Mr FAWCETT (6:35 PM) —I rise to support the Superannuation Laws Amendment (Abolition of Surcharge) Bill 2005. I am fascinated to see that yet again members opposite are going to try to put a roadblock in the way of hardworking Australians getting adequate reward for their labours. I am fascinated also to see that they say that their package stands on such good merit that the government should be responding to it, when in the press releases that they send out the figures do not stack up—they cannot even compare apples with apples. They launch scurrilous personal attacks on people and compare two levels of income—one being the average electorate income for each member—and then they compare the figures that they contest that their tax package would deliver to voters.

The figures looked impressive upon my first reading. I thought, ‘How could this be?’ In the fine print at the bottom of the page, where they hoped that nobody would find it, was the fact that their figures were based not on $37,500, which they contended when they looked at the coalition’s tax package, but on $85,000. If their package is so good, why do they need to obscure the facts and use different figures to compare apples with oranges to try to sell their package? In their own words, they are undone.

In 2004 the superannuation industry lobby group, the Association of Superannuation Funds of Australia, and the Australian Consumers Association argued that one way to encourage people to put more away towards their retirement nest egg is to reduce tax. The Chief Executive of ASFA, Philippa Smith, said:

The Howard government has taken significant steps with measures detailed in this year’s budget. These measures, which include not only the abolition of the superannuation surcharge but also tax cuts for all Australians, have been supported by a broad range of groups, including many of the state Labor premiers. In fact, there is only one significant obstacle to every Australian receiving a tax cut on 1 July this year, and that is the members opposite.

With respect to the abolition of the superannuation surcharge, interestingly, some of the criticism from the member for Hunter related to the fact that it was this government that introduced the measure in 1996. ‘Why,’ the opposition argue, ‘does it now want to remove it?’ ‘Doesn’t it show,’ they argue, ‘that this was an unwise measure in the first place?’ There appears to be in some quarters an unrealistic expectation that circumstances never change, that priorities never change and that plans should be perfect and able to be followed without alteration, happily into the future. In my life experience, military analysts are often quoted as saying that battle plans are perfect until the first shot is fired, then victory relies on combat commanders who can adapt to changing conditions. So let us take a little time to look at the contexts of 1996 and 2005.

In 1996 the new Howard government faced, among other things, the daunting task of dealing with the $96 billion debt left by the Labor government—a debt that was costing the Australian taxpayer over $5 billion a year. The introduction of the surcharge was one of a number of measures introduced in part to contribute to the long task of paying down Labor debt. It is worth noting at this point that not only has the good economic management of the Howard government paid down this debt by $90 billion but it has boosted spending on health, education and defence, amongst other portfolios, to record levels. So, while the surcharge was not introduced for debt reduction alone, the fact that this debt no longer exists is one more factor allowing the government to now move to abolish the surcharge entirely.

With the immediate concern of debt reduction largely dealt with, there are two other areas of longer term concern that this government continues to respond to through a range of measures, including the subject of this bill. One is the ageing of Australia’s population. The other is the shortage of labour and, associated with that, the shortage of a skilled work force. Australia faces an ageing of its population over the next four decades. Twenty-five per cent of Australians will be aged over 65 by 2044-45, which is about twice the present percentage. As I speak with community groups and individuals throughout Wakefield, a common question I am asked pertains to how Australia will afford to look after its elderly into the future. Population ageing of itself should not be seen as the problem, but it will have economic and fiscal impacts that will create significant policy challenges. People over 55 have lower work force participation rates than younger people, and as more people move into older age groups participation rates are expected to drop even further.

The Intergenerational report, commissioned by this government, indicates that taxation revenue is expected to follow GDP growth but that government expenditure is likely to rise rapidly, placing budgets under considerable pressure. Education and some welfare payments are projected to increase more slowly than GDP, while government spending on health, aged care and pensions will grow at a faster rate. If the government does nothing, the aggregate fiscal gap will be around 6.4 percentage points of GDP by 2044-45, with an estimated value over the 40 years of around $2,200 billion in 2002-03 dollars. A range of policy measures will be needed to reduce the fiscal pressure from ageing. Measures to raise productivity and participation would enhance income growth and the capacity to pay for the costs of ageing, including through taxation. Measures to encourage savings for retirement will also lesson the burden on the taxpayer into the future. Population ageing can only be conceived of as a crisis if we let it become one.

The Howard government response has been broad and consistent in its direction. Over the past few years the government has implemented a number of important measures aimed at improving the superannuation and retirement income arrangements for all Australians. These changes have assisted Australians to build financial self-reliance for their retirement. Initiatives in 2001 increased the attractiveness and accessibility of superannuation. These measures included the introduction of the co-contribution scheme for eligible low-income earners who make voluntary superannuation contributions, and reductions in superannuation surcharge rates. The policy paper entitled ‘A more flexible and adaptable retirement income system’, released in February 2004, outlined further measures to improve the accessibility, flexibility and integrity of the retirement income system and to reduce red tape. This included the removal of work tests for individuals under the age of 65 who wanted to contribute to superannuation.

