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Tuesday, 7 February 2012
Page: 2


Senator ARBIB (New South WalesAssistant Treasurer, Minister for Small Business, Minister for Sport and Manager of Government Business in the Senate) (12:35): I table three revised explanatory memoranda relating to seven of the bills and move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

MINERALS RESOURCE RENT TAX BILL 2011

Every Australian knows the mining boom is delivering tremendous benefits to our nation.

But the mining boom won’t last forever. The resources can only be dug up and sold once.

We know we need to make the most of our opportunities while the sun is shining.

We also realise that not everyone is feeling the benefits of the boom.

Many households are struggling to make ends meet.

And many businesses are struggling with a high Australian dollar, and struggling to get the workers they need.

Some of these businesses can take heart that the expanding middle class in Asia will bring opportunities well beyond mining—in sectors like tourism and other services.

But other businesses recognise that conditions are tough.

So our nation faces a fundamental choice.

We could do nothing and sit on our hands. This is the easy choice.

The government has chosen the other path. We will act to seize the opportunities and respond to the challenges of our patchwork economy.

We will not let the coming boom be squandered like the last.

That is why we’re building a fairer, simpler tax system and a stronger economy that delivers for all Australians.

The reforms that I present today are the cornerstone of that vision. They are an ambitious step in a long term reform agenda.

We recognise that many businesses are struggling with the pressures of a patchwork economy.

The Minerals Resource Rent Tax makes it possible to deliver a billion dollar tax break for Australia’s 2.7 million small businesses and cut company tax.

We recognise that many parts of the country, especially our great mining regions, have extra infrastructure needs.

The MRRT will fund billions of dollars of new roads, bridges and other critical infrastructure, such as the Gateway project in Western Australia. Much of this infrastructure will benefit the regions where the resources come from and where the workers and their families live, such as the great coal mining regions of NSW and Queensland.

We recognise that this time around Australia needs to save some of the gains of the boom.

The MRRT makes it possible to increase the superannuation guarantee from nine to 12 per cent, boosting super savings of 8.4 million Australian workers by $500 billion by 2035.

The MRRT also makes it possible to deliver fairer super concessions for 3.6 million low-income earners, who currently get little or no concession on their employer superannuation contributions.

Mining Boom Mark II

Australia is experiencing an unprecedented boom in our resources sector which has delivered record profits to mining companies year after year.

Mining profits have jumped 262 per cent in the last decade. Along with the coal and iron ore, a large share of these profits are also shipped off overseas.

The current arrangements fail to provide an appropriate return for these non-renewable resources to the Australian community, who own the resources 100 per cent.

Royalties just don't keep up with the booming profits of our miners.

Royalties often take a flat amount of revenues or production regardless of profitability.

Taxes on profit mean the higher your profit, the more tax you pay.

Taxes on mining profit are better for the nation and the mining industry.

Taxes on profit return more to the nation when times are good, but they also relieve the tax burden on the industry when times are bad. Taxes on profit automatically relieve struggling mines and their communities of tax when times are tough, unlike royalties.

We will see volatility in MRRT revenue, particularly as prices and investment plans change, but that is good for the nation and for the industry.

The need for improved resource charging arrangements is clear. That is why we are introducing these bills today.

The Minerals Resource Rent Tax

These reforms ensure that the Australian community receives a fairer return for its non-renewable iron ore and coal resources.

The Australian people will get a better share in the bounty of this mining boom, and the government will use this share to develop a stronger and broader economy.

We will ensure that the dividends of the boom are directed to where they can make the greatest contribution to jobs, to infrastructure, to national savings and to sustainable economic growth.

The new resource tax arrangements also represent a cooperative approach between industry and government in the process of tax reform.

Indeed, these bills have been developed in partnership with the resource sector through one of the most comprehensive stakeholder consultation processes ever conducted by an Australian government.

Industry was directly involved in the development of these reforms through the Resource Tax Consultation Panel, the Policy Transition Group, the Resource Tax Implementation Group and numerous public submission processes.

