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Wednesday, 23 March 1994
Page: 2028

Senator SHERRY (Parliamentary Secretary to the Minister for Primary Industries and Energy) (11.25 a.m.) —The debate on the Taxation Laws Amendment Bill (No. 4) has ranged fairly widely and I thank all honourable senators for their contributions. I will confine my response to some matters that Senator Watson and Senator Short raised. Senator Troeth raised some matters that Senator Watson also raised so, in some respects, I will be dealing with those; likewise with respect to matters raised by Senator Coulter.

  In Senator Gibson's contribution, which was a general economic analysis, he made a comment about the lack of incentive for investment and the lack of profit. In response, I make the comment that profits are actually at a record level at the present time. There is a time lag between investment pick-up and the recognition of profits. The government is confident that profit will be a significant incentive to ensure a lift in investment.

  Yesterday Senator Watson moved an amendment relating to superannuation that will be dealt with at the conclusion of my contribution. I read Senator Watson's speech—I was not in the Senate at the time he delivered it—and I note that he moved that the government be condemned for:

(i)its lack of concern for the many casual, part-time and itinerant workers whose superannuation benefits are eroded by taxes, fees and charges; and

(ii)extending the coverage of the Superannuation Guarantee Charge to contractors;

This directly relates to this legislation. The first matter he raised in respect to part-time and casual workers does not relate to this legislation. The motion continued:

(b)calls on the Government to:

(i)modify the Superannuation Guarantee Charge system immediately so that it treats casual, part-time and itinerant workers fairly; and

(ii)exempt contractors from the provisions of the Superannuation Guarantee Charge legislation.

Clearly we do not believe that the amendment should be supported. Firstly, in relation to part-time and casual workers, this is the wrong time and the wrong place to be dealing with that issue. I am sure that Senator Watson and I could talk about matters relating to superannuation for a great deal of time, given that he is the current chairman of the superannuation committee and I was the former chairman. The government recognises that small superannuation contributions made for employees are a problem with the superannuation guarantee charge because of the impact that superannuation fund fees and charges can have on those small amounts. I am certainly very well aware of those problems.

  Accordingly, the government is giving a high priority to resolving this problem in consultation with a range of interest groups and parties. One option that has been mentioned is to give access to superannuation products to the banks. That is just one option; the government is looking at all of the options and is confident that the problem can be resolved soon. But the answer does not lie in limiting the coverage of the superannuation guarantee. The superannuation guarantee is a fundamental reform to improve the retirement incomes for all Australians so that they may enjoy a higher standard of living in retirement. The government will not be diverted from this basic objective. It is true that persons who receive employer support for their superannuation are not able to claim a deduction for their personal superannuation contributions—it is as true for people employed under contracts wholly or principally for their labour as it is for other employees.

  The government cannot afford to maintain tax deduction concessions for people who are also receiving employer support. In dealing with this issue of part-time and casual workers, I think Senator Watson would be aware that the government will make a statement on this and other superannuation matters over the next few months. I do not know the date of that statement, but I do know that part-time and casual matters will be included in it. Therefore, it is a little premature of Senator Watson to attempt to criticise and condemn the government at this point in time.

Senator Watson —There is a bit of slippage in your program. We wanted to keep you honest to your original program.

Senator SHERRY —I appreciate you trying to keep us honest, but you are doing that on your committee which is looking at these issues. So it is premature for you to attempt to condemn the government when you yourself, on an all-party Senate select committee, are attempting to come up with some positive solutions about which, on the past record of the government's response to the committee, significant notice will be taken of your recommendations.

  The other issue that Senator Watson criticised the government for on the superannuation matter relates to persons under contracts solely or principally for their labour, with which this legislation deals. The amendment in this legislation does not extend the scope of the superannuation guarantee arrangements. Under the law as it stands payments made to persons under contracts solely or principally for their labour are subject to the SGC rules. The amendments made by this bill simply seek to make that point clear in response to a particular technical argument raised which, I am advised, the Commissioner of Taxation does not accept; nevertheless, the matter has been raised.

  What is more, it is clear that the government always intended that payments under contracts wholly or principally for the labour of a person should be covered by the SGC arrangements—see, for example, an information paper on the design of the SGC released by John Kerin when he was Treasurer in December 1991. So for that reason, again, it is unfair of Senator Watson to be moving an amendment—

Senator Panizza —For how long was John Kerin Treasurer?

Senator SHERRY —That is certainly not relevant to this issue. The fact is that the then Treasurer, John Kerin, clearly foreshadowed the intention of the government on contractors and we are clearing up any doubt, if there is any doubt, in this legislation. So I do not think that Senator Watson's amendment to the motion is appropriate at this time. Once Senator Watson and the committee have finished their deliberations and the government has responded, if he wishes to continue with that criticism, we might not necessarily accept it but that is the appropriate time to do it.

  The second matter which has occupied the majority of the debate on this package of measures is the heritage conservation rebate. I am conscious we will be dealing with amendments on this in the committee stage and I do not want to go into all the detail now. I can indicate that we will not be accepting the amendments as moved by Senator Coulter or by the opposition. But I can indicate one matter that may assist the opposition in the way in which it pursues its amendments and that relates to the inclusion of National Trust lists. Senator Watson asked for an on the record response. It does pertain to Tasmania, and I think Senator Troeth mentioned it pertains to a number of other states, although I cannot recall the ones she mentioned.

  I can state on behalf of the government and confirm that the Heritage Commission, for a limited time only, is willing to ensure that, in states and territories where there are not yet substantial state heritage registers, it will undertake priority assessments of those places which are on the National Trust register and have applied for the scheme. This will ensure that the states, where there are no or limited state registers, are in no way disadvantaged. I give that commitment on behalf of the government.

  The last matter I want to deal with relates to an issue that Senator Short raised. This goes to the alleged constitutional problem of amendments the government is moving on the life insurance measures. There was no criticism of the particular detail of the amendments, so I will not deal with that in this debate. However, on the issue of constitutional matters, the office of parliamentary counsel has advised the government, on the basis of advice it has received from the Attorney-General (Mr Lavarch), that the changes in respect to the life insurance industry and the grouping provisions in relation to company instalments should be made as requests.

  The advice the government has received is at odds with that being put by the Clerk of the Senate. We are confident that the procedure that we are following is correct, and on that basis we intend to persist with our amendments. I do not wish to make any further comments on that. I am aware that there is an extensive range of amendments and obviously there will be considerable debate and comment on those in the committee stage. I thank honourable senators for their contributions to the debate.

  Question put:

  That the amendment (Senator Watson's) be agreed to.