Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

At the outset I inform the Senate that Labor's position is to support the Tax and Superannuation Laws Amendment (2015 Measures No. 4) Bill 2015. I expect that would not be surprising to anyone who followed the debate on this bill in the other place, given that two-thirds of the bill are measures from previous Labor budgets. The bill implements previous Labor integrity measures on capital gains tax, rollovers and lost member superannuation accounts, and it unifies the tax treatment of all civilian and Australian government employees who work overseas. It is greatly pleasing that the government is proceeding with some of the measures that Labor had planned to implement. Up until recently, you could have been forgiven for thinking that the sole purpose of the government was to tear down prior achievements of Labor governments. So, it is good to see a tax and superannuation laws amendment bill that indeed implements these sensible integrity measures.

Going to schedule 1, improving the integrity of the scrip-for-scrip rollover, we welcome the government's move to implement our integrity measures on scrip-for-scrip rollovers. The scrip-for-scrip rollover regime ensures that tax considerations are not an impediment to takeovers or mergers involving companies or trusts. Recent court cases have shed light on the tax minimisation opportunities arising from ambiguity in the existing legislation. This reform, first announced by Labor in 2012, prevents entities from indefinitely deferring capital gains tax obligations and greater consistency to the taxation of trusts.

Schedule 2 is the exemption of income earned in overseas employment. The opposition is comfortable with the government's efforts to boost the integrity of our personal income tax system by standardising the tax treatment for workers delivering overseas development assistance. This integrity measure improves the consistency of our personal income tax system by upholding the principle that Australians should pay tax on their earnings somewhere. This provision was originally introduced to ensure that aid workers working overseas were not taxed on their income both in Australia and in the source country. However, the provision no longer serves this purpose, with Australians working overseas often able to avoid income tax in both jurisdictions.

While we welcome efforts to tighten the tax net, I contrast the government's approach to the issue of double taxation of individuals with its approach to the double taxation of corporations. Earlier this year Labor announced a multinational tax package which included a measure for tackling hybrid instruments. Under our proposal, we are allowing the Australian Taxation Office to look at how a hybrid instrument is treated by an overseas jurisdiction essentially to ensure that a hybrid instrument could not, effectively, avoid tax in multiple jurisdictions. It is striking that, while the government is willing to tackle this issue in the case of aid workers, it is not willing to tackle the same issue when it comes to big multinational corporations. The principle is a sensible one. Multinational corporations are looking at how a hybrid instrument is treated by the tax regime of another country and how it is treated by the Australian Taxation Office. The Australian Taxation Office should not be blind to the way in which an overseas tax office treats a hybrid instrument.

Unfortunately, while the Treasurer has been talking about acting on multinational tax for over a year and we have heard, again, the promise that he will act, we are yet to see actual legislation. By contrast, Labor's multinational tax plan, announced in the first half of this parliamentary term, would raise more than $7 billion over the decade. It is informed by work in the OECD and has been carefully costed by the Parliamentary Budget Office.

Schedule 3 of this bill covers the small lost member account threshold. Labor will support raising the threshold at which the government collects small lost member superannuation accounts. Labor invented Australia's universal superannuation system. It was fought hard against by the coalition at the time. When the Keating government introduced universal superannuation in the early 1990s, those opposite railed against universal superannuation. I remember going out and fighting for this on the job as a union official, trying to get equal access to superannuation for blue-collar workers, predominantly in places where white-collar workers had access to superannuation but blue-collar workers did not and where white-collar workers could vest their superannuation and blue-collar workers could not—all issues opposed by those opposite.

Before the 1996 election, the coalition promised not to tinker with superannuation but then froze the superannuation contribution rate throughout the period of the Howard government. History repeated itself in 2013 when the then opposition promised that they would not make adverse, unexpected changes to superannuation but went ahead and froze the super contribution rate at 9½ per cent, not allowing it to continue on its planned trajectory to 12 per cent, which would have guaranteed a more dignified retirement for many Australians.

The system of collecting lost member accounts is sensible. It is easy for Australians to be reunited with their lost superannuation accounts using a simple tool available on the tax office website. But the decision that the government made in the past was that when accounts fell below a certain amount they should be transferred to the Australian Taxation Office to ensure they were not completely eaten up by fees and charges. Many young people know the experience of moving from casual job to casual job, ending up with a collection of superannuation accounts and wanting to consolidate those accounts. Before we had the lost super regime, those accounts would often be gone within a matter of months. Thanks to the lost super regime these accounts, when found, contain a reasonable chunk of money—about what the individual put in.

