Nick Sherry (Tasmania, Australian Labor Party) Share this | Hansard source

and Finance. It was costed in exactly the same way and usually by the same people in Treasury and Finance as costed taxing provisions under the former Liberal-National Party government. Senator Macdonald, if you had bothered to look at Senator Cormann's questions at Senate estimates, all of the future budget estimates projections have been released publicly in exactly the same way that Treasury have released tax estimates in the past under the previous coalition government.

Let me go to the two superannuation measures. As colleagues know I have had a long involvement with superannuation in my almost 22 years in this parliament. I had the privilege of being in this chamber when we passed the original superannuation guarantee charge, as it is known, and to be chair of the Senate superannuation committee back in 1992. Of course, compulsory superannuation was passionately—and irrationally—opposed by the Liberal and National parties. They have had a road to Damascus conversion on that measure. They have said that, whilst they will oppose it here, they will not reverse it should they ever be elected to government.

We had all sorts of doom and gloom predictions from those opposite about the introduction of the nine per cent superannuation guarantee—it would destroy the economy and socialise it; union officials would take control; it would destroy real wages. We had all sorts of horrendous predictions—somewhat similar to the predictions we had on the mining tax, which turned out not to be true, and somewhat similar to the predictions we have had on the claimed impact of the carbon tax—but they did not happen.

In fact, compulsory superannuation is a very important social measure because for the majority of Australians it is a social gain, an addition to what is by any international standards a comparatively low basic government pension. Compulsory superannuation has added to the retirement savings of the six out of 10 Australians who had no superannuation. So it has a very important social policy impact.

But in the economic sphere it has been a fundamental strengthening of the Australian economy. We now have, if you include Future Fund assets, almost $1.4 trillion in savings in superannuation. In fact, I think it is the fourth largest pool of aggregate retirement savings anywhere in the world. That savings pool of $1.4 trillion is approximately equal to the size of the Australian economy. It has had a very important positive impact on the economy. It has led to additional net savings, which is important in terms of growing the Australian economy. We are a capital-importing country. We need imported capital. We need to maximise savings to grow the Australian economy. So it has been a very important positive for the Australian economy and, in turn, has been very important in generating employment in this country.

I am pleased to say the Liberal and National parties have discovered the superannuation positives. It has been a bit half-hearted: they will oppose the changes here but have said they will not reverse them. Senator Xenophon and others in the public debate about the mining tax have pointed out that we need a sovereign wealth fund. We already have a sovereign wealth fund. What we have is $1.4 trillion in savings in superannuation that we would not have had without compulsory superannuation. That is long-term, future diversified savings for the future of individuals in this country. In effect, it is almost identical to what would be known as a sovereign wealth fund. So we already have that through superannuation in this country, and we are adding to that pool of savings with the measure in this package to increase the superannuation guarantee from nine to 12 per cent over the next seven years from 2010. It is estimated that increasing the superannuation savings from nine to 12 per cent for 8.4 million Australian workers will by 2035 result in an extra $500 billion—that is an extra half a trillion—in savings in superannuation that would not otherwise have occurred. In fact, the projections are that by 2035 we will probably have between $6 trillion and $7 trillion in superannuation. Depending on the growth rate of the Australian economy, that will probably be well in excess of the total value of the Australian economy.

Of course, this measure has to be paid for. An increase in the superannuation guarantee paid by employers does cost the government revenue because of the tax concessionality of superannuation. It will cost the government about $740 million in 2013-14 and 2014-15. So it has to be paid for, and one of the uses to which revenue from the mining tax is being put is the increase in the superannuation guarantee. It is critical to increase the guarantee from nine to 12 per cent because it will take the majority of Australians, together with their age pension—we have a means tested system—over time for the moneys to accrue, close to or in excess of 70 per cent of their preretirement income. Seventy per cent—about two-thirds of preretirement income—is the actuarial estimate of what is required for people to live in relative comfort in retirement. So it is an important social policy but also an important economic policy, as I have highlighted.

There is one other important change in this package that I want to highlight, and that is an important tax change which, in many respects—certainly in the short- to medium-term—is more valuable in respect of superannuation than the actual increase in the superannuation guarantee. This relates to an important tax cut for low- and low middle-income Australians. What happens at the moment is that, when superannuation contributions go in, everyone is taxed at 15 per cent on their contributions regardless of income. So obviously that is highly concessional for higher income earners and not quite so much for middle-income earners, but there is no tax concession relative to income tax treatment for low- and low middle-income earners. That is grossly unfair.

