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Thursday, 26 September 2002
Page: 5024


Senator CHERRY (4:25 PM) —I rise to speak on the motion moved by Senator Sherry today dealing with failures of the Howard government on superannuation. I want to speak about not so much the failures of the Howard government but the failures of the Keating government which preceded it, because a lot of what passes for superannuation policy of the Howard government was inherited from the previous government. And a lot of the problems we are still dealing with are problems that not just this government has failed to adequately deal with but the previous government failed to adequately deal with.

If you take Senator Sherry's first point which deals with the issue of the contributions tax, it is interesting to note that that tax was introduced in 1987 by the then Hawke government as a flat tax on contributions. It provides essentially a tax cut for high-income earners of 32c in the dollar. It provides low-income earners with a tax cut of essentially 5c in the dollar. It provides middle-income earners with a tax cut essentially of around 15c in the dollar. By introducing a flat tax on contributions in 1987, the Labor Party ensured that the tax concessions that would be flowing through to people on their superannuation would always be larger for high-income earners as opposed to low-income earners.

The Howard government should be commended for its introduction of a surcharge on high-income earners based on the notion of evening out those concessions over time. The Democrats supported that bill in 1996, which was at the time opposed by the Labor Party. Of course, the difficulty was that the collection mechanism chosen by the Howard government of having that tax collected at the fund level has proved to be administratively complex and administratively difficult. It has added enormous costs to the funds and, because of its complexity, it has also reduced the attractiveness of superannuation for high-income earners.

The Democrats have certainly said that we are not excited about a tax cut—or any cut— in surcharge. But what the government put forward in its most recent election policy was a proposal to introduce a co-contribution for low-income earners. That is a very important development. Essentially it means that a low-income earner who is making voluntary contributions to superannuation will get a dollar for dollar contribution for the first $1,000. It is a measure which is only ever going to benefit a small number of people because only a small number of low-income earners will ever be able to afford to make contributions to superannuation.

But certainly the evidence coming forward from savings experts like Dr Vince FitzGerald—who was, of course, deputy secretary to the Department of Treasury under the Hawke government—shows that it will encourage people to save. For every dollar that the government provides by way of cost of a new contribution, there will be an extra $1.34 which will be contributed as additional contributions to superannuation by low- and middle-income earners. That suggests to me that there is some real merit in pursuing the government's proposal for a co-contribution for low-income earners. That is why the Democrats have suggested that at least half, and possibly even more, of the government's proposed cut in surcharge should be redirected to low-income earners to encourage them to increase that co-contribution. We would like to see all of the government money that is set aside for surcharge redirected towards encouraging co-contributions. But the government has made it clear that it wants to ensure that the surcharge is dealt with at the same time as the co-contribution. That is a political reality we have to deal with, and we will deal with it at the appropriate time.

Moving forward to some of the other issues which Senator Sherry raised, he talked about the failure to provide adequate consumer protection through the capping of ongoing fees and the banning of entry and exit fees. I remember raising these issues with the previous government when I was an adviser to the then Democrat superannuation spokesperson, Senator Kernot. I remember that at that point in time we received fierce resistance from government to any notion that there should be anything other than disclosure of fees, rather than regulation of fees. I find it to some extent amusing that we are now seeing proposals coming forward from the Labor Party in this regard. It is something we need to work through. The government deserves at least some credit for bringing forward, through the CLERP reform process, proposals on disclosure in terms of key feature statements and so forth, which is a significant improvement on the disclosure that we had probably five or 10 years ago.

In terms of disallowance of the financial services regulations, the concern from the Democrats' point of view has been that the government has not yet gone far enough. The ongoing management charge approach is simply not providing sufficient information to consumers about superannuation. Whilst we are concerned that the government has not done enough, we acknowledge that it has made some moves in this regard, and further moves should be encouraged. The other point which amused me somewhat was (f):

... the failure to cover unpaid superannuation contributions in the case of corporate collapse as part of a workers' entitlements scheme.