In May 2012, Labor increased the threshold at which an account could be shifted to the ATO from $200 to $2,000. In the 2013 budget, Labor proposed an incremental increase in the threshold from $2,000 to $6,000. I note in passing that when it comes to unclaimed moneys the coalition is happy to run a scare campaign with crazy talk of 'trousering', with the suggestion that anyone who believes in having a different duration after which bank accounts should be moved to the government is somehow trying to steal people's money. At the same time we have a government bill in the Senate whose effect is going to be to move more superannuation accounts to the government. The principle in both cases is the same: we want to make sure that people who have lost their bank accounts or their superannuation accounts do not find them again only to discover there is nothing in them. We also want to guard against the possibility that someone who has simply not accessed an account for a while may not want it transferred to the government. The thresholds—duration or financial—aim to get that balance right. But the government is clearly pursuing an approach to superannuation accounts that is somewhat different from its approach to bank accounts.

In the spirit of constructive bipartisanship, Labor will support this measure. We do so knowing that, as of 30 June this year, over 14 million Australians have a superannuation fund account and approximately 45 per cent of these people have more than one account. We know, through figures from the Australian Prudential Regulation Authority, that the median figure for fees and charges for low-cost superannuation accounts is $532 a year. If a person has a superannuation balance of $1,000, they will see it entirely eroded by fees and charges in a couple of years. That is the principle of lost super laws, which see accounts moved to the tax office when they fall below a certain threshold—currently $2,000 but, under this bill, $6,000. These measures will, hopefully, ensure that low wage workers and those working casual jobs are able to retire in more dignity, knowing that their accounts have not been eaten up by fees and charges.

At the same time, it is not possible to talk about super in this place without acknowledging that there is only one party of government in this parliament who believes that our superannuation tax concessions are not fair and not sustainable. The age pension is set to grow around five per cent a year over the next four years. The government says that the age pension is out of control because of that, but superannuation tax concessions are growing at more than four times this rate. The earnings concessions alone are set to double over the next four years to more than $30 billion. It will soon be the case that we spend more on superannuation tax concessions than we spend on the age pension entirely.

A Grattan Institute report on tax reform found that more than half of the benefits of super tax concessions go to the top 20 per cent of households. Indeed, the top one per cent of households gains more from our super tax concessions than the bottom 40 per cent. To improve the fairness and sustainability of our superannuation system, the opposition has made clear that we will ensure that earnings in excess of $75,000 in the retirement phase are taxed at a concessional rate of 15 per cent rather than being tax-free. This represents a partial unwinding of one of Peter Costello's many imprudent decisions in the late phase of the Howard government—this one removing entirely the tax-free status of earnings in the pension phase. That is a measure which has disproportionately benefited high-income earners and done little to take pressure off the age pension but instead had the effect of acting as a windfall for those who are able to recycle their earnings through the superannuation system.

Labor do not propose to entirely reverse that Costello decision of 2006. But we do propose, if we are fortunate enough to win government, to ensure that earnings over $75,000—and just the marginal amount over $75,000—are subject to a 15 per cent tax rate. We have also indicated that we will lower the threshold for the 15 per cent high-income superannuation charge from $300,000 to $250,000. Those two measures together save the budget in excess of $14 billion over the decade. They are responsible, they are fair and they will put our superannuation system on a more sustainable footing for the future.

Labor is hardly a voice in the wilderness amongst those who believe that our superannuation settings need to change. We can go through those who support some changes to our superannuation system, and we will start with the Secretary to the Treasury, John Fraser. The government's own tax white paper asked the question, 'Are Australia's superannuation tax concessions sustainable?' A range of groups across the political spectrum have called for the government to engage in a sensible debate over superannuation tax concessions. They include the Association of Superannuation Funds of Australia, the Business Council of Australia, the Australian Council of Social Service, AustralianSuper, the Grattan Institute and Rice Warner actuaries. Indeed, the recent reform summit cosponsored by The Australian newspaper and the Financial Review newspaper saw, as part of its communique, a recognition that we need to look carefully at our superannuation tax concessions. We need to make sure that they are fair for this generation and fair for generations to come, such as students.

