Andrew Leigh (Fenner, Australian Labor Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

The Superannuation Amendment (PSSAP Membership) Bill 2016 enables certain members of the Public Sector Superannuation Accumulation Plan, PSSap, who move to non-Commonwealth employment to choose to continue to make contributions to the scheme. That better aligns the PSSap with superannuation schemes in the rest of the economy and it means that public servants are not forced to move to another superannuation scheme. It follows changes from 1 July 2015 which saw members pay the administrative costs of the PSSap rather than the Commonwealth. That change, too, brought the scheme more in line with private sector arrangements.

It has been estimated that there are nearly 90,000 contributing members and around 40,000 people who have money with PSSap but are no longer paying into it. As has been pointed out by David Donaldson in The Mandarin:

At the moment, APS employees who go to work for a state government or move into the private sector are unable to nominate a Public Sector Superannuation Accumulation Plan account as the place to pay new super.

Instead, they need to choose between keeping the money paid by the APS in that account and having new super put into a separate fund—with the extra ongoing costs that brings—and moving their money out of the PSSAP, which also entails extra costs.

This bill will ensure that PSSap is modernised and, given that its members are paying its costs, rather than taxpayers, it is a perfectly appropriate measure.

However, when we speak about superannuation, it is important to recognise some of the other measures that this government is attempting to pursue. This government has attempted, through its negotiations with the Public Service, to reduce the employer superannuation rate, attempting to remove any mention of the employer superannuation contribution rate of 15.4 per cent from new agreements. That would mean that the finance minister and the public service minister could instruct APS agencies to pay 9.5 per cent instead of 15.4 per cent.

That reflects the debate that this House has seen over superannuation going back decades. The labour movement has always wanted to see superannuation extended and broadened, ensuring that superannuation is accessible to ordinary working Australians. Labor built our superannuation system and will always work to ensure it is fair, sustainable and sets Australians up for a comfortable life in retirement. We do not see superannuation as being for the few; we see it as being for the many. More than two decades ago, Labor created universal superannuation and, last term, Labor introduced legislation to increase the superannuation guarantee.

But at every time we see the coalition attempting to frustrate the goals of universal superannuation. In 1994, the member for Warringah said:

Compulsory superannuation is one of the biggest con jobs ever foisted by government on the Australian people.

And then we saw under both the Howard government and the Abbott-Turnbull government a freezing of the superannuation guarantee. When they are in opposition, they talk the good talk about superannuation but, when they come into government, they freeze the superannuation guarantee. They themselves are happy to take 15 per cent as parliamentarians if they were elected after 2004, but they do not want low- and middle-income Australians to see the same level of superannuation go into their accounts. And, when they came into office, the Liberals and Nationals got rid of the low-income superannuation contribution, only to then bring it back under a slightly tweaked name.

So, whenever we debate superannuation reform in this place, we always do so against a backdrop of a history that has shown that Labor is the party—the only party—that fights for super and fights for better retirement incomes in middle Australia. Bill Shorten and Labor have ensured that we fight not only for expanding superannuation to low- and middle-income Australia but also to ensure that our superannuation tax concessions are fair and sustainable.

The current system delivers half of all tax concessions to the top fifth of income earners. That is not fair and it is not fiscally sustainable. Labor believes that the current proposals that the government has put forward belatedly to close some superannuation tax loopholes do not go far enough, either in terms of budget savings or in terms of fairness. Labor's Senator Katy Gallagher and the shadow Treasurer, Chris Bowen, have proposed a package that improves on the government's proposals by $1.4 billion over the forward estimates and $18.9 billion over the medium term. That includes lowering the annual non-concessional contributions cap to $75,000. Parliamentary Budget Office analysis has shown that only 0.7 per cent of taxpayers made non-concessional contributions worth more than $100,000 in 2012-13. Eighty-six per cent of taxpayers made no non-concessional contributions. So we believe it is appropriate to bring down the annual non-concessional contributions cap. Labor believes we need to bring down the high-income super contribution threshold to $200,000. The government is proposing that it be $250,000. Again, Parliamentary Budget Office analysis estimates that less than four per cent of taxpayers would be affected by the change. It is a change which would deliver significant revenue to the budget bottom line—more than $7 billion over the course of the decade.