The 2004-05 budget contained incentives to save for retirement worth $2.8 billion over four years and included an expansion of the co-contribution scheme and further reductions in the superannuation surcharge rates. The government has passed legislation to deliver choice of fund and has reconfirmed its commitment to the superannuation contribution splitting policy. In the 2002-03 and 2004-05 budgets the government announced reductions in the superannuation surcharge. Unfortunately, those reductions were opposed in the Senate and the government was only able to secure through the Senate a reduction to 13.5 per cent in 2004-05. The government now proposes, through this bill, to remove this impost on superannuation savings and abolish the surcharge payable on individual surchargeable contributions and relevant termination payments, with effect from 1 July this year. The measure presented in this bill will provide incentives for individuals to make additional voluntary savings through the superannuation system, as well as simplifying the operation of the system.

The other area that government is addressing is the issue of work force shortages. These shortages have resulted from strong growth in the economy which has caused a growing demand for labour, both skilled and unskilled. This is true across all the sectors that I speak with in Wakefield. I see signs on power poles in Playford and Salisbury, for example, advertising vacancies right now for unskilled workers to commence work in the poultry sector. Growers in Virginia talk about their inability to obtain unskilled workers to work in their packing sheds. Businesses expanding in the viticulture sector tell me that their No. 1 risk is the inability to secure both skilled and unskilled workers.

Employers I have spoken to indicate that they see a number of ways to increase work force availability but that there needs to be more incentive for workers to take up these opportunities. More work is available for many who wish to do overtime, but many workers do not have the incentive to do this, lest they be pushed into the top tax bracket. As stated earlier, there is only one group that is standing in the way of a solution to this. Unless the Labor Party decides to stop blocking the lifting of tax thresholds proposed by this government, not only will these workers and their families miss out but over 800,000 businesses in Australia will be forced to wear the higher costs associated with implementing multiple withholding schedules. Yet again, Labor is showing that it is no friend of small business. Like the changes to the tax thresholds, removing the superannuation surcharge provides another incentive for workers to undertake overtime without the risk of being pushed into another bracket, where additional work does not correspond with appropriate levels of additional reward.

The opportunities to upskill are there for many workers, some funded by industry and some funded by the government. But there must be incentive to train. A large part of that is having the confidence that there will be an appropriate increase in reward for the effort put in to obtain the qualifications and for the effort and time spent fulfilling new responsibilities. This government—those on this side of the House—still believes in reward for effort and decries the politics of envy that would seek to cut down the tall poppies that seek to better themselves and their families. Again, the recent tax cuts and this bill are part of the response to this concern. I call on the Labor Party to get out of the way of the tax cuts and the superannuation surcharge relief that the people of Wakefield deserve.

People have spoken to me about our tertiary qualified work force, the engineers needed by industry in Edinburgh Parks and Elizabeth West and the medical practitioners needed to support individuals and families in centres in Wakefield such as Riverton, Munno Para, Clare, Salisbury and Gawler. I have been asked many times why so many who train in Australia are no longer working in Australia. The thousands of professionally qualified Australians working overseas are sometimes known as the Australian diaspora. They are there for a variety of reasons, including family, professional development and even life experience. But a recent study by the Australian Chamber of Commerce and Industry shows that the Australian government should focus on opportunities presented by this diverse and talented group whilst also tackling some of the domestic reasons that push them to live and work overseas—things such as our high personal income tax levels and workplace relations over-regulation. The ACCI study found that Australian expatriates tend on average to be highly educated and well skilled. They have strong engagement with the labour market where they are overseas and they are more likely to be employed on a full-time basis in their host country.

In a 2002 study of Australian emigration patterns, demographic researchers found that almost 42 per cent of Australian expatriates surveyed held a postgraduate degree compared with around seven per cent of the resident Australian population, with almost 89 per cent employed as professionals and on a full-time basis. According to one of these Hong Kong based expatriates:

Mr Crean interjecting—

The DEPUTY SPEAKER (Mr Baldwin)—The member for Hotham has asked a question about relevance. If he had come to the House a little earlier, he would have heard that the member for Hunter was drawn to that and he said, ‘I have moved an amendment to the bill,’ and it is such a broad-ranging amendment that I think the member has the right to speak on whatever he wishes.

Mr FAWCETT —If the Labor Party would actually open their ears and listen, they would realise that we are talking about incentives for people to gain the skills and make the contributions to Australia’s workplace that we need. These incentives include things such as the changes to the tax rates brought in by Treasurer and the abolition of the superannuation surcharge. But, yet again, the Labor Party, instead of listening and trying to work with the government for a good outcome for Australia’s people, choose to make comments and, more importantly and drastically, just stand in the way of Australian workers such as those in Wakefield getting the tax breaks that they need this year.

Mr Crean interjecting—

The DEPUTY SPEAKER —The member for Hotham has been advised many times before about interjection. If he wants to give the next speech, I would suggest that he refrain from interjecting.

Mr FAWCETT —In conclusion, this government has moved to provide incentives for Australians to choose to learn, earn and stay in Australia and save for their life plans and retirement. The measures presented in this bill will provide incentives for individuals to make voluntary contributions to their superannuation and will simplify the administration of the superannuation system. The abolition of the superannuation surcharge is the government’s latest measure to improve retirement income arrangements for Australian families. I commend the bill to the House.