What does the government have to say about these unfair and unsustainable superannuation concessions? It depends on who you ask in the government, as with many things. The Treasurer—for the moment—Mr Hockey, has refused to rule out changes, but the former Prime Minister slammed the door on him, having said that there would be no changes whatsoever. Now it falls to the new Prime Minister, Mr Turnbull, to set aside the policy approach of his predecessor and engage with the opposition in some constructive reform.

Labor's policy on superannuation is one which has been announced early in this term of government. We did that in order to promote exactly the sort of healthy public debate that I know some on the opposite side of the chamber believe in. We recognise that superannuation changes are not universally popular, and that is why we have begun the community conversation about Labor's changes. Yes, they raise $14 billion over the next decade, but they do so by reversing a Peter Costello change, which I hope those opposite no longer believe was a fiscally prudent one, and by changing the high-income superannuation charge.

But the real question here is where the government stands. It is unusual for a member of the opposition to be saying this, but we do not know. Mr Hockey does not want to rule out any changes, but the Mr Abbott did want to rule out changes. What does Mr Turnbull believe? We know indeed that the government was considering making superannuation changes right up until the day Labor announced its policy package. Indeed, plausibly, some of the talented Treasury officials sitting in the boxes today were working on the memorandums that we know— thanks to freedom of information laws—were being sent up to the government during this period. We know that there were four briefs that went to the government in the lead-up to the 2015 budget, but they stopped on a particular day. No prizes for guessing which day that was—that was the day that Labor made its superannuation announcement. How is that a coincidence? As always, we have the government playing politics over the policy.

Let us be clear: when we are talking about superannuation, as this bill does, we need to recognise the role of the superannuation tax concessions. They do two things. They recognise the public benefit in reducing the number of people who claim the age pension, and they recognise the public benefit in having a larger pool of savings. That second public benefit is tangible and was important in the global financial crisis but surely must be accorded less weight than the first. For people with multimillions in their superannuation accounts, Labor says: 'Good luck to you. Congratulations, but you should not necessarily be claiming the same superannuation tax concessions as you did in the past.'

Labor's policy is costed and sustainable and is something which I hope the government will engage on. I hope the government will go back to those excellent briefs which I am sure were being prepared for them by the Department of the Treasury in the lead-up to Labor's announcement and will come to a bipartisan consensus with Labor to make sure that our super tax concessions can be sustainable in the future. We have no problem with the government's proposal to increase the threshold for collecting lost members' accounts, but we want to make sure that the government engage in the bigger conversation over superannuation concessions. It is such an important conversation, particularly for those of us on this side of the chamber, who were responsible for creating universal superannuation and who will continue to defend a strong and accessible superannuation system.

Labor calls on the Prime Minister to get over the false start that he has had, the bad start that he has had, as Prime Minister of this country by conceding to the claims of the National Party to do things that are not in the national interest and only in a sectional interest. Prime Minister Turnbull has not started well. Prime Minister Turnbull has started by caving in to the National Party, and we know what that means in terms of good economic policy in this country. If you cave in to the National Party, you end up causing problems for the economic future of this country. The National Party are narrowly focused. The National Party are concerned only for their own interests, not for the interests of the regions that they have seats in. They do not look after rural communities and they do not look after Indigenous communities; they do not look after their health and they do not look after their education. Yet this new Prime Minister has caved in to the Luddites in the National Party. He has started off weakly; he has started off badly. It does not fill anyone with confidence that there will be any change. We know there will be no change because we know this Prime Minister supports the first bad budget, so he supports bad economics and bad policy.

Lee Rhiannon (NSW, Australian Greens) Share this | Link to this | Hansard source

I rise to speak on the Tax and Superannuation Laws Amendment (2015 Measures No. 4) Bill 2015. The specific aspect of this bill that I want to deal with is that of the exemption of income earned in overseas employment. This looks like another unfair tax measure, where we have an inconsistency, and questions need to be answered by Labor, Liberals and Nationals about why they would support this inconsistency.

This measure really does penalise workers who work for the government on overseas aid projects. We are talking about people employed and paid for out of overseas development assistance. Under the current law all employees of an Australian government agency who work overseas for not fewer than 91 continuous days delivering ODA are exempted from payment of income tax on the income they earn while overseas. It might sound fair that we need to tidy that up, but that exemption is not being removed for all workers who are paid out of the government coffers.

