contributions and changes to tax deductibility of personal superannuation contributions. With the deficit almost at $40 billion, we believe that responsible governments must ensure that every new dollar of Commonwealth money is targeted and well spent. The government's proposed new superannuation loopholes will cost the budget $12.3 billion over the decade, and this is simply not affordable in the current climate. Each of these measures is likely to be taken up by those on high incomes, who can afford to make additional contributions. Meanwhile, the number of middle- and low-income earners who have the financial capacity to take advantage of these changes is limited.

In conclusion, our package, which we are offering as an alternative, would improve the government's proposals by $1.4 billion over the forward estimates and $18.9 billion over the medium term, for a total budget improvement of $4.5 billion in 2019-2020 and $32.6 billion in 2026-2027. Based on those figures our reforms are sensible. They target those massive superannuation tax concessions but also offer credible alternatives, and in that respect I support the amendment moved by the member for McMahon.

Stephen Jones (Whitlam, Australian Labor Party, Shadow Parliamentary Secretary for Regional Development and Infrastructure) Share this | Link to this | Hansard source

It is my great pleasure to speak on the Superannuation (Objective) Bill 2016 and related bills which concern the provision of superannuation, how it is taxed and how it is managed. I also rise to support the excellent amendment to this bill that has been moved by my friend the member for McMahon and spoken to most eloquently by the member for Rankin, who is in the chamber with us today together with the member for Kingsford Smith, who has spoken passionately about these issues.

I want to contrast the position of Labor, when it comes to superannuation, with the chaotic, haphazard approach that this government has taken to superannuation issues since it first occupied a position on the treasury bench after the 2013 election. I ask you to consider this, Mr Deputy Speaker: since the 1980s, when a partnership was formed between Labor in government and the Australian trade union movement to introduce occupational superannuation so that it was not just the managerial class, not just the wealthy, who had access to superannuation in this country, we have seen a clear-eyed and consistent approach to superannuation in this country. From the Hawke and Keating governments to the Rudd and Gillard governments, we have seen a clear and consistent approach to superannuation.

We want to work with the union movement and with businesses to ensure that we can see a steady increase in the percentage of contributions that are made through the compulsory contribution system into a worker's superannuation account. From that very first moment when there was a wage-superannuation trade-off, it has been our mission to ensure that we can steadily increase the contributions that are being made. We have an objective of ensuring that average Australians can approach the position that we privileged people in this place have when it comes to occupational superannuation. Members of the public may or may not know that members in this place attract a superannuation contribution of 15 per cent. Labor believes that that should be a contribution that is available to every working man and woman. Those on the opposite side continue to frustrate our objectives of improving and increasing compulsory superannuation contributions.

That said, significant progress has been made. But, when you look at occupational superannuation and when you look at superannuation accounts, we also have a long way to go. I had the opportunity to do some research and looked at an excellent report by the Association of Superannuation Funds of Australia. It was their most recent report and it included a survey of average contributions, broken down by gender, age and state. It was very interesting reading, particularly when you consider the approaches taken by many members of the government party in the immediate period after the election. Whilst the average superannuation account balance across Australia comes in at just under $160,000, averages belie the actual truth.

I see the member for Dawson is here in the chamber. He championed the human right that would ensure that people could put up to a million dollars or more of post-tax money into their superannuation accounts. It might surprise the member for Dawson that the majority of people in his own electorate—let's not stop at his own electorate—and the majority of people in his own state do not have a superannuation balance that approaches near that, and nor will they ever. In Queensland, the average superannuation balance is $156,000, which is a long way short of what we believe is necessary for a dignified and fair retirement.

I was very interested to hear a senator for Tasmania championing the human right of people to dump up to a million dollars—or more—of their post-tax money into their superannuation accounts, even positing that it was the government's May 2016 superannuation proposals which led to the devastating results for the Liberal Party in Tasmania. This is a man who comes from a state where the average superannuation balance is $31,000 less than the national average. That is right—the average superannuation balance of a person from Tasmania is $128,000.