It is of great concern that there has not been enough done to protect workers entitlements in the course of the Howard government, although we do acknowledge the government's scheme introduced by former Minister Reith which allows for payment of some of those benefits. A 1987 Law Reform Commission report recommended that employee entitlements should come before other secured creditors. That was ignored by the previous Labor government for six years, despite the fact that we raised that issue time and time again in terms of trying to ensure that workers get some reasonable compensation in the case of corporate collapse. So after `the failure' I would have preferred to have seen added to point (f) `of the Howard government and the Keating and the Hawke governments' to ensure that we got the full measure of how workers entitlements have not been adequately protected over a very long period of time by successive governments in this country.

The other thing I would have liked to have seen in this motion, probably at (g), is `the failure of the Hawke government, the Keating government and the Howard government to adequately do anything to ensure that the rights of same sex couples and other households in this country are adequately accommodated in terms of superannuation arrangements'. We have had situations where people have wanted to leave their superannuation when they die to a person who is in their household—whether it be their same sex partner, a son who wants to leave his superannuation to his mother or two sisters living together who might want to leave their superannuation to each other. Under the current rules in the Superannuation Industry (Supervision) Act and the tax acts they cannot. There is great difficulty in these sorts of areas, and this is something which the government does need to address.

Unfortunately, this issue has become little more than talking about the issue of same sex couples. Whilst the Democrats are fundamentally concerned about the fact that same sex couples should have the recognition of their rights as a couple, as a family, as a household, this goes beyond that to a whole range of interpersonal relationships. Only last week we had the situation where the Tasmanian government introduced leading legislation dealing with progressive laws for same sex couples and just about every other variety of significant personal relationship. Under the proposed Tasmanian reforms not only gay and lesbian couples but elderly couples in carer relationships, Indigenous or ethnic customary partnerships—all of these groups—will be granted the same rights as married or de facto heterosexual partners. This will cover a range of rights, including property transfers, child maintenance, organ donations, guardianship, access to a partner in hospital, superannuation, funerals, wills and various partnering, family and carer leave entitlements. This puts Tasmania ahead of the rest of Australia.

We now have laws which recognise the notion of different types of families in terms of same sex, de facto or other interpersonal relationships. We now have these laws in Queensland, in New South Wales, in Victoria and in Western Australia. Also, we have now had a law passed in the lower house of the South Australian parliament. The Commonwealth is now lagging behind all of the states in ensuring that our superannuation and our tax laws adequately pick up all types of households that are represented in the modern Australian society. I really hope that when we get to deal with superannuation legislation later this year we will finally address this wrong and ensure that the Commonwealth, rather than lagging behind the other states, catches up with them and that the Commonwealth, rather than lagging behind other countries, catches up with Canada, New Zealand, Britain and South Africa in having such laws in place.

Discrimination against same sex couples continues in superannuation, social security, immigration, taxation and the defence forces. It is there in property settlements and marriage laws. The fact is that the only way we can achieve comprehensive and uniform national antidiscrimination laws on the grounds of sexuality recognised at the Commonwealth level is by amending the legislation before the parliament and by supporting a comprehensive bill. I would have liked to have seen the Labor Party bringing this sort of thing forward when they tabled their paper on choice of funds legislation only last month. I was disappointed to see that the issue of ensuring choice not just on what happens to your superannuation when you are alive but on what happens to your superannuation when you are dead was not included in that paper. That reflects the Labor Party's itsy-bitsy approach to the whole issue of recognition and equality for same sex couples in this country.

In summary, in looking at this motion today I acknowledge that there are issues which Senator Sherry is trying to raise which do need to be raised. I am pleased to see that this parliament has continued to have a Senate Select Committee on Superannuation. I am pleased to see the chair of that committee, Senator Watson, in the chamber today. That committee continues to ensure that there is a focus on these very important issues about what we do about fees and charges, about investment, about compliance, about choice, about administrative burdens, about superannuation contributions in terms of collapses. These are fundamental issues, and they are issues which I am pleased to say the superannuation committee—an initiative of the Democrats way back in 1991—continues to work on. We need to ensure that workers entitlements are protected, enhanced and allowed to grow. We need to ensure that as our population ages we avoid having future generations of Australians slipping into poverty due to lack of national savings. With those very short comments I conclude my comments on this motion.