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Tuesday, 19 October 2010
Page: 769

Mr RIPOLL (8:58 PM) —I thank the House for the opportunity to speak on this very important bill, the Superannuation Legislation Amendment Bill 2010.

Mr Bowen interjecting

Mrs Bronwyn Bishop interjecting

The DEPUTY SPEAKER (Hon. BC Scott)—The Minister for Immigration and Citizenship and the member for Mackellar will stop the across-the-table chatter. They will give the member for Oxley the courtesy that he deserves.

Mr RIPOLL —Thank you, Deputy Speaker Scott, for controlling the conduct of the House. I appreciate it. I am expecting a point of order any moment.

This is a very important piece of legislation. It puts in place a range of changes that need to take place after the long 12 years of a Howard government that continually made changes to the superannuation rules, almost as if superannuation were a plaything. Superannuation is an exceptionally important part of the Australian retirement income system. It was put in place by the Australian Labor Party when in government a little bit over 20 years ago to ensure that ordinary working people have the opportunity to save for their own retirements so that they can be independent in their own retirements like other people in the community.

We on this side of the House believe in superannuation. We have introduced a superannuation guarantee on this side of the House. We have continued to improve its performance over the years, as we are doing tonight in the amendments we have before us. I will take note of just a few of the things that have been said by other speakers about the changes we are making, but I particularly want to refer to the fact that these changes are in order to stabilise the superannuation system that we have in this country and follow on very clearly from the Henry review’s report on the sustainability of superannuation in this country and also the review that was done by Jeremy Cooper on structural efficiencies in our superannuation system.

If any government or anybody in this country is serious about a decent, fair, equitable and independent retirement—and we know that people ought to be given that opportunity—we need to get the rules right. We need slow, methodical, strategic change that is sustainable. Unfortunately that is not what we got under the previous administration. The attitude of continual and elastic, rubbery change that blew out of proportion the rules and conditions under which people could contribute to their superannuation really did set about putting superannuation on a trajectory that was unsustainable. What we are doing tonight in these amendments is making sure that we have a superannuation system in this country that can survive in the future and provide for individual people.

I will also draw to the attention of the House a small point from a little report called the Intergenerational report just to put into context the issue of sustainability which we all face and which we as a government face. By 2050 it is projected that there will be twice as many 65-year-olds as there are today. In 2050 there will be four times as many people aged over the age of 85 as there are today. Those are pretty stark facts. But the fact that really sticks in my mind is that in 1970 there were about 7.5 people in the workforce for everyone aged 65 years or older. Today there are about five people in the workforce for everyone aged 65 years or older. But in 2050 that figure is expected to be only 2.7 people in the workforce for everyone aged 65 years or older. That concerns me. That is an issue that government should deal with and should deal with properly. We need to provide for a stable, secure, long-term superannuation system which is sustainable a long way into the future rather than what may suit a small proportion of people who make specific contributions to their superannuation at particular points in time. I think that is the key bit that was missing in the debate that we heard from members of the opposition.

We need to get the settings right, and we need to leave them there. We need time for people to absorb them so that they are not confused, so that they do not have to deal with complex superannuation. Superannuation ought not to be so complex that you have to deal with it on a daily basis. For most people, it should be the case that they can deal with their superannuation on an annual basis or on a periodic basis as is their requirement rather than having to deal with continual government change and tinkering at the edges—the sort of changes we saw from the previous Howard government, which were just completely unsustainable and which distorted the capacity of our superannuation system into the future.

We have heard the very disingenuous debate of the other side. Most of it, although not all, was around the politics of this. On the one hand they were saying, ‘Yes, we will support this bill, but of course there are some problems with it,’ but on the other hand they have the view that in opposition you can never trust the ATO, Treasury or any government department. That is somewhat bizarre because it was not the case when they were in government. You cannot have it both ways. Where the rubber hits the road in this chamber is that you cannot have it both ways. If the professional people in those bureaucracies were good enough when the other side was in government, they ought to still be good enough today. If they could trust the ATO when they were in government collecting people’s taxes then they ought to be able to trust them now. You cannot have it both ways. If we have a professional bureaucracy and a professional Public Service in this country then we should not come into this place and deride them every time it suits our agenda or when they somehow do not match up with our particular political leanings.

These amendments actually make some very important changes to do with unclaimed money and members’ lost money. It is quite a significant figure. While the regulation does allow for private superannuation funds to transfer those unclaimed moneys from state and territory authorities across to the Commissioner of Taxation, that is not the case in the public sector—but it ought to be. We make those changes to make it clear and transparent and for there to be the ability to transfer those moneys across to the Commissioner of Taxation.