So the bills that I present to the House today are the direct result of the strong cooperation of industry in the legislative process.

The bills before the House provide for a robust resource rent tax regime and ensure that the long-term attractiveness of investment in Australian iron ore and coal is maintained.

You only have to look at the massive $430 billion pipeline of investment in our mining sector—and $82 billion in this year alone—to see that the industry has great confidence in the future.

Mining companies are investing in the future in full knowledge of the commencement of the MRRT on July 1 next year.

The MRRT will apply, at a rate of 30 per cent, to all new and existing iron ore and coal projects.

An extraction allowance of 25 per cent will recognise the miner’s use of specialist skill in the extraction of resources.

Because the MRRT only taxes the most highly profitable mines, Australia will remain an attractive destination for resource investment.

At the same time, Australians will receive an appropriate return on their non-renewable resources, which they own 100 per cent.

Supporting Mining Investments

Unlike royalties, the MRRT recognises the massive investments that miners make.

The tax doesn't apply to the value added by miners through processing. It applies only to profits attributable to the resource at the valuation point just after extraction.

Under the MRRT, projects will be able to immediately write-off new investment and immediately deduct expenses.

No MRRT will be payable until the project has made enough profit to pay off its upfront investment.

We expect the big miners to pay the bulk of the MRRT, and to pay it from year one. This is based on extensive consultations with the mining industry.

The big miners are expected to pay the most because they are the most profitable.

Supporting Small Miners

Small miners have been well-served by the design of the MRRT.

Companies with MRRT profits of less than $50 million a year will have a low profit offset that wipes out their MRRT liability.

Small miners who know that their profits will never exceed this threshold will not have to account for the tax or maintain MRRT records—simplifying compliance and administration.

Miners with annual MRRT profits between $50 million and $100 million will benefit from a partial reduction in their MRRT liability.

Small miners investing to grow will also benefit from the immediate deductibility of upstream capital investments.

They will only pay MRRT after the project has made enough profit to pay off these upfront investments.

The government will refer this bill to the House Economics Committee, to report by 21 November, and I hope to see passage through this chamber this year.

The Right Reform, at the Right Time

This is a proud day for every Australian.

Our nation will finally lock in the gains from our nation’s mineral endowment.

We picked this challenge long before it became popular. We picked it and we acted on it.

No reform is easy—this one has been very difficult.

But the most important reforms, those that strengthen, broaden and modernise our economy most markedly, are always the most difficult.

This was the case when far-sighted Labor governments of the past fought tooth and nail to put in place the nation-building reforms that have underpinned our current prosperity.

And it is so today, as the Gillard government gets on with the job of introducing major reforms like the MRRT—to build a stronger economy that delivers for all Australians.

With the consent of other far-sighted members of this parliament, we will pass it.

The package of bills I introduce today mean that for the first time in this nation’s history, we can be sure that every Australian will benefit from our valuable mineral heritage.

Our non-renewable natural resources will finally benefit ordinary Australians.

Our coal often fires overseas furnaces, our iron ore supports towers under different stars and a large part of the profits flow to foreign shareholders.

From now on, our resources will also contribute to better infrastructure, more productive businesses and more secure retirements for ordinary Australians.

Now is the time for our nation to choose to get a fairer return for the resource wealth in the ground.

And now is the time to reinvest that return in a stronger economy, in vital regional infrastructure, and in our national savings for the future.

This landmark legislation is part of a reform package that will build and strengthen our economy.

Legislation which will do so much for our nation and which deserves the full support of the parliament, the business sector and the community.

It is up to us here today, to recognise that now is the time to act in the long-term interest, to seize these opportunities for the sake of all Australians—in this generation and those to follow.

I commend this bill to all Australians today and for the generations to come.

 

MINERALS RESOURCE RENT TAX (CONSEQUENTIAL AMENDMENTS AND TRANSITIONAL PROVISIONS) BILL 2011

This bill is the second of five bills related to the imposition of the Minerals Resource Rent Tax that I am introducing to this session of parliament.

