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Thursday, 26 March 1998
Page: 1766

Mr HOCKEY (10:06 AM) —The Superannuation Legislation Amendment Bill 1997 will make various miscellaneous amendments to the superannuation legislation to maintain and strengthen the efficiency and effectiveness of the superannuation supervisory framework.

Many of the points are contained in the second reading speech. I would like to reflect on a few of those points which have an effect on the Superannuation Industry (Supervision) Act, the SI(S) Act, as it is known. These specific amendments include permitting a trustee of a fund to amend the governing rules of the fund to enable the acceptance of binding death benefit nominations from members.

I would like to particularly focus on this proposed amendment. Unfortunately, there continues to be some discrimination in the way that we treat some nominees of people who hold superannuation accounts. I am referring specifically to the way that homosexual couples are treated. At this stage, there has been no attempt by either side of politics to permit a binding nomination to be enforced so that a partner of an individual is the beneficiary either at the time of death or at the time of maturity of the superannuation policy.

As a member of the Liberal Party and as someone who believes passionately in the principles of liberalism, I strongly believe that people should be judged not on their sexuality or on issues where the community may treat them unfairly. People should be treated as individuals and equal members of the community, provided they do not themselves give up that right to be a fully fledged member of the community by committing an unlawful act resulting in gaol.

I cannot for the life of me understand why a binding nomination provided by a gay person—either a lesbian or a male homosexual—should preclude a partner, a friend or any other person that they may be in a relationship with, if that is their nomination. This cuts to the very core of the principles that I believe underpin modern liberalism, which I enunciated in my maiden speech.

It is time for this parliament to take a strong stand and to provide the opportunity for an individual to nominate a partner or a friend notwithstanding their relationship. That person should be a binding beneficiary of the estate, the superannuation part of the estate or the policy itself.

That is particularly applicable, given the announcement by the Prime Minister on International Women's Day, which I strongly applaud and which puts on the table, at the time of the marriage break-up, the accrued superannuation entitlements of one of the working partners in the relationship. It applies equally to men and women: I may be able to access my wife's superannuation and vice versa. That is only fair and just, and at the same time it is a fundamental part of liberal principles that people should not be discriminated against on the basis of their sex or, for that matter, their sexuality. It is something that we should take forward as a parliament.

This bill deals with a new division in the SI(S) Act which applies alternative in-house asset rules to certain defined benefit funds with large accumulated surpluses, subject to appropriate actuarial controls. Also, it extends from 5 June 1997 to 5 June 1998 the transitional period during which tax file numbers already quoted for superannuation purposes may be taken to have been quoted for surcharge purposes also.

The bill provides greater power to the Insurance and Superannuation Commissioner so that the commissioner can revoke an approval of the trustee without ministerial clearance where the revocation is requested by the trustee. That is a particularly important power to protect the beneficiaries in this case. The bill also strengthens the arm of the Insurance and Superannuation Commissioner in relation to monitoring and investigation powers, by expanding the number of parties to whom existing powers apply and—importantly, given the size of the funds and the large risks that are involved in the funds management—by increasing the penalties for non-compliance.

This bill also amends the Superannuation (Resolution of Complaints) Act to enable the Superannuation Complaints Tribunal to be constituted by one, two or three members, rather than the present mandatory three members. This improves the efficiency of the tribunal. The bill provides for an improvement in the transparency and the process of constituting tribunal panels. It will require the tribunal chairperson to make available to the public guidelines concerning the circumstances under which the tribunal may be constituted by fewer than three members.

The final principal act amended by this bill is the Bankruptcy Act, which is amended to ensure consistent treatment of the superannuation benefits that are bankrupt, regardless of whether the bankrupt's benefits are in a regulated superannuation fund or an exempt public sector superannuation scheme. What this does is to create a level playing field. The playing field has for some time discriminated against members of private sector funds. But, importantly, this legislation is, in effect, again trying to repair some of the problems that have been passed on to us by the mismanaged introduction of superannuation.

I personally regret the fact that we had to introduce the superannuation surcharge. It would not have been necessary but for the $10.5 billion Beazley black hole which we inherited and which we have set about repairing. We have set about repairing it for a distinct purpose: to shore up Australia for the next downturn in the world economy, to shore up Australia so that it can benefit from a sustained level of economic growth and low inflation, and to create better work practices that make us more internationally competitive.

The superannuation surcharge basically ensures that the three per cent of people in the population who happen to be earning more than $70,000 a year are on an even playing field with the rest of the community. But the fundamental problems with superannuation go to the fact that governments over the last few years have continually been moving the goal posts. That is a source of great frustration to many accountants, to many lawyers, but most significantly it is a source of great frustration to contributors.

I will give credit where credit is due. When superannuation arrangements were first introduced in the 1980s by Bob Hawke, it was the right decision. People had to start to put away, in a very defined way, money for their future. If you like, it was a private contribution to their own retirement.

Over the last 20 to 30 years we have seen a demographic change in Australia. People once had two very distinct parts to their lives. The first part involved their education, their teenage years and their growth phase, while the second part involved their working phase and a retirement period, which for some was a comparatively short period, quite tragically.

However, these days the population is living longer and there are three long phases in people's lives and retirement is a key third part. Previously, retirement was regarded as a period of 10 or 15 years from the age of 65. If we all lived to 75, that would be great. Well, of every three women born today, one is going to live to be 100. You are seeing a major demographic shift in the nation. Therefore, we need to provide for our future. As I said, I give credit to Bob Hawke for taking the major step of establishing superannuation.

But the taxation arrangements in relation to superannuation have been fiddled over the years, and quite tragically so. People are now taxed on their contributions on the way in and they are taxed on their contributions on the way out. We should have followed the original UK model where tax is only applied at the point of collection and the funds accumulate pre-tax profits over the years. Regrettably, these days we have a very confused and unstable system involving the taxation of superannuation.

At some point someone is going to have to take a tough decision with those people taking a lump sum payout when their superannuation matures, taking a 100 per cent payout of their funds. Quite frankly, for many people that will be the most significant amount of money they will ever have in their lives. Despite all the accumulated wisdom and despite the fact that it is their money, we need to be able to protect people from shonks out there who are prepared to say, `I want your money. Come and invest in this nice little corner store in Upper Cumbucker West and you'll be rich forever.' Some people will be tricked and will pour their life savings into that corner store in Upper Cumbucker West, a place where there are only two dingoes and a Cobb & Co cart that passes by every three months. That is tragic. We have all seen examples of that.

At the same time, there is no doubt there are many people in the community who would be more prudent investors than certain fund managers, and that needs to be taken into account at well.

However, I do have reservations about the current entitlement to the bulk payout. I do have significant reservations about the current taxation treatment of superannuation. We have inherited a very confused and difficult system and, at some point of time, there needs to be a bipartisan commitment to redress the imbalances of the current system and to provide people with long-term certainty about the direction in which superannuation and the taxation arrangements relating to superannuation are taken.

Finally, I strongly support the proposed amendment bill before this House. I do reiterate my strong support for the entitlement of beneficiaries of superannuation accounts to be nominated and be binding in relation to all individuals and specifically in relation to gay couples. I also reiterate the fact that we do need to focus as a parliament on providing greater certainty in relation to superannuation entitlement and taxation and provide the community with that certainty, so that those young girls that are born today that will live to be 100 will not be relying on the generosity of the state in 2098. They will in fact be able to provide for their own retirement so that they can live with dignity and certainty and so that they can ensure that they pass on to their children—and I would expect their great-grandchildren even by that stage—a quality of life that is indeed better than that which was passed on to them.