John Watson (Tasmania, Liberal Party) Share this | Hansard source

I move:

That the Senate take note of the document.

As part of the last budget, the government released a plan to streamline superannuation by sweeping away the current tax complexities faced by retirees, by improving retirement incomes, by giving greater flexibility over how superannuation savings can be drawn down and by improving incentives to work and to save. These came on top of a number of other big initiatives in recent years. The proposals represent the most significant reform of Australia’s superannuation system in about 20 years. They build on the previous tax cuts in the superannuation system and the introduction of co-contribution, which this report is all about, for low income earners. This is part of the coalition’s ongoing plan to build a strong future for Australia. The complexity associated with taxing superannuation benefits confuses retirement decisions, clouds incentives to invest in super and imposes unnecessary costs on retirees.

The superannuation co-contribution scheme is an excellent initiative, and I was pleased to see the actual detail handed down by the Commissioner of Taxation in the quarterly and annual reports during the April-June quarter of 2006, when 147,588 people were beneficiaries of super co-contributions, which amounted to $128,805,000. This figure becomes even more impressive when you look at the annual report for the year. The annual report states that the total number of beneficiaries in 2004 was 45,273. In the next year, 2005, the number grew to 1,193,304. I must commend the Treasurer for his excellent selling of this government initiative, which will see over a million low-income earners accrue nearly $1 billion dollars extra to their superannuation.

In the past, the government’s co-contribution scheme unfortunately has come under attack from those on the other side. Indeed, Senator Sherry has said in this place that the scheme will not help middle Australia, and that too few lower income earners will be able to benefit from it. Senator Sherry, it appears that 171,844 people earning less than $20,000 per annum disagree with you. Indeed, the total number of people earning less than $58,000 a year using this scheme is well over one million—I repeat: one million.

I also note that the industry super funds strongly support Treasurer Costello’s bold super initiatives—first the co-contribution and its extension, and a year later the simplification changes. Gary Weaven, former ACTU industry fund advocate, said:

... the Government’s Budget initiatives have proved the Liberal Party is now the official party for superannuation.

The Investment and Financial Services Association CEO, Richard Gilbert, said:

The co-contributions partnership between Government and Australians saving for their retirement will foster a savings culture—with benefits beyond better retirement incomes.

On the other hand, we have an earlier quote from the Association of Superannuation Funds of Australia chief executive, Philippa Smith. She said that the ALP’s proposed cuts to the co-contribution scheme in the 2004 election were ‘disappointing and excessive’. She went on:

Just at a time when we should be helping to boost people’s savings, the ALP fails to deliver on a national priority.

It is not surprising that the Liberal-National coalition is now the party of superannuation. I would comment further on Labor’s position on the co-contribution scheme, but it has been 125 days since the budget was announced, and the Leader of the Opposition has not given us his opinion on the recent changes.

We see that the co-contribution scheme, as part of the government’s policy, has broad support from industry. This money will pay real dividends to our society as it is an effective measure to help ameliorate the effects of our ageing population. We are in great need of initiatives like this scheme, and I hope that the evidence presented in this report will ensure that it has the full support of everyone in this chamber.