I notice the Greens have had a shot about tax concessions on superannuation, and there is validity in the criticism of the inequitable tax treatment of superannuation, but I point out to the Greens and to those listening that what we have in this package of bills is an important fairness measure. It effectively removes the 15 per cent contributions tax for those Australians earning less than $37,000 a year. They will receive a maximum payment, effectively a rebate of their tax up to $500. This means that some 3.6 million low-income Australians, who pay a 15 per cent contributions tax and overwhelmingly pay no effective income tax, will effectively no longer pay tax on their superannuation. Of these 3.6 million low-income Australians, 2.1 million—two-thirds of them—are women because of their income status. This is a very, very important fairness measure and, I have to say, it is an issue that I have mentioned from time to time in the public debate and I am particularly pleased to see tonight that we are redressing the tax imbalance and the unfair tax treatment that applies to 3.6 million low-income Australians.

As I have mentioned, we have a funded tax package. What about those opposite? They are running around promising tax cuts here, there and everywhere, except in one area. They claim that they are going to introduce, as re-affirmed last week, a rolled-gold—no, platinum—benefit in terms of paternity leave. How is that to be funded? By an increase in company tax. But perhaps I should stand corrected; they have called it a 'levy'. When the Liberal Party increase taxes they do not call it a tax; they call it a levy. They hate to fess up that they have decided to increase a tax so they call it a levy. In the distant past, if my memory serves me correctly, when they wanted to tax superannuation they called it a surcharge. So the Liberal Party have delivered a tax increase promise, an increased company tax to pay for their platinum-plated parental leave scheme.

The Liberal Party do face some pretty essential contradictions. They say they are going to repeal the mining tax. They are going to give the $10.6 billion back to the mining companies, who actually want to pay the tax. They have agreed to pay the tax, but the Liberal Party want to give it back to them. At the same time, what do the Liberal Party do when they lose $10.6 billion? They will have agreed to an increase in the superannuation guarantee, they will have agreed to a cut to low-income earners' superannuation for 3.6 million low-income earning Australians. By the time of the next election I hope we will have approved the reduction in company tax, and I certainly hope we will have passed the tax reduction, the improvement in write-offs, for almost 2.7 million small businesses.

So what are the Liberal Party going to do? They are going to get rid of the mining tax, so they say. Are they then going to remove and effectively increase the superannuation contributions tax for 3.6 million low-income Australians? Are they going to increase company tax beyond what they promised? Are they going to increase tax on small business? If they do not reverse these measures and they repeal the mining tax, where are they going to get the $10.6 billion from? It will be interesting, certainly in the context of fiscal responsibility. I see my good friend Senator Mason over there grimacing. He knows the challenge of the Expenditure Review Committee in the opposition. They have got to find not just $70 billion in cuts; they have also got to find another $10.6 billion to make up for the lost revenue that they want to give back to the mining companies—who, as I say, have agreed to pay for it. They want to give those billions of dollars back.

Compulsory superannuation is a very, very vital and fundamental economic and social reform, and I have touched on some of the key elements. I do want to pay tribute to a number of people and I think it is important to put it on the record. Back in 1986, Bill Kelty and Garry Weaven were heavily involved in the test case for the initial three per cent. I want to pay tribute to them, and of course Paul Keating, who announced the superannuation guarantee. I am very proud to have worked with him. He had enormous vision. He was lambasted by the Liberal and National parties, as I said earlier. There were all sorts of absurd criticisms about destroying the Australian economy, cutting real wages and socialising the Australian economy. It did not come to pass, of course. In fact, compulsory superannuation was a significant positive for the economy. I looked at some comments by former Treasurer and Prime Minister Keating the other day. He said in 2007:

When you hear conservatives these days speak of superannuation as a tax on employers they are either ill-informed or they are lying. The fall in unit labour costs and the upward shift in the profit share during the period of the Superannuation Guarantee Charge is simply a matter of statistical record. It is not a matter of argument.

Indeed, during the periods of increase in the superannuation guarantee it did not implode or destroy the Australian economy, it did not result in higher unemployment—all of the claims that the Liberal and National parties made at the time. Indeed, the Liberal and National parties makes the same claims about the mining tax. Even with the mining industry now, if you look at their commentary, there are constant announcements about increases in investment. Investment has continued to grow despite the debate about the mining tax and what I am confident will be the passage of this legislation here on Monday. So when it comes to the hard yards, the macroeconomic reform, tax reform, superannuation reform and carbon tax, there are lots and lots of criticisms by the Liberal and National parties but history shows that they are wrong. These reforms will strengthen the Australian economy.