Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Hansard source

I also rise to talk about the Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016. To put it in a nutshell, this is a step in the right direction, but it is nevertheless disappointing in terms of the quantum of reform to our superannuation system. This is the first piece of legislation we have had before us in the 45th Parliament that actually attempts some economic reform, so I will acknowledge that the government has brought this forward, and it does attempt to reform the superannuation system. However, most of the reforms we are dealing with here are just fiddling around the edges. They are very similar to previous reforms that we have seen in this country in the last 15 years, looking at things such as the contributions caps. We have done this before.

The Greens have been leading the superannuation reform agenda when no-one else was talking about it. This goes back to before the 12 months that Senator Gallagher said Labor has been focused on this. Under our previous leader, Christine Milne, we came out with the first proposal to make super fairer and progressive and to save government revenue at the same time—revenue that, we all admit, we desperately need. We may disagree on whether we have a spending problem or a revenue problem and how we should be prioritising this, but I think we all agree that we need to raise revenue in this country.

Superannuation is a critical area for us to tackle if we are going to not only make revenue gains but make this country fairer and more equitable. It has long been used by financial planners as a tax- and estate-planning tool. Let us not mince words here. Superannuation has become, in decades past, a tax haven for wealthy Australians, and it does need reform. While I recognise that this is a step in the right direction, it is a missed opportunity for us not to have made more progressive structural changes to superannuation. That is what we are here to do. We are here to reform the economy to make it more fair and equitable and to help balance budgets to provide the revenue we need for safety nets. This is a missed opportunity. Most of the measures in this legislation do improve the situation—I will go through some measures that we oppose in a minute—but many of the big gaps will remain. And two measures put forward by the government—those are the catch-up contributions and tax deductions for contributions—will open up new opportunities for economic exploitation.

Even after all these changes in the bill pass into law, the system will still be skewed to benefit wealthy Australians. Someone earning $240,000 a year—which is you and me, Mr President, I am guessing—will get a 30 per cent benefit for every dollar, while a single mother earning only $18,000 gets absolutely no benefit for putting money into super. The superwealthy will be able to transfer a significant amount of assets into super just before retirement and enjoy tax-free capital gains and a tax-free income stream from those assets.

We are haemorrhaging revenue in this country with no corresponding policy rationale. Mr John Howard, our previous Prime Minister, made this change when he was floating on the rivers of gold. We all remember those good old days during the mining boom. He wanted the older vote in this country, and essentially Australians are still paying for it.

Labor, along with the Liberal backbench, protected the wealthiest one per cent of super funds when they forced the government to back down from the lifetime non-concessional cap of half a million dollars. This is something we were very disappointed about. That did seem to be a reasonably significant reform. Understandably, significant economic reform is going to be difficult, but the difficulty in this case proved to be within the party room of the Liberal Party. We knew there was a rebellion on around that. The vested interests were swooping, and unfortunately the Treasurer backed down on that. But that would have been a reasonably significant structural reform had it gone ahead.

It is another example of how this parliament is making income inequality worse in this country. I have talked already in this new parliament about the range of bills we have seen already—the omnibus bill taking nearly $5 billion of spending cuts from tertiary students, from Newstart recipients, from single parents and from renewable energy. And then, only a couple of weeks later, we voted—including our friends at One Nation—to pass a bill in this parliament to give a tax cut to the wealthiest Australians. So we raised $5 billion by taking it from probably the most disadvantaged Australians, and then we gave it back two weeks later to the most wealthy Australians.

But I again acknowledge that at least this is some kind of economic reform that we are dealing with here today. We welcome the restoration of the low-income super tax offset, which was repealed by Mr Tony Abbott with Clive Palmer and Ricky Muir while they were still in this building. It disproportionately affected casual and part-time workers, who are overwhelmingly women and young Australians. We all know—or we should all know—that we have a real issue in this country with intergenerational equity, with issues such as housing affordability. Giving young Australians a leg up is one of the more important things that we can do as a parliament.

