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Tuesday, 19 October 2010
Page: 763

Mr CRAIG THOMSON (8:32 PM) —I rise to speak on the Superannuation Legislation Amendment Bill 2010. It is no surprise that the member for North Sydney is opposed to increases in superannuation for working families and working people, because the Liberal Party has always been opposed to superannuation for working families and working people. In Australia we have had superannuation in some form for over a century, but by no means has that been universal for most of that time. In fact, in 1974 the Australian Bureau of Statistics conducted the first survey of superannuation and it came up with a pretty sorry state. Only 32 per cent of the workforce was covered by superannuation and only 15 per cent of females who worked were covered by superannuation. In the private sector it was even lower. Only 24 per cent of people in the private sector had super cover under the conservative government that was in at that time. It was not until 1985 that there was a major breakthrough.

I also thank the member for North Sydney for pointing out the contribution that the union movement made to superannuation in this country, working hand in hand with the Hawke Labor government. In 1985 the ACTU sought a three per cent employer superannuation contribution to be paid in as an industry fund as part of the national wage case claim with the then Australian Conciliation and Arbitration Commission. Before that, access to superannuation was deeply inequitable. For the member for North Sydney to stand here and rant for half an hour about the contribution that the coalition made to superannuation simply flies in the face of the facts.

He made some other incredible claims as well. The first was that the stimulus package that this government introduced was in some way a bad thing for Australia. As we all know, the Australian economy has come out of the global financial crisis better than any other country in the world. We have come out of it because of the targeted stimulus package that was there. The main point of the stimulus package was to ensure that we created and retained jobs in Australia. As the member for North Sydney would know, if you are contributing to superannuation as part of having a job, you need to actually have a job in the first place to contribute to superannuation. So national savings would have been affected if we had had hundreds of thousands of additional Australians out of jobs because of the global financial crisis. That is something that even a schoolboy economist would understand, but clearly the member for North Sydney does not.

He then tried to say that credible economists were critical of the path that this government took. I defy the member for North Sydney to come up with one credible economist who has not supported the stimulus intervention that this government took in relation to the global financial crisis. Whether it is international economists or the IMF or domestic economists, they have all said that this is the best targeted stimulus package in the world, and that is why Australia is seen as an economic marvel in terms of the way in which we came through the global financial crisis.

But we should not worry about what economists say, what the IMF says, what the Reserve Bank governor says or what Treasury says, because according to the member for North Sydney we do not need experts. We should ‘run the economy by instinctive feel’. So let’s not worry about the experts out there or the advice as to what is the best thing for the Australian economy or how we can keep people in jobs in Australia; let’s run the Australian economy by ‘instinctive feel’. If that is what the shadow Treasurer is proposing as the coalition’s policy and their approach to economics, it is a great thing that they are on the opposition benches and not in charge of the treasury bench. Heaven help us if we are going to ignore the experts and decide that this great economy and great country of Australia is going to be run by instinctive feel and we are not going to listen to the experts who are offering advice and who have said what a wonderful job Treasurer Wayne Swan and this government have done to ensure that Australia has come through the global financial crisis in a better position than any other country in the world.

As I said previously, before the unions’ national wage claim in 1985, only a minority of workers had superannuation. These were mainly higher earning white-collar workers, public servants and the defence forces. In recognition of the need to develop strategies to manage an ageing population, the then Labor government supported the ACTU’s claim. In February 1986 the commission confirmed that awards would include contributions of up to three per cent to approved superannuation funds. Between 1986 and 1990, superannuation funds rapidly increased, from around 40 per cent of employees to 79 per cent of employees, as a result of the commission’s ruling.

But despite the rapid growth a number of problems remained. The Labor government and the trade unions made sure that there was real reform in superannuation. There were considerable gaps in coverage in the private sector. There was a lack of compliance with award superannuation provisions. Not all employees were covered by the awards, and three per cent superannuation contributions were too small to significantly improve the retirement income for many employees—something that those on the opposite side, when they have been in charge of the Treasury bench, have never responded to and have never understood. They would rather us go back to the days when only 15 per cent of females had superannuation. That is the approach that those on the other side take.

Those on this side take a very, very different view to superannuation. We want to make sure that superannuation is accessible to everyone, that is equitable, that is not just for high income earners—white-collar workers—but is available to all. We on this side are actually proud of the relationship between the trade union movement and the Labor Party in establishing compulsory superannuation in this country.

In response to the problems associated with award superannuation, in recognition of its importance, on 1 July 1992 the superannuation guarantee was introduced. The superannuation guarantee was designed to be universal and compulsory, effectively extending coverage to employees who had previously not had access to it, requiring employers to comply and enabling a consistent increase in employees’ retirement savings in line with the government’s retirement income policy—an increase in national savings and an increase in individual savings, creating dignity for people once they reach retirement.