Labor opposes the government's new superannuation tax loopholes. While the government is saying it is closing loopholes with one hand, with the other it is opening new ones. The proposal of allowing for catch-up concessional contributions and tax deductibility for personal superannuation contributions will overwhelmingly benefit high-income earners while having a more than $12 billion impact on the budget over the course of the next decade. With net debt having nearly doubled since the coalition came to office and with our triple-A credit rating under threat, Labor does not believe that these are appropriate new superannuation tax breaks to put in place.

But we do support the measure today. The introduction of the PSSap was a sensible modernisation, ensuring that the accumulation arrangements for former public servants are the same as for those in the private sector. It makes no sense to see former public servants forced to maintain multiple superannuation accounts, nor to force them to move PSSap account balances to another superannuation account. It reduces transaction costs and increases the retirement incomes of those great public servants who use the PSSap. This is important because the superannuation funds operated by the government are among the largest in our superannuation system.

Currently we have two major agencies with responsibility for government super: ComSuper and Commonwealth Superannuation Corporation. ComSuper performs the administrative role for most super schemes for ADF members and government employees. These schemes are among the largest and most complex occupational superannuation schemes in Australia. They have a combined membership of over 700,000 contributors, pensioners and preserved-benefits members. ComSuper employs 482 staff, all of them here in the nation's capital—well, here for now, as long as Barnaby Joyce does not have his way and moves them off somewhere to regional Australia, as he appears to be attempting to do with every public servant's job here in Canberra.

The Commonwealth Superannuation Corporation is a corporate Commonwealth entity and the trustee of most government and Defence super schemes and retirement income streams. It has responsibility for investments and products for members. It has over $30 billion under management, pays pensions to more than 200,000 retirees and was itself formed by the merger of three previous Commonwealth super trustee bodies. Because these two agencies both deal with the activities of the same 700,000 people, there is considerable overlap in their activities. Both sides of the House are interested in reducing duplication and finding sensible efficiencies within the Commonwealth Public Service.

Labor supports these sensible changes and recognises those who have worked hard to ensure that these schemes operate successfully and with the same transparency and rigor that applies to private sector schemes. But, whenever we are talking about superannuation, it must be reiterated that the coalition has never and will never be a friend to superannuation. The coalition has fought only for tax breaks to the top end of town and never for universal superannuation that would benefit a great many Australians.

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

The Superannuation Amendment (PSSAP Membership) Bill 2016 allows members of the Public Sector Superannuation Accumulation Plan who pursue employment outside of the public sector to remain contributory members of the scheme. This is a sensible reform and one that is supported by myself and my Labor colleagues. At present, former public sector employees are unable to remain contributory members of the scheme and must either consolidate their superannuation by moving their PSSap membership monies into a separate superannuation account or maintaining multiple super accounts.

Superannuation is complicated enough. It is the lack of understanding of the superannuation system and people's own investments that lead to bad investment choices. There have been cases of individuals who have made bad investment choices and have suffered as a result with respect to the level of their retirement income and its sustainability into the future. Of course, there were many Australians who, through no fault of their own, saw much of their superannuation savings whittled away as a result of bad banking practices in the United States which resulted in the global financial crisis and spread throughout the world. Basically no-one's investments, be they in superannuation or in other managed investment vehicles, were immune from the devastating effects of the financial crisis. So it is important that superannuation is as simple as possible and is as comprehendible and understandable as possible. Contributing to that is ensuring that people are able to, where they choose to and where they want to, maintain membership of a superannuation fund that they know and trust.

With the advent of choice of superannuation funds, it is important that all superannuation fund members get the right to exercise that choice and to remain members of the fund that they wish to contribute to during their working lives to maintain a decent standard of living in retirement. Maintaining membership of a scheme someone knows should be a contributory factor to the stability of the superannuation scheme and to providing certainty for people in terms of their investments. That is what this reform does, and that is why it is worthy of support from the parliament.