But it should ultimately be doubled because people below the tax-free threshold do not get the 15 per cent benefit that people earning between $19,000 and $250,000 enjoy. These people will also be unlikely to own a home, so they will be vulnerable in retirement and will end up costing future governments more.

There are still many problems in our superannuation system. Let us not be foolhardy and think that that is not the case and that somehow this legislation before us today is going to fix the problems. It will not. It is a compromise piece of legislation. It is still unfair. It still favours wealthy Australians. But these changes will make it slightly less unfair.

I am pleased to hear that Senator Gallagher, on behalf of Labor, will be putting up amendments, because the Greens agree with Labor's amendments. We recognise the package that Labor announced on this recently. There are multiple variations of how we believe the system could be improved. I will say—it is on the public record already—that we have had chats to the Treasurer and the Treasurer's office about what the Greens believe should be done to superannuation.

We took a very strong policy to the last federal election to make the super system more progressive, ending unfair tax breaks, supporting low-income earners and raising the revenues we need in this country to fund schools, hospitals and infrastructure. Our proposal is for progressive tax rates on superannuation contributions. At the moment, all Australians pay a 15 per cent tax on contributions into super regardless of whether you earn $15,000 or $500,000. Everybody pays the same tax rate. We want to see a system that taxes superannuation contributions in accordance with a table that we set out labelling a new set of progressive taxes that are higher than 15 per cent, based on the income that you earn.

Admittedly, if I am in the 49 per cent tax rate my contribution should be higher than that of someone who earns $15,000, but it will not necessarily be at 49 per cent. I will not go through the details of all that with you, but I will say that for $180,000 upwards, which is all of the senators in this chamber, where your current marginal tax rate is 45 cents in the dollar you are currently paying 15c. We believe you should be paying 32c. We believe that people earning between $100,000 and $150,000 should be paying a 22 per cent contribution, that the 15 per cent contribution should stay for tax rates between $37,000 and $100,000, and that there should be no tax on your contributions if you earn less than $37,000.

This would actually bring the super system in line with the progressive tax system that we have in this country on income. Let us face it, super is set up to pay your income in retirement. This would make it a lot fairer. Just as importantly, the Greens approach to reforming the super system would have brought in $11 billion of revenue over the forward estimates. That is significantly more than we are looking at with this package. It is what I would call a significant structural reform.

The amendments that I understand Labor are going to move—I would urge that they be passed by the Senate—are about improving the integrity of the tax system and preventing exploitation by financial advisers and are to slightly shift tax rates further to make the super system fairer. We have seen reports from the Grattan Institute and other commentators in this country that we could take them even further and still provide the incentive necessary to help Australians save. The tension in the super system is giving people enough of an incentive to save for their retirement, because a lot of us are busy and we do not necessarily think rationally in our busy lives. The super system was set up to provide a nest egg in our retirement on top of the pension. So we do need to give people an incentive—a slightly lower tax rate on their contributions—but at the moment it is still being rorted by too many Australians.

We would support removing the ability for catch-up contributions for someone who has contributed less than $25,000 and could be put in a lump sum on the difference. We would support allowing individuals up to the age of 75 being able to deduct super contributions from their income taxes. That would split the long held nexus between income from work and superannuation. We would support making super more progressive. Currently, people who with incomes over $300,000 pay 30 cents in the dollar for their super contributions. The bill lowers the high-income super charge to $250,000. The amendment that Labor is introducing to lower that further to $200,000 will still affect the top three to four per cent of income earners. That will raise an additional $700 million. The final amendment that, I understand, Labor will be putting forward is to clean up the mess on non-concessional, or what is commonly referred to as after-tax, contributions. These are what are exploited by the very wealthy individuals in this country. They pour their assets in and protect them from future taxation.

