Nick Xenophon (SA, Independent) Share this | Hansard source

I indicate my support for the second reading of the Temporary Residents’ Superannuation Legislation Amendment Bill 2008. I want to traverse neither the same ground that Senator Bushby did when he articulated so well a number of concerns that were raised, nor the concerns raised by Senator Hurley in the context of the Economics Committee in relation to this. I am also grateful for the time that I have had today with Senator Sherry to discuss with him some of the concerns I have had in relation to this bill. I circulated amendments earlier today in relation to the issue of compliance. Whilst I still have reservations about matters of compliance—the superannuation industry has indicated that there would be a cost of between $10 million and $100 million—I am not proposing to proceed with that amendment on the basis of the discussions I have had with Senator Sherry. I think we will have an opportunity to discuss this in the committee stage, or perhaps Senator Sherry could respond in his summing up to the claims made by the industry of costs between $10 million and $100 million. That is something that has worried me, but I was reassured to a considerable degree by matters raised by Senator Sherry in the context of discussions I have had with him today.

I will go to the nub of what principally concerns me: the issue of retrospectivity. The proposed legislation is retrospective in nature; there is no other way of looking at it. It means that temporary residents who have earned superannuation in Australia in the past on the understanding that when they turned 60 they could have access to their superannuation under existing legislation will now be subject to very significant taxation implications, often paying tax at a higher rate than the top marginal rate they were paying on the income they were earning in the first place. This impact is compounded for those income earners who, in good faith, made a decision based on the tax and super laws at the time to increase their level of contributions to their fund. I am in great sympathy with the comments made by Mr John Fauvet, a partner at PricewaterhouseCoopers, who gave evidence at the Senate economics committee inquiry:

It is just really a question of the rate and of the retrospective nature that applies to those individuals who are serious savers for their retirement, who were encouraged to do so … all of the time when they were here. This may well have been the only opportunity they had to save for their retirement, so they did that based on the then current legislation, expecting to be able to withdraw that superannuation in the same way as Australians can: tax free at age 60.

The argument is, ‘They’re not Australian citizens; why should we prop them up?’ but they made these investments in good faith, and I am in agreement with the argument put by Senator Bushby. These are people whom I think we should not dud, to put it colloquially, by making this retrospective in nature.

If this legislation is about lost or unclaimed super, I commend the minister for the work that he has done in relation to this. In fact, earlier this year, when I was trying to make a quid before I got to this place, I was doing a stint as a talkback radio host—I think it is a good thing I am here in the Senate and not doing talkback—and Senator Sherry was my guest on the program, talking about unclaimed super. We got quite a few calls that afternoon because people are concerned about this—lost and unclaimed super. Senator Sherry is to be commended for tackling an issue that ought to have been tackled much earlier. There has been a lot of talk about this in the past, and he is doing the right thing by looking at the whole issue of unclaimed and lost super. But in this particular case, when it comes to temporary residents, if a temporary resident is making an effort to keep in touch with their fund and is doing the right thing in the context of maintaining regular contact with their superannuation provider, I do not think it is fair that they should be subject to this new regime. I think it is fundamentally unfair. It is retrospective in nature, and I can foreshadow that I will be moving an amendment at the committee stage to ensure that that does not occur, both for those who already have funds in place and for those temporary residents who continue to maintain contact with their fund, because to me it is a fundamental equity issue. There may be other countries that do not treat Australians working overseas fairly, but that does not mean we should do the wrong thing by those temporary residents who are working here and, I believe, doing the right thing by keeping in contact with their superannuation fund.

Essentially, I believe that this is welcome legislation. I did have reservations—I still do to an extent—in relation to the issue of compliance costs, and I would be grateful if Senator Sherry would put on record his views in relation to that, but my principal concern is in relation to the issue of retrospectivity and for those temporary residents who are doing the right thing by keeping in contact with their super funds. That cannot be described as lost super, which I think is the mischief that this legislation is principally intended to deal with. It is not lost super if you keep in contact with your super fund.