The bill provides for amendments to a range of acts that are necessary to facilitate the operation of the Minerals Resource Rent Tax.

The bill also provides for transitional matters relating to the enactment of the Minerals Resource Rent Tax.

 

MINERALS RESOURCE RENT TAX (IMPOSITION—GENERAL) BILL 2011

The bill imposes Minerals Resource Rent Tax to the extent that it is neither a duty of customs nor a duty of excise.

Minerals Resource Rent Tax is payable under the Minerals Resource Rent Tax Act 2011 from 1 July 2012. It is imposed at a rate of 30 per cent, less a 25 per cent extraction allowance to reflect the contribution of miners' expertise in extracting the resources.

The bill does not impose tax on property of any kind belonging to a State.

 

MINERALS RESOURCE RENT TAX (IMPOSITION—CUSTOMS) BILL 2011

The bill imposes Minerals Resource Rent Tax to the extent that it is a duty of Customs.

Minerals Resource Rent Tax is payable under the Minerals Resource Rent Tax Act 2011 from 1 July 2012.

It is imposed at a rate of 30 per cent, less a 25 per cent extraction allowance to reflect the contribution of miners’ expertise in extracting the resources.

The bill does not impose tax on property of any kind belonging to a State.

 

MINERALS RESOURCE RENT TAX (IMPOSITION—EXCISE) BILL 2011

The bill imposes Minerals Resource Rent Tax to the extent that it is a duty of excise.

Minerals Resource Rent Tax is payable under the Minerals Resource Rent Tax Act 2011 from 1 July 2012.

It is imposed at a rate of 30 per cent, less a 25 per cent extraction allowance to reflect the contribution of miners' expertise in extracting the resources.

The bill does not impose tax on property of any kind belonging to a State.

 

PETROLEUM RESOURCE RENT TAX ASSESSMENT AMENDMENT BILL 2011

This bill is part of establishing a new way to tax Australia's valuable non-renewable resources.

This bill extends the existing Petroleum Resource Rent Tax regime to all oil and gas production in Australia.

The Petroleum Resource Rent Tax Assessment Amendment Bill 2011 establishes a tax that keeps pace with our booming resource sector.

Last year, the government announced new resource taxation arrangements to build a stronger economy and a fairer tax system.

Extending the PRRT to all Australian oil and gas production is another component of that vision.

It is an ambitious step in a long-term reform agenda that will provide all Australian oil and gas projects with a certain and consistent tax regime that takes account of the varying circumstances and profitability of individual projects.

Australia is experiencing an unprecedented boom in its resources sector.

Australian oil and gas production is expected to continue to grow as new projects come on line.

Over $140 billion of investment has been committed to Australia's booming LNG industry, putting Australia on track to becoming the world's second largest exporter of LNG in 2015.

Just as the application of the PRRT in offshore areas has not prevented investments in offshore oil and gas projects, the extension of this regime to onshore oil and gas projects and the North West Shelf project is not expected to affect investment levels onshore.

Resource charging arrangements have not been keeping pace with resource profits and resource taxes have been declining as a share of resource profits.

For the first time, the Australian community will share in the profits of this resources boom to develop a stronger and broader economy, through investments in jobs, infrastructure and sustainable economic growth.

Like the MRRT, the PRRT extension has been developed in a cooperative manner between industry and government.

These bills underwent the same comprehensive consultation process as the MRRT, with industry involved in the policy, legislative development and design process.

Extensive consultation has occurred through the Resource Tax Consultation Panel, the Policy Transition Group, the Resource Tax Implementation Group and a public submission process.

The PRRT has been operating successfully offshore since 1987.

The bill before the House extends this efficient profit based tax to onshore oil and gas, including the growing onshore coal seam gas industry, while ensuring that the long-term attractiveness of investment in Australian oil and gas extraction is not impaired.

It was true back in 1987 and it is true now.

I quote Hansard back when the PRRT was first introduced:

Petroleum resources are, in their most basic sense, community property and the government believes that the community as a whole should share in the potentially high returns from the exploitation of these scarce, non-renewable resources.

