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

It's lovely to be here, and it was wonderful to hear the final first speech of the 47th Parliament. I congratulate the member for Paramatta for a fine speech. It's my son's 17th birthday. When I was walking down here just now, he called to say that he got his drivers licence. He just passed the test. So everyone's kicked a goal today. Well done, Caleb.

I rise to speak to the Treasury Laws Amendment (2022 Measures No. 3) Bill 2022. It's a collation of a number of miscellaneous Treasury measures, as TLABs are wont to be. Schedule 1 of the bill amends the Foreign Acquisitions and Takeovers Act to double the maximum penalties for contraventions of provisions that relate only to residential land. Foreign investment, as we know, plays a very important part and beneficial role in the Australian economy. However, it's necessary to regulate certain kinds of foreign investment to ensure the proposed investments are not contrary to Australia's national interest. The FATA provides that a foreign person must seek foreign investment approval before acquiring an interest in Australian residential land and imposes obligations on a foreign person who acquires an interest in residential land.

Residential land in Australia is where there is at least one dwelling on the land or the number of dwellings that could reasonably be built on the land is fewer than 10 and does not include land that is used wholly and exclusively for a primary production business or on which the only dwellings are commercial residential premises. When considering an application for a foreign person to acquire an interest in residential land, the overarching principle is that the proposed acquisition should add to Australia's housing stock. The FATA contains specific penalties for contraventions of these residential land provisions. The amendments double the maximum financial penalties in the FATA for contraventions of residential land provisions. The purpose of this increase to financial penalties is to ensure that these penalties effectively deter foreign persons from contravening the residential land provisions in the FATA.

Noncompliance with the provisions may have a significant impact on Australia's housing stock and housing affordability, and foreign persons can make a significant financial gain by obtaining an interest in land. Foreign investors that break the law absolutely should face the consequences of the law, and it's appropriate that the costs of administering our foreign investment scheme be borne by foreign investors. To the extent this measure boosts housing supply and supports Australians getting into a home, the coalition welcomes it.

The coalition, Mr Deputy Speaker Buchholz, as you and others in the House would know, has a very strong record in delivering more housing and more Australians into homes. We have a very strong track record of helping first home buyers into the market. Sixty thousand Australians purchased a home or reserved a place under the previous coalition government's Home Guarantee Scheme. To support even more Australians into homeownership, the coalition more than doubled the Home Guarantee Scheme to make available up to 50,000 places each year. As part of the 2022-23 budget, the coalition promised to: expand the First Home Guarantee by providing 35,000 places from 1 July, up from 10,000; expand the Family Home Guarantee, with 5,000 guarantees made available each year, enabling single parents with dependants to purchase a home sooner with a deposit of two per cent; and establish a new Regional Home Guarantee, with 10,000 guarantees available each year to support eligible home buyers in regional areas.

These measures follow the successful HomeBuilder program, which supported over $33 billion of residential construction activity through the pandemic by providing grants for new homes and substantial renovations. Over 137,000 HomeBuilder applications had been received as of the last budget. Over 80 per cent of these, or 113,000, are new builds. Denita Wawn, CEO of Master Builders Australia said that without HomeBuilder thousands of small businesses would have gone under and hundreds of thousands of jobs would have been lost.

In the last term of parliament the coalition supported more than 300,000 Australians into homes. The coalition also recognised the importance of access to social and affordable housing for vulnerable Australians. The coalition in government announced additional low-cost financing for community housing providers to support social and affordable housing by increasing the guarantee of the liabilities of the National Housing Finance and Investment Corporation by some half a billion dollars. This is expected to allow NHFIC to support another 2½ thousand social and affordable dwellings, in addition to the 14,000 dwellings they have already supported in just three years. So, while the coalition do not oppose this change, we note that the impact of this policy appears to be on the modest side.

Turning to the bills before us today, Schedule 2 of the Income Tax Amendment (Labour Mobility Program) Bill amends the Tax Administration Act 1953 to allow protected information to be disclosed to Australian government agencies for the purposes of administering major disaster support payments and programs approved by the minister. This is a weakness of the current scheme that it's good to see being resolved.