The amendments ensure that all employees of an Australian government agency will be treated equally, in that they will now be subject to income tax on overseas income they have earned in the delivery of ODA. We are being told that there is an issue of fairness here and that there needs to be an evening out of the current system, but it is only to do with ODA. When you look into it more deeply, you find considerable discrimination. The change, which is in schedule 2 of the bill, means that overseas development assistance workers employed by the government will no longer be eligible for tax exemptions. We know this is discriminatory because tax exemptions are being retained for workers in private companies, the Australian Federal Police and the military. This is where we need an explanation, because the Greens certainly support consistency, but we need some fair consistency in how this works.

If workers in private NGOs, the Australian Federal Police and the military will retain their tax exemption status, why shouldn't all government employees do so? I have not been able to find anything in the explanatory memorandum to the bill or in the second reading speech to clarify this. What we find buried in this legislation is that it does penalise workers who choose to work for the government in delivering ODA. If they are working for the government delivering ODA project services, this provision will now apply to them, where it did not previously. This is where we have to look at this measure closely. It looks very discriminatory.

It is also relevant to consider the changes that have been made recently to overseas aid. We have seen a massive decrease in money—$11 billion—for overseas aid. Under this government we now have language about overseas aid having to be about the national interest—not the national interest in relieving poverty in low-income countries but Australia's national interest. I have looked at this issue closely for a long time. When one sees this measure, which discriminates against government workers employed under ODA but not against those in the private sector who are linked with aid, one has to ask questions. And those questions should be answered. As I say again, it looks very discriminatory. I did not hear any explanation as to why Labor signed off on this.

This measure is largely hidden. To be frank about it, we only came across it recently. Again I want to emphasise that the Greens support consistency in terms of tax measures—that is fair—but we are not getting consistency here. Although, when you look at how it is set out on page 25 of the explanatory memorandum, you would think that it was fair, because we are told:

These amendments ensure that all employees of an Australian government agency are treated equally …

Those are the first words—I read them out earlier. When you read on, you find that we are only talking about ODA; we are not talking about those measures applying to AFP officers and the military.

We will return to this in the committee stage of the bill. I do hope that we get a fuller explanation, because right now it seems that buried in this legislation is something that is unfair and discriminatory.

James McGrath (Queensland, Liberal National Party) Share this | Link to this | Hansard source

It gives me great pleasure to rise this evening to speak on the Tax and Superannuation Laws Amendment (2015 Measures No. 4) Bill 2015. This is a bill of unrelated tax and super measures. I will go through the three schedules in relation to each element of the bill.

The first schedule relates to improving the integrity of the scrip for scrip rollover relief rules in the Income Tax Assessment Act following a 2009 decision of the Federal Court. Secondly, this bill will end the personal income tax exemption of wages under the provisions of the Income Tax Assessment Act earned by some Australian government employees who work overseas for more than 91 days delivering official development assistance. Thirdly, it will increase the super account balance below which small lost super accounts will be required to be transferred to the Commissioner of Taxation under the provisions of the Superannuation (Unclaimed Money and Lost Members) Act 1999. I will deal with the first schedule and then go on to the other ones in order.

It is normal practice for a company acquiring or merging with another company to offer its own shares as payment for the acquired company. Normally, such an event, which, in effect, amounts to a disposal of shares, would create capital gains tax liability. However, in certain circumstances, an entity may be able to defer paying capital gains tax until a later capital gains tax event. This is where a scrip for scrip rollover becomes a possibility. A scrip for scrip rollover is the deferral of a liability where: the owner of the asset chooses to take advantage of these provisions; the owner acquired its interest in the company being sold on or after 20 September 1985; the exchange of shares which results in a capital gain occurs on or after 10 December 1999; the exchange of shares results in the purchasing company gaining at least 80 per cent of the equity of the target company or trust; holders of voting interest in the acquired entity can participate in the merger or takeover on substantially the same terms; and the purchase bid does not contravene key provisions in chapter 6 of the Corporations Act or, if the target entity is a company, it includes a scheme of arrangement approved by the court under part 5 of the Corporations Act. Similar provisions apply to allow the deferral of capital gains tax where one trust acquires units in another trust. However, scrip for scrip rollover capital gains tax relief is not available if a share is exchanged for a unit or other interest in a fixed trust or if a unit or other interest in a fixed trust is exchanged for a share. Generally, foreign residents for tax purposes cannot take advantage of these provisions.