The government believes that a resource rent tax related to achieved profits is a more efficient and equitable secondary taxation regime.

In contrast to production-based secondary tax regimes, the petroleum resource rent tax will be payable only in respect of projects earning a high rate of return on outlays…and

[The PRRT] strikes a reasonable balance between the objectives of satisfying the right of the community as a whole to share in the benefits of profitable offshore petroleum projects, and of providing the participants with adequate returns for the risks they accept in undertaking exploration and development activities.

The PRRT is applied at a rate of 40 per cent on the taxable profit derived from a petroleum project.

Broadly speaking a petroleum project's profit is calculated by deducting expenses from the assessable revenues derived from the project.

Project expenditure is immediately deductible and exploration expenditure may be transferable to other petroleum projects.

Assessable revenue primarily comprises the receipts received from the sale of petroleum or marketable petroleum commodities recovered or produced from a project.

Where deductible expenditure exceeds assessable revenue from a project in a financial year, the excess expenditure is carried forward and uplifted to be deducted against project earnings in future years.

From 1 July 2012, the PRRT will apply to all new and existing oil and gas projects in Australia.

The core design features of the PRRT will remain unchanged, and offshore projects currently operating under the PRRT will be largely unaffected by the PRRT extension.

To accommodate onshore projects and the North West Shelf project into the PRRT the bill makes the following key amendments.

The project combination certificate criteria are expanded to allow onshore projects with integrated downstream operations to be treated as a single project.

Consolidated group companies will have the choice to treat interests held by different group companies within a petroleum project as a single interest for PRRT purposes.

Project expenditure related to the environment is made explicitly deductible.

A new category of assessable incidental production receipts will include revenue generated using petroleum project facilities.

Deductible expenditure is expanded to include resource taxation expenditure to avoid the double taxation of petroleum projects subject to crude oil excise and State based royalty regimes.

And finally, existing petroleum projects that are transitioning to the PRRT are entitled to a starting base to shield historical investment and prevent the retrospective application of the extended PRRT.

The starting base is non-transferable, and unused starting base expenditure will be uplifted, consistent with the treatment of unused general project expenditure, to be deducted in future years.

Like the MRRT, under the extended PRRT the state and territory governments will continue to receive a stream of royalty revenues.

To ensure that taxpayers are not double taxed, the PRRT regime provides a deduction equivalent for state royalties paid by a taxpayer in respect of a petroleum project.

Unused resource tax credits are not transferable between petroleum projects and will be uplifted at the long-term government bond rate plus five per cent, consistent with the treatment of other losses.

The bill includes amendments to ensure that, in circumstances where onshore coal seam gas producers have an integrated gas to liquids project, they will be able to access the pricing methodologies contained in the Petroleum Resource Rent Tax Assessment Regulations 2005.

It is the government's intention to undertake subsequent consultation on the PRRT regulations to ensure they operate effectively in an onshore context.

The PRRT will ensure a more consistent share for all Australians of the returns generated from our non-renewable resources while maintaining a healthy pipeline of investment and job creation.

Like the MRRT, the PRRT extension is landmark legislation. Legislation that will do much for our great nation and it deserves the full support of the parliament, the business sector and the community.

 

PETROLEUM RESOURCE RENT TAX (IMPOSITION—GENERAL) BILL 2011

The bill imposes a tax in respect of the profits of certain petroleum projects, so far as that tax is neither a duty of customs nor a duty of excise and sets that rate at 40 per cent from 1 July 1986.

The Petroleum Resource Rent Tax is administered under the Petroleum Resource Rent Tax Assessment Act 1987.

The bill does not impose tax on property of any kind belonging to a state.

 

PETROLEUM RESOURCE RENT TAX (IMPOSITION—CUSTOMS) BILL 2011

The bill imposes a tax in respect of the profits of certain petroleum projects, so far as that tax is a duty of customs and sets that rate at 40 per cent from 1 July 1986.

