Christine Milne (Tasmania, Australian Greens) Share this | Hansard source

I know you will all be very disappointed that my colleague Senator Whish-Wilson was not able to continue from where he left off, which of course was parking his boat next to something on Rottnest Island! But I do wish to make a serious contribution to this debate. I want to indicate that with regard to this Tax and Superannuation Laws Amendment (2014 Measures No. 7) Bill 2014 the Greens will be opposing schedule 1 and schedule 6. When we get to committee we will be seeking to have those voted on separately and will oppose them. I wish to speak to those issues now and indicate why we are opposing them.

Schedule 1 relates to excess superannuation contributions, and this is very much the frustration the Greens have that the Abbott government talks constantly about the budget problems, talks constantly about making life harder for ordinary people—everything from the GP co-payments and the like—and here we have a proposal once again to let the big end of town off scot-free. It is just wrong. What is being proposed here is that, if a person exceeds the legal cap on their non-concessional superannuation contributions, they be virtually let off scot-free. I just think it is wrong.

The substance for this is that the government is in its explanatory memorandum assuming that many of the relevant tax law violations are inadvertent. The government argues that people just somehow overlook it, make a mistake, exceed the contribution and—oh dear!—they should not then have to suffer any real penalty for that. I keep making the point, as I did in the tax estimates the other day, that if a person gets into trouble with Centrelink or gets a pension overpaid for a period of time then before they know it they are in the courts, but when it is the big end of town it is always assumed, 'Oh, it must've been inadvertent; we mustn't do anything that would cause them any difficulty.' Industry Super Australia had a look at that and they have said that they are concerned that the legislation, in its current form, would undermine incentives to comply with the tax laws and further threaten the sustainability of superannuation tax concessions, including by exposing superannuation to gaming behaviour. They say that very few people are in a position to violate the non-concessional contributions cap—that is, the $180,000 extra that you can put in. There are not many people who have $180,000 extra to put into their superannuation so, in the case of voluntary contributions, we are talking about a small number of very wealthy people, and the legislation would enable those few people to engage in gaming behaviour. In this game there would be a number of ways to win.

First of all, the tax office may not detect or enforce a tax liability against excess contributions. If that happens, individuals who breach the law get to enjoy significant tax concessions on earnings and income arising from these unlawful contributions. However, if a violation is detected and the tax office seeks to impose a tax liability, individuals who breach the law are then given a free pass: they can have the excess contribution returned to them with no penalty. How is this fair? The law is the law. If you breach the law, you should pay the penalty. Everybody else does. Why is it that, for high-income earners, it is assumed that it is just inadvertent and they should get the money back—that they should get it out of their fund and pay no penalty for what they have done? That is what this is. That is why it is so wrong.

In fact, the legislation creates perverse incentives by giving an individual who has broken the law the option to choose to withdraw the excess contribution, which returns the individual who has breached the law to an approximation of the same position they would have been in had they not violated the cap; plus they get any earnings that accrue between the assessment date and the withdrawal date, compounded over time. They can also pay the penalty and keep the concessional treatment on earnings and retirement income. Further arbitrage opportunities are available under the proposed legislation because earnings for tax purposes are calculated by reference to a formula that is the average general interest charge for the relevant financial year, rather than the actual earnings received; and as a result, if the constructed earnings are less than the actual earnings, a further benefit is possible.

This is a ridiculous piece of legislation you are bringing in here which once again gives the wink and the nod to the big end of town. It is simply wrong to suggest that it is inadvertent because most individuals in a position to exceed the non-concessional contributions cap are likely to be receiving professional advice and tax preparation assistance. Let's face it—if they have that much surplus cash to put into super, they are going to be getting their tax done. This goes back to the financial services industry and all the problems we have with that.

If there is a legitimate concern around inadvertent violations, more moderately targeted reforms could be contemplated. But I do not accept that we should be presuming this is accidental or inadvertent and that there should be no penalty. That is why we should recognise that it is wrong and a mistake.

Everybody should be equal under the law. That should be a fundamental premise in Australia. Everyone is equal under the law. If there is a law which says that you cannot get the pension if you have a certain amount of money or if certain changes apply and you breach that, then you suffer the consequences; but equally, if the big end of town stacks up this money in their super beyond the cap they are allowed, they should pay a penalty when they are found out. Why is it that we assume rich people make mistakes to their financial advantage inadvertently, but poorer people are clearly not innocent and have done so for some criminal intent? That is wrong, and that is why the Greens will be strongly opposing schedule 1 of this particular tax bill. It shows again that the Abbott government cannot help itself. Where the rich are concerned, no penalties apply. Where other people are concerned, every penalty applies and the book is thrown at them. It is wrong.

The other schedule we will be opposing today is about the destruction of the environment and using public funds to benefit mining companies. That is exactly what exploration tax credits do. What this schedule does is provide tax credits for junior mining companies—essentially, mining start-ups that have no current investment from which to redirect existing profits into further exploration. It is giving these mining start-ups a credit when they are exploring greenfield areas. In other words, this is about new miners on new exploration projects. Guess what? They are trying to get into every protected area around the country. We would be offering a tax credit for these miners to open up areas that ought to be protected. The fact of the matter is that frequently they go in and destroy these areas. State governments fall over themselves to give them licenses, a royalty holiday and every concession under the sun. They go in and wreck the place; they go broke; and then they leave. They never meet the bond, if there was one, to rehabilitate the area.