Annette Hurley (SA, Australian Labor Party) Share this | Hansard source

I am pleased to speak for the Temporary Residents’ Superannuation Legislation Amendment Bill 2008 and the related bill. As Senator Coonan indicated, this measure was initiated by the former government and it is a useful measure that has been continued after a consultation period by the current government. The current situation is that people working temporarily in Australia have superannuation paid by their employer, as is usual for all employees, and then have the option to take it with them when they go back to their home country. But, often, it is left in superannuation accounts in Australia and in many cases these very small amounts of super are eaten up by fees charged by the superannuation fund. This measure makes sense in a lot of ways. That money will instead be paid into the government revenue and will be held there in case those temporary residents wish to claim it. In that case, they will pay the relevant departing Australia superannuation payment, the DAS payment. I think this is a very sensible arrangement.

During the Senate Economics Committee process, some concerns were raised about this, and the committee listened very carefully to those concerns. One of the chief ones was that some temporary residents paid money into their super account above and beyond the required statutory payment, expecting to be able to come back and claim that money, with the tax concessions given by the Australian government, at a later date. The committee accepted the view that the tax concessions allowed by the government for superannuation in Australia are to ensure that Australian citizens make sufficient provision for their retirement income and in turn create a smaller burden for future taxpayers. But there is no reason that the Australian government should in any way make concessions for temporary residents who go back to their own country. Temporary residents can of course withdraw their superannuation on their departure if they wish, in which case the government recoups some of the tax concession they have been given by applying that final tax through the DAS payment.

The concern about the retrospectivity aspect being unfair on these former temporary residents is not really valid. It is not the role of the Australian taxpayer to subsidise an ongoing savings vehicle for former residents who have left the country. The committee found that there was no reason for the taxpayer to continue to do that. It acknowledged that it is a change in the system but that there is no guarantee for those temporary residents that that advantageous system for them would continue.

There were also concerns expressed by some from the superannuation industry about the cost and time of implementing the changes. Again, the committee listened to these problems carefully. As has been noted, this was initially proposed last year, there was consultation done by the former government and it was well signalled that this was the proposed change. The incoming Labor government then took it out for further consultation. Super funds have known for some time that this was a likely outcome. So the committee did not accept that superannuation funds could not have expected this measure to be implemented. The committee also noted that, if there was a delay in implementation of these bills, there would be a delay in the revenue available to the government. The superannuation industry was fully involved with the government’s consultation process. We heard evidence in the Senate Economics Committee that there was no convincing case that the work they claimed would take 12 months could not in fact be done by the end of April next year. The committee took into account that superannuation funds might be a little reluctant to lose the fees on the accounts that they do have and would not necessarily be keen to implement the changes quickly.

The third and final strand of submissions, as Senator Coonan noted, was that there was some concern that people were not fully informed about their entitlement to take their superannuation entitlements when they left the country or indeed to claim them when they were back in their home country. The committee did make a recommendation that there should be better education of temporary residents about their entitlements. In particular, we heard from the student representative council of the University of Sydney, who were concerned that students who come to study here and do some part-time work were not well informed about their entitlements.

The committee asked that the government look to making a better system to ensure that people knew of the superannuation payments and to ensure that there was a range of promotional material in a range of languages provided to universities so that they could hand them out to their foreign students to remind them to claim their superannuation before they departed. There was also a request that the Department of Immigration and Citizenship consider the feasibility of writing to international students and other workers on temporary visas, reminding them about withdrawing their super just before their visa was due to expire. The Senate Economics Committee concluded that these bills should be passed and I commend them to the Senate.