The Petroleum Resource Rent Tax is administered under the Petroleum Resource Rent Tax Assessment Act 1987.

The bill does not impose tax on property of any kind belonging to a state.

 

PETROLEUM RESOURCE RENT TAX (IMPOSITION—EXCISE) BILL 2011

The bill imposes a tax in respect of the profits of certain petroleum projects, so far as that tax is a duty of excise and sets that rate at 40 per cent from 1 July 1986.

The Petroleum Resource Rent Tax is administered under the Petroleum Resource Rent Tax Assessment Act 1987.

The bill does not impose tax on property of any kind belonging to a state.

 

TAX LAWS AMENDMENT (STRONGER, FAIRER, SIMPLER AND OTHER MEASURES) BILL 2011

This bill contains long-term reforms that will bring benefits to small business and lift the superannuation savings of millions of low income Australians and make our superannuation system fairer.

Schedule 1 removes the entrepreneurs' tax offset in order to deliver more effective assistance for small businesses. This is consistent with recommendation 6 of Australia's Future Tax System (better known as the Henry Review).

The entrepreneurs' tax offset, which according to AFTS 'provides problematic incentives related to business structure' makes way for better targeted small business assistance.

Through schedules 2 and 3 the government is delivering on its commitment to improve cash flow and reduce compliance costs for Australia's 2.7 million small businesses.

Under schedule 2, from the 2012-13 income year, small businesses will benefit from being able to immediately write-off depreciating assets that cost less than $6,500. This increase from a threshold of $1,000 will allow small businesses to claim a deduction for more expensive assets—those costing less than $6,500 instead of less than $1,000—providing a cash flow benefit. Small business will benefit from this initiative when they purchase assets such as a computer, photocopier and printer.

The government will also simplify the depreciation regime for depreciating assets costing $6,500 or more. Instead of having to allocate assets to one of two depreciation pools, each with a different depreciation rate (five per cent and 30 per cent), small business will now be able to allocate assets to a single depreciation pool with a single rate of 30 per cent (and 15 per cent in the first year).

In addition to the benefits that come with simplifying the pooling arrangements, small businesses will also benefit from being able to depreciate some assets more quickly, at an increased rate of 30 per cent instead of five per cent—again, providing a cash-flow benefit.

In addition to these measures, which were announced as part of the government's response to the AFTS Review and the Clean Energy Future package, the government has continued to deliver for small businesses through the 2011-12 Budget.

Schedule 3 will do this by providing an accelerated initial deduction for motor vehicles purchased by small businesses from the 2012-13 income year.

This means that small businesses that purchase a motor vehicle costing $6,500 or more from the 2012-13 income year will be able to immediately write-off up to $5,000 and will be able to depreciate the remainder of the value at 15 per cent in the first year and 30 per cent in following years.

As motor vehicles are primary assets for many small business operators, this increased initial deduction will improve cash flow for a large number of small businesses.

It will mean that a tradesman on a 30 per cent marginal tax rate buying a new ute worth $33,960 will receive a tax benefit of $1,275 in the year they purchase the vehicle. This means more money in the pocket of small business.

These changes improve cash flow for businesses and makes investing in and growing their business more achievable.

Businesses with an annual turnover of less than $2 million will benefit from this small business package. That is 96 per cent of Australia's 2.7 million small businesses.

The government is committed to assisting small business and has already reduced quarterly Pay As You Go (PAYG) income tax instalments for the 2011-12 income year for taxpayers using the GDP adjustment method, providing a $700 million cash flow benefit to small business.

The government is providing extensive assistance to small business through the small business support line, business.gov.au website, the small business advisory service program and enterprise connect. These services are all about helping small businesses with their day-to-day running.

In addition to these measures, the government will reduce the company tax rate for small business companies from 30 to 29 per cent from 2012-13. This will assist up to 720,000 incorporated small businesses, allowing them to reinvest more of the profits to grow their businesses.

This government values small business, it has a plan to assist small business and it is delivering on this plan.