Schedule 3 of the Treasury Laws Amendment (2022 Measures No. 3) 2022 amends schedule 5 of the Coronavirus Economic Response Package Omnibus (Measures No 2) Bill. This amendment will extend a temporary mechanism for responsible ministers to make alternative arrangements for meeting information and documentary requirements under Commonwealth legislation, including requirements to give information and to produce witness and signed documents in response to challenges provided by COVID. The amendment extends the date for the sunset of this mechanism to 31 December. This schedule is a general instrument-making power that enables responsible ministers to make a determination adjusting arrangements for meeting information and documenting requirements under Commonwealth legislation in response to COVID-19. This mechanism has been included in schedule 5 to the coronavirus measures No. 2 act as a temporary terminating measure. In light of the ongoing nature of COVID-19, both in Australia and globally, and its effects on the ability of individuals to move freely, the power to amend arrangements for meeting information and documentary requirements remains necessary. The coalition implemented this measure as part of our response to COVID-19.

The coalition will continue to support sensible and measured responses to manage the risks that COVID-19 presents, while noting that the environment we are operating in today is drastically different to that which we as a government faced two years ago. When COVID-19 first broke, there was no vaccine, there was no knowledge of the risks of the virus, and around the world we saw hospitals overwhelmed as the disease spread rapidly and mortality and morbidity rates were high. In Australia it was estimated the deaths could be in the tens of thousands and the impacts on economic activity could be severe. Treasury estimated that unemployment would reach 15 per cent.

When we left office the unemployment rate was 3.4 per cent, testimony to what the coalition delivered. The coalition's pandemic response put Australia in good stead for today. It saved tens of thousands of lives and supported hundreds of thousands of livelihoods. Measures like this played a crucial role in keeping government going through uncertain times. Measures like this worked alongside our economic support, to keep our country moving forward despite the pandemic. Our economic support through COVID kept Australians in jobs. Australian households and businesses have been supported by a range of measures since the beginning of the pandemic, all of which have led us to the times we are in now, with the highest terms of trade—a $50 billion turnaround in the economic fortunes of the nation. On that note, I look forward to seeing the end result of the last financial year, being delivered tomorrow.

The JobKeeper payment, for example, provided $89 billion in support to businesses and their employees, keeping businesses in business, and individuals connected to their employer. Small and medium-sized businesses and not-for-profit employers received over $35.8 billion in cash-flow boost payments, which have provided direct support allowing them to stay open, pay bills and retain staff. The coalition temporarily expanded eligibility for income support payments and established a new time-limited coronavirus supplement. Eligible recipients were paid $20.5 billion, and $11.9 billion in economic support payments were paid to eligible pensioners, social security veterans and other income support recipients and concession card holders. The coalition allowed eligible individuals in financial stress to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21 if eligibility continued. Under the SME guarantee scheme, the coalition provided the guarantee of 50 per cent for new short-term unsecured debt to SMEs written until 30 June 2021, guaranteeing up to $40 billion of new lending to small and medium enterprises.

Building on the scheme, the coalition's SME Recovery Loan Scheme is designed to provide continued assistance to firms that need that support. Temporary full expensing was brought in, allowing businesses to deduct the full cost of eligible assets of any value purchased from 6 October 2020 and first used or installed for use by 30 June this year. It was announced in the 2021 budget that this measure would be extended by one year to 30 June 2023. Legislation was introduced on 27 October last year to give effect to this extension.

The temporary loss carry-back allowed companies with turnover below $5 billion to recoup tax paid on prior year profits as far back as the 2018-19 financial year using 2019-20, 2020-21 or 2021-22 tax losses. It was announced in the 2021-22 budget that this measure would be extended to the 2022-23 financial year. Legislation was introduced on 25 November last year to give this effect. HomeBuilder provided eligible home-occupiers with a grant of $25,000 to build a new home or substantially renovate an existing home where the contract was signed from 4 June 2020 to 31 December 2020, inclusive, or $15,000 for contracts between 1 January 2021 and 31 March 2021.

We continued to support apprentices and trainees through boosting the apprenticeship commencement wage subsidy, which provided eligible employers with 50 per cent of a first-year apprentice's or trainee's wage, up to a cap of $7,000 per quarter. All of these measures build into the current measure that we're seeing in this schedule today. The coalition provided support for the aviation sector, personal income tax plans and permanent changes to our continuous disclosure regimes. All of these continue to build into schedule 3 of the bill we're looking at today. So the coalition welcomes this measure by the government.

