Andrew Murray (WA, Australian Democrats) Share this | Hansard source

With respect to the Superannuation Laws Amendment (2007 Budget Co-contribution Measure) Bill 2007, the co-contribution scheme is designed to boost the superannuation of low- and middle-income Australians. The scheme works by matching a qualifying employee’s eligible personal superannuation contributions with a government contribution at $1.50 for each dollar contributed by the employee, up to a maximum government contribution of $1,500. The maximum government contribution of $1,500 is available for qualifying employees on incomes up to $28,000 for co-contribution purposes and who voluntarily—if they can—save up to $1,000 annually. It then phases out at the rate of 5c for every dollar of income above $28,000 and phases out completely at $58,000. I was reminded by the shadow minister earlier that it was the Democrats who, with the Labor Party, ensured that the compulsory superannuation guarantee scheme was introduced to this country, against trenchant coalition opposition. The foresight of the Labor government at the time and of the Democrats deserves to be applauded over the decades to come, because no single measure has done more for Australians than that one.

I then thought about the co-contribution scheme. I had a look back at former Senator Cherry’s remarks—Senator Cherry was a senator from Queensland whom I sorely miss—with respect to the Superannuation Laws Amendment (2004 Measures No. 1) Bill 2004. At that time he was talking about the fact that the co-contribution scheme happened because of the Democrats combining, in this case, with the government. It was the Democrats’ agreement with the government that permitted this measure to go through. In his remarks on the bill I just mentioned, Senator Cherry said the following:

The Senate would be aware that this particular measure passed through the Senate last year after negotiations between the government and the Democrats which established a doubling of the initial funding for the government co-contribution for low-income earners. As a result of those discussions—and I should acknowledge the very positive role that Senator Coonan played in that discussion—the funding for the low-income earners co-contribution for the next four years was increased from $460-odd million to $920-odd million.

So we not only helped to pass the measure; we also helped make it the size and strength that it is today.

This bill provides for an additional one-off government superannuation co-contribution to eligible persons in the 2005-06 income year only—which will double the amount already received. For instance, a person eligible for a co-contribution of $1,500 in the 2005-06 income year will receive an extra $1,500, making a total of $3,000. If the eligible co-contribution amount is $500, then they will receive a total of $1,000 all up. Interest will not be payable on amounts that arise solely from this one-off payment—which is an important consideration. The cost of it is high, but of course it is a payment towards the future of the Australians who receive these benefits. But I found it quite odd that this bill was introduced two days after the budget. The budget papers and the bill were obviously designed at the same time. Budget Paper No. 1, item 1-16 states:

This will improve superannuation savings for low income earners at a cost to the Budget of approximately $1.1 billion in 2006-07.

But the explanatory memorandum for the bill says:

This measure is expected to result in a cost of $990 million in 2006-07 and $80 million in 2007-08.

For those who can do their maths, there is a cool $30 million difference, in two days, between those two figures. That is pretty sloppy. Budget papers do not round up to the nearest billion or hundred million; they round up to the nearest million. Suddenly there is $30 million more that the government has put into its budget papers, available for it to do other things with, when the EM is much more specific and indicates it will be $1.07 billion. So we have a cool $30 million difference in two days. I would be grateful if the Parliamentary Secretary to the Minister for Health and Ageing could perhaps indicate just why that has happened.

The other thing we should recognise is that undoubtedly this measure only affects a select group of Australians—a lucky number—and the problem for us is that neither the budget papers nor the explanatory memorandum indicates the number of Australians who will be affected by this measure. Once again—through you, Mr Acting Deputy President—I would ask the parliamentary secretary to indicate to us in his closing remarks how many Australians he thinks will benefit from this. Although this one-off payment increases superannuation balances for those who are eligible, by a set amount which then compounds over the life of the balance—making it a very attractive gift that grows over time—one cannot help but suspect that its main motivation is as an election sweetener. As soon as you see a one-off gift at this time in the electoral cycle, it does, unfortunately, provoke such impure thoughts.

Among other measures, the Democrats support superannuation savings being encouraged through government co-contributions targeted at low- to middle-income earners. So we support this bill, and we support it without amendment. We have not quite understood why it is non-contro early in this session and why it could not have waited until June. There is no real need for urgency that I can see, except for the government’s desire to get an immediate feel-good response for the coalition when those eligible are advised of their nice gift from kind John and helpful Peter. However, it does not really matter, because we would pass it today and support it today and we would pass it and support it in June. You are entitled to get your government bills on the Notice Paper as you see fit. As you noticed, we did not oppose the cut-off being exempted in this matter.

In closing: I suspect your motive, but anything which improves the superannuation savings available to Australians and therefore prevents later government payments at a far higher rate occurring—because this is an early payment and compounds over time it saves the government money later, strangely enough—is a good idea and is supported by us.