Of course, averages do not tell the entire truth. If you look at the disparities between men and women, you will see that, of people aged 60 to 64 approaching retirement, males average a median superannuation accumulation of $100,000; females, $28,000. We know, in that instant, that we have much work to do. It is why, on this side of the House, we are still scratching our heads when we consider the fact that, in their first act and in their first budget, when presented with these statistics, when presented with the unavoidable facts that we have massive inequality between men and women and between the wealthiest and the poorest when it comes to superannuation contributions and superannuation accumulation, they went after the poorest people. In their first budget, why did they go after the poorest people by removing the low-income tax offset and by providing massive tax cuts to people with superannuation balances of a million dollars or more? If you were going to address the real problems that we are facing in inequality in superannuation in this country, why would you provide massive tax cuts to the wealthiest—to the people with the largest superannuation contributions—and yet remove the low-income tax offset for people who are on the lowest incomes in this country? In that one act alone, we see the absolute contempt that the government members have for equity in superannuation and for consistent policymaking when it comes to something that requires, nay begs, consistent policymaking.

So we are very pleased that after exploring every possible alternative, the government in some respects is doing the right thing in this bill before the House today, and not before time, by changing the name on the low-income tax offset and reintroducing it—if you like, making amends for the sins of the 2014 budget by reintroducing it in this bill today. Of course, we on this side of the House support these propositions—of course we do; we introduced them in the first place. Of course, we offer our full-hearted support to the government for these propositions. But that does not mean that we are going to be supporting every measure in this bill. It is not just the confusion; it is the fact that there are so many measures within this bill that strike at the heart of any government plan to introduce budget repair that is fair and equitable.

It is for this reason that we will be opposing a number of measures within the bill. For instance, we will not be supporting the measure which will allow catch-up concessional superannuation contributions for individuals with balances that are set out within the bill. We will not be supporting that proposition because we do not believe that it is either fair or equitable. We will be making some amendments to the provisions within the bill—for example, the measure which proposes to replace the controversial $500 lifetime cap in the government's original package. This is the proposition that the member for Dawson and others went war against. We will be amending this proposition. I support the member for McMahon's proposition in that because we believe that there are still problems in the proposition that the government is making. We will be proposing, in our amendments, to reduce the annual concessional contribution cap to $75,000. When it comes to reforming the taxation of concessional superannuation contributions, we are proposing amendments to that as well.

But more than anything, what is needed in this area is certainty. We support the fact that within the bill there is a proposition to set out the purpose of our occupational superannuation scheme. Both the member for McMahon and the member for Rankin have pointed out that every opportunity this government has had and the previous government has had to improve and amend the operation of our superannuation scheme, they have stuffed it up. That is because they do not have a clear understanding of the purpose—as the member for Rankin pointed out and, by my way of thinking, from the contribution of the government's member for Mackellar, who supported that when he pointed out that there was a confusion in previous governments' approaches to this when they have merged estate planning propositions with the original purpose of superannuation, which of course was to provide a pool of savings for a dignified retirement. There is the dual purpose: to ensure that individual Australians could plan for a retirement where they could live in modest comfort on the basis of the earnings from their superannuation savings and, at the same time, ensuring that we were reducing the pressure on the government coffers through the pension payment system. That is the purpose of the superannuation system, not as a means for estate planning, not as a means for tax minimisation, as we have seen over the last couple of decades; it is to provide a dignified retirement savings for ordinary wage and salary earners.

I support the amendments moved by the member for McMahon. We are pleased to see that finally we have a bill before the House that we are able to debate, a bill that we are able to consider. It is an improvement on the proposition that was put before the Australian people, an improvement on the proposition that was introduced in this year's budget, but it requires the amendments that are put forward by the Labor opposition to ensure that superannuation can reach the potential that all Australians who send us to this place rely upon.

Mark Coulton (Parkes, Deputy-Speaker) Share this | Link to this | Hansard source

The debate is interrupted in accordance with standing order 43. The debate may be resumed at a later hour. The member may have leave to continue his speech if he wishes to use his remaining one minute and 43 seconds at a later hour.