Schedule 4 of the bill and the Income Tax Amendment (Labour Mobility Program) Bill 2022 make amendments to reduce the tax rate of certain income earnt by foreign resident workers participating in the Pacific Australian Labour Mobility scheme, from marginal rates starting at 32.5 per cent to a flat 15 per cent. This is coalition policy, and we welcome it. It gives the opportunity for our family across the Pacific to come in and work in Australia at a flat 15 per cent tax rate, which will add value to our tight labour market.

Finally, schedule 5 of the bill amends the Superannuation Industry (Supervision) Act 1993 to provide for an alternative annual performance test for faith based products. APRA may determine if it is faith based if a trustee for the product provides APRA with a valid application.

This bill contains a number of worthwhile measures that continue the trend of the new Labor government's legislative agenda being remarkably similar to the previous government's agenda. Indeed, the most important part of this bill, I believe—the income tax amendments to facilitate the Pacific Australia Labour Mobility scheme—is indeed a coalition initiative that I think members of the House are all proud of. However, there are substantial concerns with schedule 5 of this bill. I understand that Labor is seeking to implement an election promise to exempt faith based superannuation products from the Your Future, Your Super performance test. I've circulated two amendments in my name which I propose to move in consideration in detail. One of these amendments is to remove schedule 5 from this bill.

We should always be striving for the best when it comes to Australians' hard-earned money. This is money that is compulsorily taken from their pay and put aside so it grows to pay for their retirement. I think all Australians agree with that. There is a key word here: compulsory. Australians by law, if they're working, have to have that money put aside for their future, and that is excellent. We are as one when it comes to the compulsory side of super and, indeed, building superannuation for Australians. Today over 530,000 Australians' primary source of income is from superannuation, and we as a country should be proud of that. Compulsory saving by ordinary Australians has seen the growth of the super industry to over $3.4 trillion as of March this year. Again, this is excellent. The initial intent of super was to take the financial pressure off the government and taxpayers by ensuring that Australians can pay—or eventually pay—their way through retirement with their own money. And it is their own money, compulsorily set aside.

It's compulsory, and it will remain compulsory under any future coalition governments. There are no plans to change any of that. But we all have to strive to have the best system that delivers the best outcomes for ordinary Australians and their money. There are three key pillars, or principles, that the coalition will adhere to when it comes to super: (1) it is members' money; (2) performance is important, and members expect performance; and (3) the transparency and integrity of how members' money is spent is also important. These principles are the bedrock of what we believe delivers the best super outcome.

The Your Future, Your Super reforms were some of the most significant reforms delivered in the last decade. They were certainly the most significant reforms to super seen since the introduction of compulsory super in 1992. The reforms ensured super works in the best financial interests of all Australians by removing unnecessary waste, increasing accountability and transparency, and providing more flexibility for families and individuals. The reforms increased transparency and accountability. They strengthened obligations to ensure trustees only act in the very best financial interests of members and obligations to provide better information regarding how trustees manage and spend members' money in advance of annual members meetings and through enhanced portfolio holdings disclosures. These reforms, unfortunately, are under attack. Attacking the transparency and integrity of super this week alone, when the integrity commission bill is coming through, is somewhat extraordinary. Unbeknownst to everyone before the election, Labor went ahead and dismantled some of the fundamental transparency and accountability reforms for super by seeking, or putting through, amendments to the regulations on annual members meetings.

The second amendment I'll put forward today will seek to reintroduce that transparency and accountability and to take it from the regulations and enshrine it in primary law. The Your Future, Your Super reforms hold funds to account for underperformance, to lower fees and protect members from poor outcomes. The parliament required superannuation products to meet an annual objective performance test. Those that fail that test are required to inform members, and persistently underperforming products are prevented from taking on new members. We've already seen this in action, and it is 100 per cent in the interests of members. There are 13 underperforming funds that have already folded or taken action. This performance needs to hold for all funds and all Australians, regardless of age, sex or faith. Allowing faith-based funds to deliver inferior returns because they're a faith-based fund cannot be in the best interests of Australians.