In saying that, it is important for people to also note that at any time they can claim for any lost funds that they discover or any moneys that have been unclaimed. It does not change that particular provision. People are still able to access their funds at any time in the future. More than that, what concerns me is the actual sheer size of the pool of unclaimed moneys and lost members’ funds, and in the future there is more work for us to do in dealing with those issues as well.

There is also transitional relief for income tax deductibility of total and permanent disability insurance premiums that are paid by superannuation funds. This is to get right the transitional arrangements that are in place so that premiums are paid in the correct amounts and also to provide a greater scope to deduct those total and permanent disability insurance premiums which are paid by the funds themselves.

There are also a range of other minor amendments which allow the public sector superannuation schemes to be prescribed by regulation to be treated as if they were a private sector scheme. That draws the rules that apply in one sector across to the other and makes sure that only those schemes which have been nominated by the Commonwealth or the states and territories will actually be prescribed in the regulations.

There is a particular amendment relating to the option of transferring both existing stocks and future flows of unclaimed superannuation to the ATO. That amendment will facilitate more uniform treatment of all those unclaimed moneys in both the private and public sector funds and I believe it will improve the likelihood of reuniting individuals with their lost or unclaimed superannuation. As I said earlier, this does not prohibit individuals from being able to claim from the ATO, at any time in the future, the money that belongs to them. This measure will have a positive revenue gain, which is estimated to be just under $30 million for the ATO over the forward estimates. There are a number of other transitional measures under the legislation which ensure that these things are done in accordance with the Income Tax Assessment Act 1936 and a range of other acts so that they accord with regulation and law, but these amendments do not limit the operation of the current law in any particular way.

There was a point raised about the discretion of the commissioner to make certain judgments in terms of excess allocation of funds to a superannuation fund and the tax implications of that. Our amendments clarify the due date for the shortfall interest charge for the purpose of excess contributions tax, which is 21 days after the commissioner provides notice of the amount that is payable. There is also provision to allow the Commissioner of Taxation to exercise discretion to disregard or to allocate to another financial year all or part of a person’s contributions for the purpose of excess contributions tax before an assessment is issued. It seemed that the only concern that the opposition had in relation to that was an issue of trust.

The issue was raised of whether you could possibly trust the ATO to get this right. If individuals make a mistake, the opportunity always exists to revisit that mistake, just as it would if the ATO made a mistake. So it is not so much an issue of trust but of whether an error is made. If an error is made there is an opportunity for individuals to revisit that error in a number of ways. I think the mechanisms provided are appropriate discretions for the Commissioner of Taxation and will actually make dealing with concessions and overpayments in relation to superannuation contributions easier.

People should pay a great deal of attention to the rules around superannuation, and if it is complex—and I accept that it is—they need to seek good advice. This is not an area where people should, without being fully informed, make ad hoc, irregular payments, not understanding the full tax consequences or implications of what they do. You would not do that in relation to any of your other financial dealings—be it tax, contributions to other funds, deductions or investments—and I do not see why superannuation contributions should be any different. A person needs to inform themselves properly. They can get professional advice on the proper mix of their superannuation contributions, their retirement goals and their needs to make sure that they get that mix right. This is not something that should be just played at as a game or where people should make some sort of guess and hope to get it right. It is too important in terms of people’s lifelong contributions and in terms of tax implications not only for individuals but also for government.

The reason that people make those extra contributions and the reason that there is a generous concessional contribution limit is that it is an attractive way to save. It attracts a lower rate of interest and costs less than any other investment vehicle. Therefore it is understandable that government needs to be able to effectively control, manage and support the system—which is supported by the tax system and by the taxpayer—to ensure that it is fair for everyone who contributes to it and to ensure that the tax paid at the start, during and at the end is fair and that people fully understand the system. I accept the issue of complexity and I accept that people ought to inform themselves fully, but I do not accept the opposition’s proposition that it is just a matter of trust and that you could not trust the Commissioner of Taxation to exercise discretion on these matters.

I note that the opposition does support these amendments. They are good amendments and I think they add more weight to a whole range of very important and necessary improvements that this government is making to our superannuation system for the long term, for its sustainability, for its ability to provide for people in their retirement. From modelling and a range of research, we understand what the future of this country will look like with respect to the number of people who will remain in the workforce compared to the number of people who will be retiring in 30, 40 and 50 years time. I congratulate the government and the minister for their good work in this area. I know that this is good legislation and it has the support of the House.