Ursula Stephens (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, my question is to the Minister representing the Minister for Superannuation, Senator Sherry. Can the minister outline to the Senate the plans the Gillard government has in place to boost and secure the retirement savings of Australians? How is the Gillard Labor government helping families save with simpler low-cost superannuation?

Nick Sherry (Tasmania, Australian Labor Party, Minister Assisting the Minister for Tourism) Share this | Link to this | Hansard source

To put it at its simplest, the government has announced policies that will ensure that the average Australian worker currently aged 30 can expect up to $40,000 more in retirement income from their superannuation. That is contained in the Gillard government’s Stronger Super package. It is a very comprehensive response to the Super System Review, more commonly known as the Cooper review. That was an election promise made by the Gillard Labor government. We will also be increasing the superannuation guarantee from nine to 12 per cent over eight years by 2020. Importantly, we will be refunding the 15 per cent contributions tax that is currently paid by low- and low-middle-income earners. This is particularly iniquitous and unfair. Low- and low-middle-income earners who have no effective marginal income tax paid, pay a 15 per cent contributions tax. Millions of low- and low-middle-income earners will effectively pay no tax on their superannuation contributions.

The Stronger Super package includes the introduction of new low-cost and simple default product called My Super. There will be heightened duties for superannuation trustees and financial planners and other advisors, and also support for the Cooper review’s SuperStream proposals. The average cost of a transaction—that is, the administration and movement of moneys in the system at the moment—is $35 per transaction. I think there are 100 million transactions in a year. So the system is clearly inefficient. Currently there are an average of three superannuation accounts for every working Australian—33 million accounts for almost 12 million Australians. (Time expired)

Ursula Stephens (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a supplementary question. Can the minister advise how the Gillard government is charting a clear path for future superannuation reform and providing certainty to both the industry and to fund members?

Nick Sherry (Tasmania, Australian Labor Party, Minister Assisting the Minister for Tourism) Share this | Link to this | Hansard source

Once they are minimised and removed, the inefficiencies reflected by double or triple administration and investment fees, higher fees than are necessary, it is estimated that the reforms announced by the Gillard Labor government will save members $2.7 billion a year in fees. Lower fees mean higher retirements incomes for all Australians. SuperStream will improve the back office processing of superannuation. It is estimated that will save up to 25 per cent of the administration costs and again that will equal a saving in the system of approximately $1 billion a year. There are an estimated 5.8 million super accounts currently containing $18.8 billion in lost superannuation moneys—an issue that has been long untouched by previous governments. (Time expired)

Ursula Stephens (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I ask a further supplementary question. Can the minister advise if he is aware of any obstacles or threats to the Gillard government’s historic reforms to the superannuation scheme?

Nick Sherry (Tasmania, Australian Labor Party, Minister Assisting the Minister for Tourism) Share this | Link to this | Hansard source

The funding of the increase in the superannuation guarantee will come at a significant cost to government revenue. The abolition of the contributions tax that is currently paid by low- and middle-income earners is another very important fairness and equity measure. These two measures cost significant expenditure on the budget. They are being funded as part of the tax package announced by this government, which is funded by the mining resource rent tax. Obviously, if the mining resource rent tax fails to pass the parliament—and certainly we know that those opposite, the Liberal-National Party, oppose that tax and the revenue that flows from it—there will be no increase in the superannuation guarantee. There will be no abolition of the tax that low- and low-middle-income earners currently pay on their contributions to super. That is the Liberal-National Party’s position. (Time expired)