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Tuesday, 19 October 2010
Page: 756

Mr HOCKEY (8:01 PM) —This government has an unhappy history on the subject of superannuation. In late 2007, the then opposition promised to change superannuation ‘not one jot, not one tittle’. Oh, how we remember the prophetic words of Kevin Rudd in 2007 when, as Leader of the Opposition, he said he was not going to touch superannuation. As is typical of Labor, it has broken that promise not once, but on numerous occasions. For example, Labor has halved the concessional contribution caps, penalising thousands of Australians who inadvertently exceeded them and undermining Australians’ incentives to save for retirement. Having broken not just that promise, the Labor Party then cut back the government co-contribution payments for the poorest people. If my memory serves me correctly that was in the 2008 budget, when they did not have to do it. Of course, they were projecting a surplus in the 2008 budget. How ambitious that was, that Labor should deliver a surplus budget! Of course, they never have and I doubt they ever will. But that did not stop the Labor Party, which cut back on the co-contribution payments for those on the lowest incomes. As if that is not enough—if that does not break the promise of ‘not one jot, not one tittle’—Labor mandated that industry funds be the default superannuation funds for the bulk of the modern awards, thereby closing down competition.

I see in the chamber the member for Dobell, who is not only a previous union official—so he would love the industry super funds—but who was also the beneficiary of union support during the recent election campaign and during the 2007 campaign. In fact, all the Labor members were. How do they pay back their union mates? They go and make the industry funds default funds under the modern award system.

Mr Hartsuyker —No competition!

Mr HOCKEY —No, you do not want competition from the private sector. For crying out loud! Industry funds? Bernie Fraser knows how to manage people’s money. He made a living out of it during those glorious days when he was at the Reserve Bank and upped interest rates to record levels. No, put him in charge of the nation’s superannuation—that would do the job. Then, in a further break of the Labor Party’s commitment to touch superannuation ‘not one jot, not one tittle’, as Kevin Rudd said, the Labor Party promised to tender the role of the superannuation clearinghouse to the private sector. But, instead, they went to Medicare. I thought Medicare had responsibility for refunding payments out of the MBS to individuals. But, no, the Labor Party, in its infinite monopolistic public sector wisdom, said, ‘Let’s get Medicare to become the clearinghouse for superannuation.’

Mr Hartsuyker —No tender!

Mr HOCKEY —No, there was no tender. Why would there be a tender? It is Medicare. Medicare is a government owned monopoly. It is so obviously the case that they would make Medicare the only clearinghouse for superannuation. This is Labor writ large. Remember, they promised ‘not one jot, not one tittle’. In that unique Rudd-like language in 2007 they promised not to touch superannuation, and then the tentacles of socialism wrapped around the superannuation system at the behest of the government as they sought to deliver for their union mates in the industry funds but also, more significantly, as they sought to get their hands on Australians’ money. Of course, this is not just in superannuation. Not only does the Labor Party want to get their hands on Australians’ super, they want to get their hands on Australians’ income. That is why Labor increased so many taxes, from tax on alcopops to taxes on cars. And that is why the Labor Party has played around with a range of different concessions to ensure that Australians end up paying more tax, not less, to the government over the course of this government’s two terms.

Typical of the Labor Party, they do not want to admit that they have broken a promise—oh no, they would not admit that they have broken any promises. Obviously there has been a sea of promises. Today we had another illustration of a broken promise when the Prime Minister said that they were going to open some new detention centres, after having said before the election that they were unnecessary. It is not just the present Prime Minister or the previous Prime Minister who has chosen to break promises made by the Labor Party; it is the Deputy Prime Minister and Treasurer who, in May 2009, said:

The government will reduce the generosity of some superannuation concessions for those with greater private wealth.

The cap on concessional super contributions will be lowered and the matching rate of the superannuation co-contribution will be reduced temporarily.

That was 2009. In April 2010, the Deputy Prime Minister and Treasurer said:

We certainly didn’t breach any promise that we made about superannuation.

He lives in this different paradigm, this different universe, old Swanny. He is out there in his own little orbit going around in his own little planet, where he says there is no breach of any election promise—they didn’t breach any promise because the words of the former Prime Minister Kevin Rudd meant so little. They meant not one jot, not one tittle—all those changes they made to super never really happened. Well, they did. They are in the budget. But still they say they never really happened. He went on to say, and this shows the absurdity of his claims:

We certainly didn’t breach any promise that we made about superannuation. It is true that we changed the caps because the caps were excessively generous, and in changing them we did not breach any promise.

That is your Treasurer. Are you proud of this man?

The DEPUTY SPEAKER (Mr S Sidebottom)—No, he is not my Treasurer. You will speak through the chair, thank you.

Mr HOCKEY —Speaking through the chair, I can understand the Deputy Speaker disowning him.