As I said earlier, this is a step in the right direction but it is a missed opportunity to bring in very significant reform. Even if we support Labor's amendments or were to put in new, targeted changes to super tax concessions, the billions of dollars we could raise would help us take pressure off other workers in this country, such as backpackers. We still have not sorted out the mess, the catastrophe, that has come to the Senate and the House that has put Australia's agricultural producers at risk. That is an attempt by the Treasurer to rip a couple of hundred million dollars out of some of the lowest paid people in this country—seasonal workers, itinerant workers, who are here on holiday. They choose to come here for a holiday because they can get work—and it is lucrative for them to work here. We know they spend most of their money in Australia when they are here, which is good for our economy. As workers they are available when they are needed. Agricultural producers, certainly in my state of Tasmania, always try to employ locals first—they have that policy—but when they need to pick, when they need hundreds of workers, sometimes it is very hard to get that labour, and backpackers supplement that labour.

We are in a situation at the moment—the Treasurer calls it belt-tightening—that is like the proverbial squeezing of the lemon; you cannot get any more out of the lemon. The lemon is low-income Australians, disadvantaged Australians and workers such as backpackers. Most of them earn, on average, only $14,000 when they are here. It is enough for them to choose to come to Australia for a holiday. We are penny-pinching. We are going after them for a miserly amount of money. With just a slight tweak to the bill that we are looking at today, on the contributions cap for after-tax contributions, we could raise billions of dollars and would be enacting progressive reform on a piece of legislation that essentially makes us, to use the term of Chris Richardson from Access Economics, Robin Hoods. That is what the budget was set up to do: tax the rich and give that money to the poor. Those not my words; those are the words of the man that the Treasurer was quoting the other day, saying we have budget crisis and we need to cut spending. Mr Richardson made it clear that the budget is our Robin Hood. It is about taxing the rich and giving to the poor. We have taxed a little bit off the rich, but we could do a lot more. There are still a lot of wealthy Australians using superannuation as a rort. Rather than putting our agricultural producers at risk by tweaking, fiddling around the edges and taking money off those who come here to help Australian industry and come here for a holiday, we could actually fix it here today by recouping that revenue by enacting some of the amendments that Labor are putting up.

I have said it before: it is a privilege to have this job here in the Senate and have the ability to represent the people who voted for you and the people who believe in your philosophy, whatever side of politics you happen to come from. We have the unusual position of privilege where we can take the will of the people who voted for us and try to enact reform and change legislation to fix this country to help the growing crisis of inequality—the same crisis that has driven the rise of Donald Trump in the US, the Brexit backlash in the UK and, I would also suggest, the rise of One Nation in Australia by the people who feel that they have been left behind. Inequality joins those dots. This is the issue that we have to face. It is the moral challenge of our generation. Everything we do here in the Senate in terms of legislation around economic bills should be viewed through the prism of trying to tackle the moral challenges of our time, such as inequality and, I dare say, climate change as well.

We at least have a piece of legislation before us today that goes some way to trying to raise revenue and taking more money from the rich. I reiterate: it is a shame it did not go further. It is a missed opportunity. The Greens will not be giving up on real superannuation tax reform. We will not be giving up on it. There is a lot more we can do. This is an area that we need to ratchet up in terms of taking away the structural system that allows wealthy Australians to use superannuation as a tax and wealth planning vehicle and allows them to avoid paying tax—the tax that pays for our hospitals and our schools. I look forward to having the debate in committee with Labor on the amendments.

On behalf of the Australian Greens, I move:23/11/2016 8:19 AM

At the end of the motion, add:

", but the Senate notes that this bill to tighten tax breaks for superannuation should be considered together with legislation to address the tax advantages for investors in real estate or more capital will be diverted into existing housing stock, making it even harder for young Australians to buy their first home and further entrenching wealth inequality between generations and therefore calls on the Government to undertake a review into how these superannuation changes will affect housing affordability for aspiring first home owners and report the results of the review to the Senate.".