The origin of the proposed changes in schedule 1 is that they arise from a decision of the Federal Court in AXA Asia Pacific Holdings Ltd v Commissioner of Taxation in 2009. Briefly, this case examined whether two parties were dealing with one another on an arms-length basis and whether their arrangements invoked the general anti-avoidance provisions of part IVA of the Income Tax Assessment Act. Neither issue is being addressed by the proposed amendments in schedule 1, but the decision in this case left open opportunities to unduly avoid capital gains tax.

The proposed amendments involve subdivision 124-M of the Income Tax Assessment Act. This subdivision contains provisions to deny scrip for scrip rollover relief in circumstances where the same person or company group has influence over both the selling company and the purchasing company. According to the explanatory memorandum of the bill, subdivision 124-M treated the AXA arrangement as a genuine takeover involving a substantial change in ownership rather than as a corporate restructure. As result, AXA was able to obtain the benefit of a capital gains tax cost base uplift when eventually disposing of one of its subsidiaries.

A restructure of an entity that involves the sale of a business into a different entity, such as the sale of a business from a trust to a company, will inevitably result in an uplift to the cost base to the acquiring entity for that asset. For example, a family trust conducts a successful retail business with goodwill worth around $1.5 million, but, due to problems with distributions to a corporate beneficiary, it decides to dispose of the business to a new company which it established. The trust vendor finances the purchase price. Thus, the newly created company now has the goodwill and the cost base of $1.5 million. The revenue earned by the company can be used for the loan payable to the trust. When the company sells the business, it can use the cost base of $1.5 million. However, because the parties to the transaction are not at arm's length, an independent evaluation of the business asset should be undertaken. The explanatory memorandum notes that the AXA case demonstrates that these integrity provisions can be circumvented. This can occur by:

… temporarily suppressing the ownership rights of a party in a scrip for scrip exchange through the use of instruments including convertible shares, options and rights.

Later, these transactions can be reversed, so that a transfer of ownership is accomplished without raising a capital gains tax liability that might otherwise occur. The proposed amendments seek to alter these integrity provisions so that this inappropriate tax relief would not occur.

This measure was first announced as part of the previous government's 2012-13 budget. The Treasury released a consultation on this matter back in July 2012, and it received only one submission in response. The coalition government announced that it was proceeding with this measure in December 2013, and in April 2015 the Treasury released an exposure draft of legislation containing the proposed provisions.

I will now move on to schedule 2 of this bill, which is removing the exemption of income earned from overseas employment. As it says in the Bills Digest:

Since 1964, under Article 34 of the Vienna Convention on Diplomatic Relations, a ‘diplomatic agent’ is exempt from personal income tax of the host country on income sourced from that agent’s home country. For the purposes of this Convention a diplomatic agent is the head of the mission or a member of the diplomatic staff of the mission. Thus Australian government staff, attached to an Australian diplomatic mission, are exempt from the host country personal income tax where that host country has signed this Convention (and the overwhelming majority of host countries have now signed).

Under section 23AG of the ITAA—

the Income Tax Assessment Act—

the foreign earnings of Australian residents for tax purposes, who have been engaged in foreign service for a continuous period of not less than 91 days, are also exempt from Australian personal income tax. This applies to periods of foreign service arising from:

Therefore, those persons attached to Australian diplomatic missions, who are Australian residents for taxation purposes, meeting the requirements of section 23AG of the ITAA 1936, engaged in foreign services for not less than 91 days are exempt from both Australian and host country personal income tax regimes on their foreign income.

Those Australian residents engaged in foreign services, that do not meet the requirements of section 23AG of the ITAA 1936, are subject to Australian personal income tax; for example ordinary Australian diplomatic staff on foreign postings.

The Explanatory Memorandum notes that this exemption under section 23AG was originally provided to avoid double taxation of those engaged in government service.

I will now move on to talk about schedule 3 of this bill. As it says in the Bills Digest:

As individuals move between jobs it is possible that superannuation payments made on their behalf are paid to different funds. Sometimes this is a deliberate choice made by the individual or is the result of restrictions on moving balances between funds (such as for certain defined benefit schemes). If an individual does not make a choice about their superannuation fund upon commencing employment, it is likely that they will be a member of multiple funds.