The DEPUTY SPEAKER —Just direct your comments through the chair.

Mr HOCKEY —To the member for Dobell and the two new members here, the member for Bass and the fellow in front of the member for Dobell—I am not sure where he comes from—

Mr Mitchell —I took a seat off you!

Mr HOCKEY —What a rare moment that was. But I say to you—

The DEPUTY SPEAKER —Order! The member for North Sydney will direct his comments through the chair.

Mr HOCKEY —I direct them through you, Mr Deputy Speaker, to the three Labor members over there and even to the member for Adelaide at the table, and I would ask those members: are you proud of a Treasurer who commits to keeping an election promise not to touch superannuation and then says, ‘Well, we changed the caps because the caps were excessively generous, and in changing them we did not breach any promise’? Isn’t there something ironic about that, or something hypocritical, when this comes from the lips of the Treasurer? He expects us to believe him on so many different things. It is Orwellian; the ministry of truth—I am telling you the truth; I am lying. That is what the word of the Treasurer amounts to.

The net effect of this tampering and backflip has been to undermine certainty and discourage Australians from saving. And naturally enough—how can they have confidence in a superannuation system, let alone confidence in a government, that fails to keep its promise? It was with the government’s record of meddling and interfering with superannuation in mind that the coalition approached the Superannuation Legislation Amendment Bill 2010. This bill is not a major reform of the superannuation system. It will do nothing to increase national savings. Nor does it address the important reforms laid out by the Henry taxation review. This bill essentially tidies up a few loose ends. It implements a range of measures and minor clarifications to Australia’s superannuation system.

First, it gives effect to the 2010-11 budget measures to allow for a transfer of unclaimed state and territory public sector superannuation moneys to the Commissioner of Taxation, as is the case for the private sector. That does not affect individuals; obviously those individuals have not claimed their super, and that money is sitting in state jurisdictions. Going to one place to claim unclaimed super is a good idea. That will facilitate state and territory authorities and public sector superannuation schemes paying unclaimed super money to the Commonwealth. This is a change to the current situation, and we think it is a pretty good idea so we will support it.

The bill also enables the taxation commissioner to accept and to subsequently pay out amounts transferred by state and territory authorities and public sector super schemes. Importantly, individuals will still be able to claim back their money from the Australian Taxation Office at any time. It will also provide a gain to revenue of $29.6 million over the forward estimates. What a surprise! They are running a budget deficit in excess of $40 billion. We think it is good from a procedural perspective but, such a surprise, it is a little revenue raiser for the Commonwealth as well. That should not surprise anyone. The Association of Superannuation Funds Australia claims:

The Commonwealth will not find it any easier to locate the owners of lost super when compared with state bodies. This illustrates that linking lost superannuation with new member accounts remains an ongoing issue. Nevertheless, the measure has the benefit of facilitating more uniform treatment of unclaimed money, and it is a one-stop shop.

I accept that. The second change will provide transitional relief for income tax deductibility of total and permanent disability insurance premiums which are paid by superannuation funds. Super funds generally take out death and disability insurance policies to insure their risk for a liability they may incur to their members. Legislative reforms in 2007 may have cast some confusion over the deductibility of that insurance. There was a clarification in 2009 to allow super funds to claim income tax deduction for the TPD insurance premiums to the extent the policies have the necessary connection to a liability of the fund to provide disability superannuation better.

This amendment will extend the commencement of the 2007 changes to 1 July 2011, and that gives the super funds time to switch administrative arrangements over to the new requirements. This measure has been discussed with the industry, superannuation and insurance companies have been calling for clarification, and we think it is a good idea. This aspect of the bill will apply to the income years 2004-05 to 2010-11, and the amendment is sensible.

The third change addresses the powers of superannuation funds to acquire an asset in the event of a breakdown of a relationship of a superannuation fund member, without contravening the prohibition against related-party acquisitions. It will, for example, allow a trustee to acquire the actual asset rather than accept cash or a replacement asset from the related party. The measure will ensure that section 66 of the act is not an impediment to separating partners achieving a clean break from each other in terms of their super arrangements.

There will also be additional minor clarifications to the tax treatment of super that will allow an individual to give a notice of intent to deduct a contribution to the successor superannuation fund where the contribution was made to the original super fund. It will allow employers to claim a deduction for super contributions made with respect to a former employee within four months of that employee ceasing employment and at any time after the employee ceases employment for contributions made to defined benefit interests.

It will also clarify that the due date of the shortfall interest charged for the purposes of excess contributions tax is 21 days after the commissioner provides notice of the amount payable, which is sensible. It allows the commissioner to exercise discretion to disregard or allocate to another financial year all or part of a person’s contributions for the purposes of excess contributions tax before an assessment is issued. Furthermore, it provides a regulation-making power to specify additional circumstances when a benefit from a public sector super scheme will have an untaxed element. In addition, it will streamline references to the immigration secretary and the immigration department in relation to the disclosure of migration and citizenship information.

