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Tuesday, 25 March 1997
Page: 2374


Senator SHERRY (Deputy Leader of the Opposition in the Senate)(3.08 p.m.) —I move:

That the Senate take note of the answer given by the Assistant Treasurer (Senator Kemp) to questions without notice asked by Senator Sherry today, relating to the superannuation surcharge.

Tomorrow we are to consider the government's major budget revenue raising measure—a new half a billion dollar tax a year on superannuation. Two weeks ago, Mr Rose QC, on behalf of the Business Council of Australia, submitted legal advice to the Senate Select Committee on Superannuation saying that—and this is paraphrasing him—clause 34 of that package of legislation was invalid under the constitution. It was invalid because it imposed a tax—and he called it a tax—indirectly on fund members through the superannuation funds.

This was a basic flaw in the legislation—and I hope that Senator Kemp is listening to this. What happened? That night, Senator Kemp, and, the next morning, Mr Costello, the Treasurer, and the Prime Minister (Mr Howard) all rushed to defend the constitutional basis of the legislation. They all rushed into the media, saying, `Look, there is nothing wrong with our legislation. We have taken into account the similar legal advice that Mr Rose submitted to the Senate select committee. There is no need to be concerned. We have got it right. Our legislation is constitutional. There is no cause for concern.'

And what happens? Last Thursday, the government rushes amendments into the House of Representatives to take care of the problem that Mr Rose QC had identified. The government rushes amendments into the House of Representatives to delete, amongst other areas, that clause 34 which goes to the heart of the problem of the constitutionality of the government's proposed new tax on superannuation.

What did the government do? Did they say, `Oh, we got it wrong. We are sorry.'? Did they publicly acknowledge that they accepted that the superannuation so-called surcharge bills were defective constitutionally? No, they did it on the quiet. They rushed it in last Thursday and they did not put out any press release acknowledging that they had got it wrong. They had to rewrite their legislation to minimise its chance of being challenged in the High Court. That could have overthrown that new tax of half a billion dollars a year.

This is not the first time there has been a major problem with this government's package of legislation. The package of bills was tabled on 13 February. We have had assurance after assurance from Senator Kemp, when he can answer a question, and assurance after assurance from Mr Costello, Mr Fahey and the Prime Minister himself that this legislation is okay—it is fair and it is reasonable. They continue to refute the arguments that we have put in criticism of the effects of this new tax legislation. They continue to say there is no major problem, it is fair legislation, despite the fact that we have been raising for some months what we believe are quite legitimate criticisms of the legislation, in addition to the constitutionality issue.

Senator Kemp, I do wish you would stay and listen because if only you had listened after the bills were tabled on 13 February, if only you had listened to what we were advising and if only you would listen to what everyone else is advising. It is not just we, Senator Kemp, who have been raising problems about this new tax. It is everyone else in the superannuation community: the accountants, the lawyers and the superannuation funds. Everyone has been raising problems about this new superannuation tax.

As I said, it is not the first time. The government rushed in additional bills to exempt federal judges after 13 February. They had discovered they had another problem. Then the second problem: they forgot to include the tax in its application to federal government employees. The third problem was that they had to rush in amendments to deal with the constitutional problems. And today we have identified a fourth major problem: in its rush, the government has neglected, or forgotten, because of its general incompetence to amend section 58 of the superannuation industry supervisory act. The effect of that is that employers will have to pay the tax themselves on defined benefit funds, or trustees will have to collect the tax on the earnings of all fund members in order to pay the tax.

Senator Ferguson is going to speak. Senator Kemp is not here. Senator Ferguson, through the chair I challenge you: I bet, on behalf of the opposition, you will have to move amendments to deal with these particular problems we have raised today—amendments created by your own government's incompetence. (Time expired)