For the coalition to agree to this—in fact, for any Australian to agree to this—a fundamental question has to be answered: why should Australians of faith retire with a lower balance than Australians of no faith? Unless that question can be answered, the coalition cannot support schedule 5 of the Treasury Laws Amendment (2022 Measures No. 3) Bill 2022. My meeting with APRA indicated that, of listed ASX entities, you would expect no more than two to three per cent of those entities to be incompatible with investment by a faith-based fund—that is, if they exercise that faith and a prohibition against such things as weapons, gambling, alcohol and the like. If the fund fails the secondary test, yet unknown what it is because it's based on whatever the super fund's strategy may be, it's subjected to the same processes as any other fund under the Your Future, Your Super performance test. If it passes the secondary test, it has no further obligation to disclose its performance to its customers.

I can understand what the Labor government is trying to do. I think they're coming at this from a good-faith perspective and I think they're coming at this from a perspective of giving faith funds opportunities. But my discussions with APRA have solidified the view that excluding two per cent or three per cent of the market does not prohibit faith based funds from meeting a basic index of the S&P 200 or the S&P 300.

The Australian $3.4 trillion super system is the fourth largest in the world and is responsible for managing the retirement savings of 16 million Australians. We should all be proud of that. Your Future, Your Super measures were about modernising and improving the superannuation system to ensure it is working harder for Australians. This included the performance test measures designed to ensure that all super funds are held to account for underperformance and to protect customers from poor outcomes. The performance test holds funds accountable for the outcomes they're delivering members. It measures a fund's net investment performance against an objective benchmark tailored to their strategy and measures their administration fees against their peers.

To give an example, the performance test—whilst there are a number of them across different asset classes, because our super industry is fourth in the world—invests right across different asset classes from bonds to equities in Australia, overseas equities and unlisted assets, and, for the most part, it does that exceptionally well. The base benchmark is: if you went into an index fund—and Vanguard was the leader. If you put your money into an index fund that just tracked the top 300 companies, the top S&P 300, and that index fund had the same value and percentages of money as per the top 300 companies in the market, if you did nothing, no active trading, if you just put your money to track the index, that's the benchmark. So the benchmark is if you do nothing. That's the benchmark. That's all the benchmark test under Your Future, Your Super is asking super funds to meet—'Please meet a benchmark that is set at "if you do nothing".'

It's quite simple. Unfortunately, 75 per cent of actively traded mutual funds in Australia don't meet that benchmark, and that is a disgrace. If Australians outside of super just put their money into a basic index fund and did nothing, and the index fund managers did nothing but track the market—yet 75 per cent of Australian fund managers can't even meet that, but they charge Australians fees and clip the ticket on buy and sells. That's outrageous. By the way, I'm informed that in Great Britain the number of active fund managers that failed to meet the index rises 88 per cent. That is outrageous.

Australia's top three performing super funds, give or take, from the last review by the regulator, were AustralianSuper, Hostplus and Cbus. They were performing exceptionally well, way above the indexes and way above the averages. That is a good thing. But the question we have to ask ourselves in this parliament is: is it acceptable for a faith based super not to even track the average? Because that's what this schedule is asking this parliament to do. If faith based super did nothing but track the average—now, super funds are bigger than the S&P 300. There are 12 industries across. I'm just picking one, but, if you can't meet a Bloomberg bond index, which just tracks the average return of bonds, you're doing something really stupid or buying bonds at some inflated rate on the secondary market. If you can't meet the S&P 300 by doing nothing, then I think there is a serious problem or the fees are high. Therefore, the coalition will move an amendment in consideration in detail that will strike schedule 5, because of these reasons.

I'm looking at the Leader of the House, who's been here longer than me—

Mr Tony Burke (Watson, Australian Labor Party, Minister for Employment and Workplace Relations) Share this | Link to this | Hansard source

Not long enough.