These changes are about making a real difference to the 2.7 million small businesses in Australia.

Superannuation

Australians should not have to work hard and retire poor.

How to enjoy a fulfilling and prosperous retirement is one of the great conversations in Australian life.

I've talked about our significant reform to lift superannuation from nine per cent to 12 per cent, but we need to do more for low-income Australians.

It's of great concern to me, and I know of great concern to the Prime Minister and Treasurer, that whilst women live longer than men, their super balances are in fact on average about 40 per cent lower.

This is a serious challenge to Australian women's financial independence. It is important that we address structural imbalances such as equal pay and today the government is also addressing a structural imbalance in the superannuation system.

Currently, 3.6 million low-income Australians, including around 2.1 million women get no (or minimal) tax benefit from contributing to superannuation, due to the fact that the15 per cent superannuation contribution tax is above or equivalent to their income tax rate.

Let's reflect for a moment on these numbers—3.6 million Australians. That is around three out every 10 workers who do not get a tax benefit from contributing to superannuation; 2.1 million of them are women, that is three in every eight women in the workforce.

Put another way the 3.6 million Australians includes:

Around 1.1 million workers in New South Wales

Around 910,000 workers in Victoria

Around 800,000 workers in Queensland

Around 260,000 workers in South Australia

Around 360,000 workers in WA

Around 90,000 workers in Tasmania

Around 30,000 workers in the Northern Territory

Around 50,000 workers in the ACT

The Gillard government is acting on the recommendation of the Henry Review which said that superannuation tax concessions should be distributed more equitably.

From 1 July next year, we will make the system fairer by ensuring no tax is paid on the superannuation contributions for Australians earning up to $37,000 and that the money is instead directed into their superannuation. This tax reduction is limited to $500 per person which covers the tax due on nine per cent SG at $37,000.

Sixty per cent of the beneficiaries of this policy are women.

The superannuation savings of 2.1 million women earning less than $37,000 will be boosted by $550 million in 2012-13 alone.

Importantly, the government has also simplified the application process for low income earners individuals who are not required to submit an income tax return. They will not need to fill out any extra paperwork. Instead the ATO will do the calculations for them using information available to the Commissioner of Taxation such as payment summaries.

This streamlined process reduces the paperwork burden on low-income Australians, while ensuring the integrity of the system.

This will be one of the most significant wealth creation reforms targeted at low income earners in modern Australian history.

Put simply, the government is lowering the tax burden on low-income Australians and directing this forgone tax revenue into their superannuation accounts to help them build for the future.

The revenue from the Minerals Resources Rent Tax will go towards filling the resultant gap in tax revenue. It is the right way to share the benefits of the mining boom and ensure our country is well prepared for the gift of longer life.

 

SUPERANNUATION GUARANTEE (ADMINISTRATION) AMENDMENT BILL 2011

I am in introducing this bill because the parliament should pass laws which are optimistic and hopeful about Australia's future.

It proposes to increase the Superannuation Guarantee charge from nine per cent to 12 per cent.

And this bill abolishes the Superannuation Guarantee age limit.

This bill passes the test of being positive and constructive.

We are living longer than ever before. So we must change with the new rhythms of life.

Those of us over 65 now are only three million in number, but by 2050 there'll be 8.1 million.

Today there are 50 of us in work for every 10 of us in retirement. By 2050, there will be 27 of us in work for every 10 of us in retirement.

These days we're probably at school and in college until we're 20 or 25.

We then work for 35 years, and after that we have another twenty or even thirty years to think about things, play bowls, go fishing, join reading groups, write family histories, and the rest of it. Thirty years, perhaps. Forty, maybe.

Life itself, our life in the best country on earth, has been redefined by these new unchangeable figures of a long and largely healthy life.

Longer life full of quality and meaning is the great gift of 20th century Australians to 21st century Australians. And we should celebrate it.

Therefore the goal of lifetime income security celebrates a long and quality life.

This bill declares that the Australian people understand change is inevitable.

This bill declares Australians reject the proposition that Australians should stay frozen in the moment.