These amendments provide clarifications to the legislation, in our view, and we believe they will improve the operation of superannuation provisions in the income tax legislation. So, in short, the coalition supports the amendments because they are sensible, they are practical and at the end of the day I think the industry wants them to help reduce red tape.

But of course this does not address the more substantive issue of how we increase national savings. The coalition accepts that as a nation we need to increase national savings. And the starting point must be to run a budget surplus. That is the fastest way this government can contribute to national savings: to start running surplus budgets. And in doing so, instead of being in the markets, borrowing money in competition with small business operators, in competition with farmers, in competition with larger operators—and therefore effectively crowding out the markets—the best thing this Labor government could do would be to get the budget back to surplus.

Now, it is not just us saying that. It is the Treasury providing that advice, through the various red books. The department of finance is providing that advice. The Reserve Bank and members of the Reserve Bank are providing that advice. It seems to be every day that credible economists are coming out and saying the best thing the government could do when the economy is running at full capacity, to take upward pressure off interest rates, to prevent crowding out in the credit markets, is to start doing something about getting the budget to surplus faster. But of course this is a government that continues to roll out stimulus spending in 2012 for an economic downturn in 2008! It is a little late! It is like trying to have a heart-start defibrillator to get Lazarus out of the box three days after he died—it is a little late. But this government is continuing to borrow money. This government is continuing to spend money. It is running expansive fiscal policy at a time when the economy is running at near full capacity, therefore it puts upward pressure on inflation and it puts upward pressure on interest rates.

The Labor Party just do not get it. Just as their policy on water is a mess, just as their policy in relation to asylum seekers is a mess, just as their policy in relation to climate change is a mess, so too is their treatment of the Australian economy—confused, leading to delay and uncertainty, leading to the point where Australians are saying the government need to pull back on their expenditure. We are now in a phase where the Reserve Bank is about to go with interest rates beyond the norm. You can have old Swannie every day, going forward and saying, ‘Oh, well—

The DEPUTY SPEAKER —Order! The member for North Sydney—

Mr HOCKEY —look at the cash rates’—

The DEPUTY SPEAKER —Order! If you were not shouting so much you would hear me. Would you please use the correct name for the member and their seat.

Mr HOCKEY —Sure. The correct name for the member is Wayne Swan. His seat is Lilley.

The DEPUTY SPEAKER —Thank you. Use it.

Mr HOCKEY —Okay, Wayne Swan in Lilley, if that is what you choose to hear.

The DEPUTY SPEAKER —Or ‘the Treasurer’.

Mr HOCKEY —The Treasurer. Thank you for the short form, Mr Deputy Speaker—very helpful. I think it is hugely relevant that the Treasurer himself does not understand the ramifications of his own actions. From day one he has been uncertain of the direction he really wants to go. He comes into this place and he reads the lines that are fed up to him by the advisers to the dispatch box, and he reads the lines that are fed to him out of Treasury—not always exactly as fed out of Treasury, but along the lines—and he thinks, ‘Mission accomplished.’ But no, you have to have an instinctive feel for how things work. Had he had an extensive career in the private sector, the Treasurer himself would understand—

Mr Ewen Jones interjecting

Mr HOCKEY —Or as my colleague the new member for Herbert, who is experienced in the private sector, in small business, would know; as my colleague at the table, the member for Cowper, would know—I am not sure whether the member for Adelaide would know. I don’t think the member for Dobell would know. Have you guys ever worked in business? No.

I would suggest that on this side of the House we know that you cannot keep spending more money than you have, that each year, if you spend more money than your revenue permits, you are going to be in a bit of trouble. This is something that Labor is not familiar with and the Treasurer himself is not familiar with. The Treasurer promised a surplus in 2008 and failed to deliver. When they were first asked about this, about when Labor will deliver their first surplus budget, they said, ‘Ah, we will be three years early.’ Three years earlier than what? ‘Well, three years earlier than we had to predict a surplus in six years time.’ You cannot deliver national savings if you do not have a surplus budget as part of the equation.

Mr Craig Thomson —Mr Deputy Speaker, I raise a point of order. I am enjoying the tirade that is coming here but I am not sure it has got much to do with the legislation that is before us. Certainly there is nothing in the legislation relating to the state of the economy, budgets and surpluses and those sorts of issues, and I would ask that you bring the member back to the legislation.

The DEPUTY SPEAKER —I know the member for North Sydney is very much aware of the specific nature of this bill and amendment and will stick to that.

