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Thursday, 19 June 2003
Page: 17005


Ms PANOPOULOS (11:24 AM) —I rise to support the Superannuation (Government Co-contribution for Low Income Earners) Bill 2003 and the Superannuation (Government Co-contribution for Low Income Earners) (Consequential Amendments) Bill 2003. Following on from the comments made by the member for Cadman, it is no surprise that the Labor Party are not interested in genuinely increasing the financial wealth of ordinary Australian workers. We only need to go back to their time in government. Over that time, the real income of ordinary Australian workers actually fell. This was supposedly the great Australian Labor Party, there for the workers. And what did we see? We saw the income of ordinary Australians fall. So it is no wonder that they cringe and try to hide in embarrassment when this government introduces measures not only to give Australian workers choice in the workplace but also to help them plan for their long-term financial security.

There are significant challenges facing workers planning for their retirement in an increasingly difficult environment. These bills have been presented to the 40th Parliament at a time of rapid change within our social environment and at a time when it is more critical than in the past to look at retirement incomes from a long-term perspective. The Howard government has always been a strong supporter of nurturing a savings culture within the work force, and these bills will have a positive impact on the people who should most benefit from the ability to save—those on low incomes. These measures will enhance the importance and attractiveness of encouraging a superannuation savings culture, particularly for low-income earners.

Only this week, with the release of the National Centre for Social and Economic Modelling report titled Wealth and inheritance: you can't rely on your old folks' money, it was reported that, whilst accumulated wealth for individuals had tripled since the 1960s, 80 per cent of the baby boomer generation would not be the beneficiaries of this wealth. A creeping trend in Australian society has been for older generations to spend the wealth that would otherwise—as has been the case in years gone by—have ended up being earmarked for their children's disposal. The report also concluded that about 40 per cent of older Australians would die without having made a will or financial plan as to how they wished their financial affairs to be handled. The harsh realities of the NATSEM report dictate that the baby boomer generation will have to work for longer than they perhaps anticipate, that people are living longer and having fewer children and that intergenerational wealth in Australia is declining, despite the fact that accumulated wealth is on the rise. This is the backdrop against which the parliament debates these important bills.

Prior to the last election, the Howard government proposed the most important series of reforms to the superannuation industry in recent memory. This was sensible policy, aimed at improving the long-term financial security of workers through reforms to the superannuation industry. The co-contribution initiative proposed in this bill will see the government paying up to $1,000 directly into the superannuation accounts of low-income earners to improve their level of savings. This policy arrangement was first announced in November 2001, and the measure replaces the current existing maximum rebate of $100 for superannuation contributions of low-income earners. This measure aims to increase the superannuation accounts of low-income earners to assist them in increasing their personal savings for retirement.

Presently Australia has a competitive and well-supported superannuation industry, yet there is more that can be done to continue and maintain its accessibility. We are entering difficult and uncertain times within the industry, and the effects of population ageing and changing demographics cannot be underestimated. Contained in the Intergenerational Report in last year's budget is the revelation that there will be an increase in spending on age pensions from the current figure of 2.9 per cent to about 4.6 per cent by 2042. This will undoubtedly lead to a significant upward creep in expenditure and the realisation that policies affecting retirement incomes is a serious issue confronting Australian society and the Australian parliament.

Through the release of the statement in the 2001 election campaign titled A Better Superannuation System, the government promised to replace the current provisions regarding government superannuation support for low-income earners with a more balanced and generous co-contribution system. The new provision offered in this bill is a welcome incentive for people to contribute as much as they can to their superannuation funds, ensuring increased economic self-reliance and greater retirement incomes for those currently on low incomes. Whilst many in the Labor Party accuse the Howard government of being tough on families and tough on low-income earners, this policy clearly articulates the government's concern for those in this income group and for their retirement planning. Through offering to co-contribute up to $1,000 a year to the superannuation funds of low-income earners, this incentive provided for retirement is strong and unprecedented.

The government believes in giving a helping hand to those on low incomes, seen most recently in this year's budget with the decision to raise the low income tax offset and increase the taxation thresholds that currently apply. Notably, the Labor Party criticised the recent tax relief for low-income earners—which constitutes a saving of $329 each year—yet they have offered none of their own. The Labor Party's only recent foray into delivering income tax relief came in its ill-fated roll-back policy, which meant a miserly $1 a week saving for taxpayers. This bill continues the visionary approach of the Howard government and continues to provide the good outcomes that the government has achieved and will continue to achieve for low-income earners.

The government has recently adopted a three-pillar system for retirement incomes that involves the age pension, the superannuation guarantee and voluntary savings. If a positive savings climate is created that encourages voluntary savings for superannuation and retirement incomes, people can be more assured both of their social and economic futures. This is particularly relevant for those on low incomes, hence the attractive features of this bill which aim to improve the situation for those earning between $20,000 and $32,500 per year. The government is continually looking at improving and sustaining the Australian superannuation system and this measure is a welcome addition to the current raft of reforms taking place within the industry.

The government is committed to ensuring that low-income earners are part of the current reforms of the superannuation industry and are not left behind. The bill dictates that for those earning $20,000 a year and contributing $1,000 to their superannuation funds the federal government will co-contribute this same amount on a dollar-for-dollar basis. Not only does this provide a real incentive to save for retirement but also it basically provides free money to those low-income earners who take up the challenge to save for their retirement.

These reforms in no way compromise the current operations of superannuation funds and their reporting systems. The reporting systems undertaken through the superannuation contributions tax act 1997 are still employed, which ensures a smooth transition into the co-contribution system.

With superannuation policy increasingly on the worldwide economic policy agenda, the significant volatility seen recently within global financial markets clearly demonstrates the need for workers and governments to plan for the provision of workers' retirement incomes and pension funds. Funds within the superannuation system in Australia have increased in size by more than double in the last six years—from $247 billion to $527 billion in December 2001.

Following the family home, superannuation is the most valuable asset that most Australians have. Personal investment and retirement planning are not issues solely for the domain of the wealthy elite, and this bill recognises the need for all sectors of the community to plan carefully for their retirement and save as much as possible for their future financial wellbeing. We need to promote personal investment and retirement savings and a culture that supports these needs. The dramatic ageing of Australia's population—not an uncommon trend within the industrialised world—and a rising expectation of living standards within retirement demonstrate the importance of encouraging people to save for their retirement.

Superannuation is a public policy area that will affect all working Australians at one stage or another. The importance of this particular bill in addressing the needs of low-income earners in their planning for retirement is particularly timely. The Howard government knows the importance of the superannuation system to Australia's future and in this parliament is aiming to implement its vision of a fairer and more equitable and accessible system. The government wants to reduce the superannuation surcharge from 15 per cent to 10.5 per cent over the next three years. The government also wishes to increase the tax-deductible threshold of superannuation contributions for the self-employed. The government has also introduced choice of funds legislation that will properly allow employees to choose where their retirement incomes are channelled. This current bill detailing the government's co-contribution measure is yet another welcome addition to these reforms.

I would hope that those on the other side of the House would realise the importance of this bill and support its passage without reservations, without miserly comments, but actually look at it for the visionary legislation that it is. Governments, when they can, should lend a hand to those who need it, and this policy embraces the importance of encouraging those on low incomes to save for their futures. The measures contained in the bill are welcome measures that highlight not only the importance of the superannuation industry in nurturing a savings environment but also important planning for our future communities. These measures constitute an important and welcome proposal that supports and rewards people in their efforts to save. These are measures that I strongly support and therefore I commend the bill to the House.