The holding of multiple superannuation accounts may disadvantage individuals through the imposition of fixed administration fees. Multiple accounts can also impose additional costs on the superannuation system. However, it is important not to assume that each individual should only have a single account. Multiple accounts may be an active choice that a member makes to obtain certain insurance benefits, to facilitate investment choice or as a transition to retirement arrangement.

…   …   …

Certain ‘lost’ accounts are required to be identified and transferred biannually from superannuation funds and retirement savings account providers to the Commissioner of Taxation.

While the identification of lost superannuation has been part of superannuation industry arrangements since 1996, requirements for the transfer of these funds to the Commissioner of Taxation first applied from 1 July 2010, after being announced in the 2009-10 Budget. Prior to this, these funds remained with the relevant superannuation fund or were transferred to eligible roll-over funds. At that time, the transfer to the Commissioner of Taxation of these funds was expected to increase net revenue by almost $230 million over the period 2010-11 to 2012-13.

…   …   …

The justification for the transfer of such funds—which was already in place for unclaimed bank account and life insurance fund moneys—was that it would improve the efficiency of the superannuation system overall by removing the need for superannuation funds to administer or apply member protection to small accounts that are transferred and improve the equity for other members of the fund that were cross-subsidising the member protection arrangements.

The requirements to be a ‘lost member’ are set out in the Retirement Savings Accounts Regulations 1997 and Superannuation Industry (Supervision) Regulations 1994. These require the account holder to be ‘uncontactable’ or ‘inactive’:

– the provider has never had an address for the account holder or

– at least one written communication has been sent to the account holder’s last known address and has been returned unclaimed

and the provider has not received a contribution or roll-over in respect of the account holder within the last 12 months

There are two strands to a superannuation account being classified as a ‘lost member account’ under the Superannuation (Unclaimed Money and Lost Members) Act 1999:

– the superannuation provider has not received an amount in respect of the member within the last 12 months and

– the superannuation provider is satisfied that it will never be possible for the provider, having regard to the information reasonably available to the provider, to pay an amount to the member.

Schedule 3 of this Bill proposes to change the account balance threshold relating to ‘small accounts’ from $2,000 to $4,000 from 31 December 2015 and then to $6,000 from 31 December 2016.

With the time that remains to me I would like to go through some of the key issues contained in the schedules of this bill, starting with schedule 1 of the methods for dealing with potential tax loopholes in the Income Tax Assessment Act. The proposed methods are:

…   …   …

Item 4 of Schedule 1 amends section 127-780 of the ITAA 1997 to add a new condition for a scrip for scrip roll-over to apply. This new condition is that where a purchasing entity is part of a wholly owned group, no member of that group may issue equity (other than the necessary replacement equity), or owe new debt:

capital gains tax—

Under section 124-780—

of the Income Tax Assessment Act—

only an original interest holder can obtain a roll-over of share interests. Under section 124-781 only an original interest holder can obtain a roll-over of trust interests. The transfer of a cost base for the purposes of a scrip for scrip roll-over can, under section 124-782, only be applied to the holder of an ‘original interest’ in an entity who is either a significant stake holder or a common stake holder. This makes the definitions of the terms ‘significant stake’ and ‘common stake’ critical for the functioning of the scrip for scrip roll-over provisions. Both terms are defined at section 124-783 and apply where the entities involved are not ‘widely-held’—that is they have less than 300 shareholders (if they are a company) or beneficiaries (if they are a trust).

An entity has a ‘significant stake’ in a company if it and its associates own shares with 30 per cent or more of the voting rights, or the right to receive 30 per cent or more of any dividends or capital distributions (subsection 124-783(6)).

An entity has, or two or more entities have, a ‘common stake’ if they and their associates own shares with 80 per cent or more of the voting rights, or the right to receive 80 per cent or more of any dividends or capital distributions …

Equivalent tests are applied to trusts …

Item 8— (Time expired)

Dean Smith (WA, Liberal Party) Share this | Link to this | Hansard source

I am glad to rise and make a contribution on this bill, the Tax and Superannuation Laws Amendment (2015 Measures No. 4) Bill, because it is one of those important, if not exactly very exciting, pieces of legislation that will better align our superannuation system with the realities of our day-to-day lives. The bill makes three changes—two to our tax laws and one, of course, to superannuation law. The two tax changes are part of the government's determined effort to make our tax system fairer and more robust, and I am sure that is an aspiration that all of us in this chamber would support. We want to make sure that everybody pays their fair share of tax and that there are no loopholes in our tax system that afford any unfair advantage to some over others based on their ability to gain the system. I would add to that coalition senators would also aspire to Australians paying the least amount of tax they possibly can.