Labor are of course very proud of the Australian superannuation system and its role in establishing what is now close to $4 trillion in investment funds. Labor are committed to ensuring that Australians reach retirement with financial independence and security. We are proud of the policies over successive Labor governments that have established that wealth of investment funds and also provided for stable retirement incomes for Australians at pension age. Superannuation has also meant big changes for the Australian people and for their living standards, particularly in retirement.

Superannuation was not always a popular concept in Australia. In seeking to establish the system, Labor overcame significant opposition from interest groups concerned by the burden of its implementation and ongoing cost to businesses. It is no secret that conservative MPs and leaders throughout the country railed against the establishment of compulsory superannuation. It was first proposed under the Hawke government as a means of providing for secure and stable retirement incomes, as part of an arrangement with the Australian union movement through the Prices and Incomes Accord.

In the early nineties, when it became obvious that Australia would soon experience a significant shift in demographics through an ageing population, the Keating government pursued this reform and pursued further reform in compulsory employer contributions to superannuation funds.

As of June 2015, Australians have over $2 trillion in superannuation assets. The bill before us today creates a new subcategory of ordinary employer-sponsored members of PSSap, referred to in the bill as 'former Commonwealth ordinary employer-sponsored members', and their new employers will become 'designated employers'.

The changes in this bill better align the Commonwealth scheme with the private funds, which allow members to continue making contributions when they change employment. An added benefit of the changes in this bill is to help keep the costs associated with the administration and management of superannuation funds down. Often when a member shifts funds or changes membership of a particular fund, there can be an exit fee associated with that. There can be new fees in establishing a new fund, and there can be changes and differences in the type of insurance people take out as membership of those particular funds. These changes will also boost the retirement incomes of those affected. They reduce that impost upon people and some of the costs associated with shifting funds, particularly when someone is very happy with the fund they are operating in and does not wish to shift their savings but has to because of a change of employment. These reforms enhance the flexibility of our superannuation system, and ensure that people can continue to invest and save in the fund that meets their needs and that they are familiar with and comfortable with into the future.

The bill places some restrictions on maintaining contributory PSSap membership. For example, a person must have been a Commonwealth employee or office holder for a continuous period of at least 12 months. They must also be engaged in non-Commonwealth employment in respect of which their employer has a superannuation guarantee obligation. These are sensible restrictions, ensuring that maintaining PSSap membership into the future is a part of this scheme.

In conclusion, I support this bill. Labor supports this bill. It contains sensible amendments to our superannuation system that maintain the integrity of ensuring people get the choice of fund when it comes to planning for their retirement incomes. It also ensures that the system provides the necessary flexibility to allow people to make that choice under this superannuation system. I commend the bill to the House.

Alan Tudge (Aston, Liberal Party, Minister for Human Services) Share this | Link to this | Hansard source

I thank all members who have contributed to the debate on the Superannuation Amendment (PSSAP Membership) Bill 2016. The bill enables members of the Public Sector Superannuation Accumulation Plan, known as PSSap, a fully-funded scheme that has operated as the default fund for new Commonwealth employees since 2005, to maintain contributory membership of the scheme if they move to non-Commonwealth employment. This change will bring the PSSap into line with accumulation schemes in the broader superannuation industry, which commonly allow members to remain as contributory members when they change employment.

In recent years, there have been a range of government initiatives aimed at reducing the administration costs borne by scheme members. The changes in this bill complement these initiatives, as PSSap members who move to non-Commonwealth employment will no longer have to incur the costs of maintaining multiple superannuation accounts or rolling the moneys held in their PSSap account over to a new superannuation account.

The ability to maintain PSSap contributory membership on ceasing Commonwealth employment will be subject to some restrictions. In particular, a person must have been a Commonwealth employee or office holder for a continuous period of at least 12 months and be engaged in employment in respect of which their new employer has superannuation guarantee obligations.

Specific superannuation arrangements have been established for persons in various non-employee roles with the Commonwealth. For example, this includes members of the Australian Defence Force. Those who move from Commonwealth employment to such rules are not affected by the changes. They will continue to be subject to the Commonwealth superannuation arrangements, established specifically for these persons.

The changes in the bill will ensure that Commonwealth superannuation arrangements remain contemporary and complement broader initiatives aimed at reducing the administration costs borne by scheme members. I commend the bill to the House.

Question agreed to.

Bill read a second time.