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

True—and who taught me that you should always make a substantive argument and present the argument to the House. The purpose of today is for me to present very clearly to the House the argument as to why the coalition won't be supporting this. It's not ideological; it is straight index based benchmarks of return. But there is a slippery slope here. If the government carves out special treatment for faith based funds, what's next? Why should faith based funds have special treatment? Why not an ESG based fund? Why not another fund that seeks to do good somewhere else? Why wouldn't they have the same carve-out? Or could we just agree in this place that all people are created equal and everyone should be equal under the law and they should all be equal under the superannuation benchmarks and the rules?

The second amendment that we'll be moving in the consideration in detail debate is to return the annual member meeting transparency measures that were in regulation—which were removed by this government as the first act of Treasury—to hard encode them and enshrine them back into law. When we moved the Your Future, Your Super measures in government previously, there was an opportunity, which the previous government did not take, to decide to outlaw or make illegal co-sponsoring payments and other non-political donations to political entities. The AFR has reported through a freedom of information that, over the last five years, super funds have provided $85 million in non-disclosed, non-donation based payments to political entities—and it's mostly that side of the House. That's just a statement of fact from an FOI. We could have decided to outlaw that, but that's not democratic. What's democratic is disclosing it—that super funds should have to disclose to members what their payments are.

I will look, for example, at two annual member meeting notices that came out—and I spoke about this in the House yesterday. The Commonwealth Superannuation Corporation—and I thank the Minister for Finance—has reported fully on all of their payments, with some $600,000 plus in sponsorships, support payments, marketing and the like itemised in detail, as you'd expect from a government agency and a substantial super fund. AustralianSuper is Australia's biggest super fund. It is a well-run and good-returning super fund—and there's no criticism of them there. My criticism of them comes on their annual member meeting statement where they had aggregate payment for sponsorship and marketing of $30 million—just aggregate; that's it—and associated payments of some $109 million, give or take, which is probably fees and charges for investments. They have to aggregate it up; therefore, there's no problem providing it in detail. This is what our amendment will do.

The last thing I'll draw the attention of the House to as to why it's important that the annual member notices are transparent and why this amendment is being moved in line with this bill is agenda item No. 10 of the Hayne royal commission, an order and risk management committee report from 20 May 2015. This is a public document that I am reading from, which was an item that was tabled in the Hayne royal commission. It is a KPMG report into review of payments made to Cbus-sponsoring organisations. It's a very good report, and Cbus's response to the report is also very good. The report makes it very clear that this is the purpose of Cbus, a very large and well-performing fund—there's no argument with that. KPMG's statement is:

The sponsorship payments made by Cbus are governed by Cbus's sponsorship policy and are made subject to an evaluation.

Good to see.

The benefit obtained by Cbus from sponsoring payment is recognised as the acquisition and retention of members and super contributions, together with an estimated increase in the brand value.

That's it. They get invoices and they pay marketing and service payments. There is a whole list of them on pages 13 and 14, and all it says is 'advertising and sponsorship'—nothing else. It doesn't list what it is for; just 'advertising and sponsorship'. The invoice comes in and Cbus pays it out of members' money, and it's for acquisition and retention of members. It's that vague.

And let's look at the payments that are made to a number of sponsoring organisations. Those sponsoring organisations are the Australian Council of Trade Unions, the CFMMEU, the Communications, Electrical and Plumbing Union, the Australian Workers' Union, Australian Manufacturing Workers' Union and Master Builders Australia. They're the sponsoring unions. In 2010, there was $1.3 million just for marketing and services and nothing else.

Andrew Giles (Scullin, Australian Labor Party, Minister for Immigration, Citizenship and Multicultural Affairs) Share this | Link to this | Hansard source

It was one of the best performing funds, wasn't it?

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

No question; it's a great-performing fund. You'll like this, Minister. In 2011, there is $1.5 million in sponsoring payments. In 2012, there is $1.5 million. Oh my Lord: in 2013 it rises to $2.7 million. What happened in 2013? I'm looking at the shadow minister beside me. There was an election? Who would have thought! In 2014, it drops down to $1.8 million again.

The Hayne royal commission looked at this. There's no issue that it is not appropriately declared and appropriately invoiced. There's no criticism in that respect. The issue is that none of it is disclosed for members to see and for members to have a say, and I think members should hear that. Otherwise, I look forward to moving amendments in the consideration in detail stage. I thank the House for their indulgence.

Debate adjourned.