Again, I take you back to those figures. When the coalition was in government, only 32 per cent of the workforce was covered by superannuation, and only 15 per cent of females were covered by superannuation. So for the member for North Sydney to come into this place and lecture us about reforms in superannuation and say that we have not done enough in terms of superannuation and that we are not genuine about fixing superannuation flies in the face of the history of compulsory superannuation—the superannuation guarantee—in this country. It also flies in the face of our commitment to increase compulsory superannuation to 12 per cent. As I said, without the Labor Party, superannuation would be available only for those in white-collar jobs, those in the defence forces and those with high incomes.

This legislation goes to a number of changes and improvements and builds on the long history and legacy that Labor has had to superannuation. Firstly, schedule 1 amends the Superannuation (Unclaimed Money and Lost Members) Act 1999 and the Income Tax Assessment Act 1997 to facilitate the transfer of superannuation unclaimed moneys from state and territory authorities and public sector superannuation schemes to the Commissioner of Taxation. The amendments will also enable the commissioner to accept and subsequently pay out amounts transferred by state and territory authorities and public sector superannuation schemes.

I note that the member for North Sydney is in favour of this particular amendment, and it is a good thing that the coalition has decided to support the amendment. This amendment will allow for the transfer of four different types of unclaimed superannuation: former temporary resident unclaimed superannuation in public sector schemes, small and insoluble lost accounts in public sector schemes, general unclaimed superannuation in public sector schemes, and private sector unclaimed superannuation which was paid to the states and territories prior to 1 July 2007.

The amendments will operate by allowing public sector superannuation schemes which have been prescribed by regulation to be treated as if they were private sector superannuation funds for the purposes of different components of the unclaimed money legislation. Only those schemes which have been nominated by the Commonwealth or the states and territories will be prescribed in the regulations.

Schedule 2 of this bill concerns changes to income tax deductibility of total and permanent disability insurance premiums paid by superannuation funds. Superannuation funds commonly take out death and disability insurance policies to insure their risk for a liability they may incur to their members, including temporary or permanent disability insurance. The practice of superannuation funds obtaining such insurance is consistent with the key objects of superannuation—that is, to provide benefits to members in retirement or, in the event of the member’s death, to the member’s beneficiaries.

As the fund contracts with insurance providers, any payout under an insurance policy due to the occurrence of an insured, permanent disability event will be made to the fund. A fund can only provide a benefit referable to that payment—and any other preserved benefits—to the member if a condition of release of benefits has been satisfied. There may be circumstances where, as a consequence of the definition of permanent disability used in the policy, a fund receives an insurance payment due to the occurrence of an insured event but no condition of release has been satisfied. With Better Super, the provisions regarding deductibility of TPD insurance premiums paid by the superannuation funds were rewritten and transferred from the Income Tax Assessment Act 1936 to the ITAA Act 1997, with effect for 2007-08 and later income years.

Industry representatives have indicated they consider that, under the ITAA 1936 provisions, a premium was fully deductible if paid for a policy insuring against some form of permanent disability and that this practice has continued after the 2006-07 income year under the provisions of the ITAA 1997. Industry’s practice has been to claim deductions for premiums relating to all TPD policies—notwithstanding that, in some cases, claims under such policies may result in payouts to the fund trustee in circumstances where the member could not satisfy the ‘permanent incapacity’ release condition.

To sum up schedule 2: the provision of the transitional arrangements will minimise the disruption to the superannuation industry. This will allow superannuation funds enough lead time to make the necessary administrative changes to apply the current provisions of the ITAA 1997 regarding the deductibility of TPD benefits as of 1 July 2011. Funds that have claimed the narrow deduction under the current law will have the opportunity to vary their tax return but this is not required. On the expiration of the transitional arrangements the current, narrower, tax deduction will be available to superannuation funds.

Schedule 3 of the bill deals with superannuation and relationship breakdowns. These amendments allow for a trustee or investment manager of a regulated superannuation fund to acquire assets from a related party where the acquisition occurs as the result of the relationship breakdown of a member.

This bill is in the long line of reforms that Labor governments have made to superannuation, starting most notably in 1995 with the historic agreement between the then Labor government and the ACTU to pursue compulsory superannuation through the Conciliation and Arbitration Commission, in the historic test case that was run in that year. Since that time it has been the Labor governments that have gone about making sure that people who work will have dignity when they retire, by making sure that there are adequate funds for their retirement through compulsory superannuation. This is something that those on this side of the parliament are very proud of. It is a tradition that we are continuing with this legislation. It is something that we want to continue to do, and we want to increase that compulsory superannuation from nine per cent to 12 per cent to make sure that all Australians have access to proper retirement funds, that they are able to retire with dignity and have enough money in their retirement. This is something that only a Labor government will do. I commend the bill to the House.