These two changes are integrity measure that will remove the ability of certain companies, trusts and individuals to obtain an unfair tax advantage that was never intended for them. This will make our tax system harder to circumvent and more sustainable for the future. These changes will remove the ability for some entities to access tax relief from the Australian taxpayer when two merging companies are owned by the same people or the same business. This will be achieved by making definitions clearer and by ensuring that the integrity structure cannot be circumvented by businesses, trusts or companies. These changes will make our system stronger and easier to understand—a simpler, clearer set of rules for business is in the best interests of job creation and stimulating economic growth, which everyone would agree are the key priorities of economic reform for our country at the present time. However, the superannuation amendment in this bill is the aspect that is of most interest to me and to coalition senators, and is the focus of my brief contribution this evening.

This reform is about making sure we have a superannuation system that actually meets the needs of today's modern workforce. I am referring specifically to the fact that there are a large number of Australians in the community who have multiple superannuation accounts. It is a phenomena, I suspect, that is particularly widespread amongst younger Australians as they take employment opportunities, test their skills and decide for themselves what the vocations are that they aspire to in their later years. There was a time, probably more so in my parent's generation than in my own, that you took a job with one organisation or company and you stayed with that organisation or company right through your working career—that is certainly true of my father's working career—but for most Australians, and particularly younger Australians, these days are long gone.

We have a situation where people develop their skills and move onwards and upwards with various different employers. I think that is something that should be encouraged as young people and not-so-young people test their skills, move in and out of the workforce and take advantage of employment that best suits their particular needs or their family's needs at any point in time. That upward economic mobility, if that is a term I can use, should be celebrated. It makes us more competitive; it makes us more flexible; and ultimately it makes us a more prosperous nation.

But, of course, it also means superannuation accounts are being established, used to make deposits for a couple of years and then, more often than not, forgotten about as people move on to new opportunities and chose to go with new employers and their preferred or default superannuation fund. In fact, we know that about 70 per cent of Australians simply sign up with the default superannuation provided by their employer without any real active consideration in regards to its suitability or how it might fit with previous superannuation accounts that they might already have in existence.

We also know that 45 per cent of working Australians have more than one superannuation account. I suspect that trend is growing. I am sure a good many people have every intention of consolidating their hard-earned moneys into one pot but life does get busy and life does go on, and those sorts of administrative things more often than not get put off and get put off until they are forgotten about altogether. Consequently, these various amounts of superannuation sit idle and if you have a few accounts with money in them, these sums can total up to a significant amount over time. As we all understand when it comes to retirement incomes, every penny counts.

As the law currently stands, these forgotten accounts will be transferred to the Australian Taxation Office for safekeeping after five years if the provider has lost contact with the account owner and the account has less than $2,000 in it. The benefit of that scenario is that it can then be held until the original owner is found. While the ATO holds the account, the owner of the account is not being charged fees or premiums, which ultimately can swallow up or eat away at these savings and line the pockets of others instead of being used by the person who earned the money to fund their retirement in the first instance.

However, more significantly, the Australian Taxation Office will pay a reclaimed account with interest in line with CPI. That means we are not just preserving the superannuation account and protecting it from being frozen, but if the account holder is located and can be linked back to their superannuation account then the Australian Taxation Office will pay a reclaimed account with interest in line with the CPI—that has to be a good thing for Australian superannuation holders.

The provisions of this legalisation will boost that $2,000 threshold, which is quite a low balance in terms of superannuation accounts being held these days. The reforms contained within the bill will see the threshold gradually move to $4,000 and then progressively upwards to $6,000. This move will mean that more of these forgotten accounts can be captured and held until such time as they are reunited with the person who actually earned the money. This is an imminently sensible change, one that takes account of an increasingly mobile and flexible workforce. I will add to that: this is a very fair outcome.

This measure was first announced by the former Labor government in its 2013-14 budget. Quite soon after coming to office, though, the coalition announced that it would continue with this measure as intended. The government's decision to proceed with the increase to the small or lost member superannuation account threshold is a sensible measure. I have no trouble saying that. I am sure my colleagues—

Debate adjourned.