Mr HOCKEY —Absolutely. As you know, Mr Deputy Speaker, superannuation is about savings and superannuation also contributes to national savings. The member for Dobell, who I think is the chairman of the economics committee, has just illustrated the dearth, the shortage, the absence of economic skills in the Labor ranks when he could not draw the fundamental link between superannuation as a savings measure and the contribution to national savings. So I would urge the member for Dobell to heed my words. Listen. I know you struggle to—

The DEPUTY SPEAKER —The member for North Sydney will speak through the chair and will address the legislation.

Mr HOCKEY —I look forward to contributing. I say to you, Mr Deputy Speaker: the government has no plan whatsoever other than simply increasing the superannuation levy from nine per cent to 12 per cent to try and increase national savings. It is a lazy approach. Even Dr Henry, in the now famous Henry review into Australia’s taxation system, said there is a better way and at the end of the day a more lucrative way for the nation to increase superannuation by taking a different approach to increasing the superannuation levy from nine per cent to 12 per cent with some reform of the taxation arrangements apply to existing super.

Of the 138 recommendations in the Henry review, the government chose to accept 2½ of the recommendations. Within six weeks they dumped one of those recommendations, the original version of the mining tax, which left them with 1½ of the 138 recommendations. That is right up there with the success story of the 2020 Summit, where I seem to recall a similar acceptance rate of recommendations. But I say to you, Mr Deputy Speaker, that not only is superannuation vitally important to the financial security of everyday Australians and their families but, most significantly, superannuation is important to our level of national savings. At this crucial moment when we have the most generous terms of trade in 50 years, we need to be a nation that can start to fund ourselves, that can start to fund our growth.

I fully accept that as a nation we have imported capital; since 1788 we have been importing capital. I accept that. We have had massive demand and need for significant funding of capital infrastructure in this country. And I do praise Bob Hawke as Prime Minister of Australia, who was not only a very good Prime Minister but also a good mate of mine and a constituent. I would say that he deserves great praise for the introduction of compulsory superannuation in Australia. I am a believer in compulsory superannuation and it is a significant contribution. The coalition government implemented an increase in the superannuation guarantee levy from, if my memory serves me correctly, six per cent to nine per cent in the latter part of the 1990s. But, as Dr Henry and the panel point out in the Henry review, nine per cent is about right. This government, in order to appease its mates in the industry super funds, undertakes an approach to national savings that if it were running surpluses would not necessarily be necessary. I would say to you that if it heeded the recommendations of the Henry review there would be a better way to increase the pool of superannuation and at the same time deliver longer term benefits to Australian superannuants.

What is of interest is the fact that there is a cost associated with the recommendation in the Henry review on superannuation. I accept that. If we were not running last year the largest cash deficit in Australian history and this year the second-largest cash deficit in Australian history, if we were not doing that, then, by my Lord, I say that we would be able to afford a whole lot of tax initiatives that reduced the tax burden and provided a very real incentive for Australians to increase their contribution to superannuation and increase the benefits over the longer term of superannuation. So Labor have taken, as they traditionally do, a very lazy approach. You would appreciate this, Mr Deputy Speaker Scott. They have taken a very lazy approach to superannuation reform. This is not true reform. Australians cannot see where they will be at the end of it.

The irony is that Dr Henry and even the Labor Party themselves have identified that this initiative to increase the contribution surcharge from nine to 12 per cent is going to be at a cost to the budget over the longer term. So why not be smarter and accept the recommendations of Dr Henry? Why not be smarter and accept that you can improve the taxation arrangement for superannuation without putting a greater burden on Australian employers and employees?

We are going to hit the cathartic moment in the next few years where, under the Labor Party, Australians will be paying a new carbon tax and will be taking less pay home with an increased superannuation contribution. And interest rates are going to be higher. This is the classic combination that will end up being a perfect storm for the Labor Party over the next two to three years, because the cost of living for Australians is increasing. It will be this government’s actions and decision making—nothing short of that—that will make the everyday cost of living much harder for Australian families. The carbon tax means that electricity and so many other industries are going to be more expensive. Higher interest rates mean that people are going to have bigger mortgages, bigger credit card bills and bigger phone bills, with so many people putting them on their credit cards. Business is going to find it more expensive to fund expansionary growth because every day it will be out in the market competing with the government, which is in the business of borrowing $100 million a day to fund its fiscal expansion.

At the same time, above and beyond all of that, the Labor Party are increasing the superannuation contribution from nine to 12 per cent, which will mean that many individuals will have less take-home pay. Well done, Labor. All they could do is just cap it off with an increase in the GST. That would be the firecracker on New Year’s Eve. Labor have delivered to you all the bangers in the last hour in the lead-up to midnight and now they introduce an increase in the GST just to wrap it all up and make sure that Australian families and households are totally screwed by an incompetent government.