Alan Ferguson (SA, Liberal Party) Share this | Link to this | Hansard source

My question is to Senator Coonan, the Minister representing the Assistant Treasurer and Minister for Revenue. Will the minister inform the Senate how the Howard government will make the superannuation system simpler and fairer and encourage Australians to save for their retirement? Is the minister aware of any alternative policies?

Helen Coonan (NSW, Liberal Party, Minister for Communications, Information Technology and the Arts) Share this | Link to this | Hansard source

I thank Senator Ferguson for asking a question that will be of great interest to all those who have money in the superannuation system. As senators on this side of the chamber are well aware, the coalition government are determined to simplify Australia’s superannuation system and to make it fairer. It is why, as part of the budget, we have released a plan to streamline superannuation by sweeping away the current tax complexities faced by retirees, by improving retirement incomes, by giving greater flexibility over how superannuation savings can be drawn down and by improving incentives to work and to save. The proposals represent the most significant reform of Australia’s superannuation system in about 20 years. They build on the previous tax cuts in the superannuation system and the introduction of the co-contribution scheme for low-income earners. This is part of the coalition’s ongoing plan to build a strong future for Australia. The complexity associated with taxing superannuation benefits confuses retirement decisions, clouds incentives to invest in super and imposes unnecessary costs on retirees.

As an example, a lump sum superannuation benefit may include up to eight different parts which can be taxed in seven different ways. Under the government’s plan, Australians aged 60 and over who have already paid tax on their superannuation contributions and earnings will not pay tax on their superannuation end benefits from 1 July 2007. They would not need to disclose their superannuation payments in their tax returns. This sweeps away the complexities retirees face when taking their benefits and means Australians will know exactly how much super they will receive. It gives individuals greater flexibility over how much of their superannuation they take and when they take it. It allows people to take their benefit as a regular income stream or leave their savings in the fund to draw down later. The changes will benefit everyone with money in the superannuation system. To ensure the proposals work effectively across the various scenarios faced by Australians with super, the government will consult with the industry on the proposal, but Australians can rest assured that the proposal is already costed and budgeted for.

At the last election, the ALP’s plan for the ageing population was a proposal to rip more than $4 billion out of the superannuation system. We certainly hope that this time Mr Beazley will commit to supporting on behalf of the Labor Party the government’s proposal. We hope that Labor does not try to hedge its bets in relation to these very constructive reforms of superannuation. I am afraid to say that, with regard to alternatives policies, Labor has hedged its bets on many occasions. Just take the surcharge. Labor first opposed the introduction of the surcharge in 1996. It opposed reductions in the surcharge in 2003 and 2004 and, finally, opposed abolishing the surcharge. This is not exactly a model of consistency and coherent superannuation policy. While the Labor Party flip flops on superannuation, this government gets on with the job of building a secure future for Australians in retirement.