This bill declares that Australians do not believe change is too hard.

This bill declares that Australians understand that as we are living longer, we need to smooth our prosperity over longer life.

Until 1985, private retirement income under the superannuation provisions applied to the very wealthy and some well-paid employees in the public sector.

Until 1985 the great majority of working Australians had no viable access to the generosity of the superannuation tax provisions.

Until 1985 most Australians had to rely upon had relied on the taxpayer provided age pension as their principal post-employment income system.

The first move towards universal access under the superannuation provisions came as part of the Hawke government's Accord with Australian trade unions.

Government and unions agreed that the profit share in the economy had to be restored to re-ignite private investment. At the time, unemployment and inflation were both hovering around 10 percent.

In return for this restraint the government supported the ACTU's claim that three percentage points of wages should be contributed by employers to a superannuation account in the name of each worker.

This was 1985. Then on 20 August 1991; in the Hawke government's ninth budget laid the groundwork for the superannuation industry as we know it now. Not long after becoming Prime Minister, Paul Keating announced the introduction of the Superannuation Guarantee Charge.

Under this path-breaking legislation, employer contributions to superannuation would rise from three percentage points of ordinary time earnings in 1992-93 to nine percentage points of ordinary time earnings by 2002-03.

Over the period when the Superannuation Guarantee Charge grew from three to nine per cent of employer contributions, unit labour costs fell. This meant that the cost of superannuation was rarely borne by employers. It was absorbed into the overall wage cost.

Had employers not paid nine percentage points of wages as superannuation contributions to employee super accounts: they would have paid it in cash as wages.

As Keating said in 2007: 'when you hear conservatives these days speak of superannuation as a tax on employers they are either ill-informed or they are lying. The fall in unit labour costs and the upward shift in the profit share during the period of the Superannuation Guarantee Charge is simply a matter of statistical record. It is not a matter of argument.'

Today the savings pool is worth more than $1.3 trillion to the nation.

Our retirement savings system is the fourth biggest pool of funds under management on the planet.

The original Superannuation Guarantee legislation has since proven fundamental to the sustainability of our private retirement income.

Superannuation has proved to be a terrific idea; blessing Australia with a national institution that almost every developed economy in the rest of the world would give their eye teeth for.

It is now a mature idea.

Yet in terms of providing an adequate retirement nest egg, the system still has great capacity to grow, to mature and perform even better for individuals who get to retire after a whole working life of superannuation behind them.

Compulsory superannuation's gradual introduction between 1992-93 and 2002-03 has smoothed the transition path and demonstrated how long run reforms can be successfully introduced in our country.

But adequacy remains the challenge, and task of providing for retirement is getting bigger as we live longer and as weak investment markets slow growth of fund balances, necessitating higher contribution levels.

Running the system as efficiently as possible is essential as it grows bigger balances and maximizes the return to the taxpayers of the 15 per cent concessional tax rate.

I think it obligatory to recognise the future's lament if we in the federal parliament don't take this opportunity to pass the law that will deliver 12 per cent compulsory superannuation contribution.

Of all the human emotions, it is perhaps regret we should fear the most.

It is both instant and long lasting.

In politics, the worst regret is always the regret for the path not taken, the timidity of a moment that cost us the skirmish, the skirmish that cost us the battle, the battle that cost us the war.

Too often in politics we deal, or we end up dealing, not with the problem, but the politics of the problem.

The rhetoric of the problem. Dare I even say—the spin.

We try to paper over with bravado the fragility within.

We lose the moment, and in doing so—the future.

No big economic reform is easy.

I understand that no change to our public life, no social contract—indeed no progress—could be taken for granted.

It has to be fought for, with all the guile and persistence of Fred Hollows, and all the brash force of Henry Chauvel, racing his horses for Beersheba water.

Victory is never certain.

And to be fair, probably all of us - whatever our political stripe—who have the privilege to serve fully in this place, sooner or later realize that the big public policy struggles are inevitable, and intricate, and close-fought, and exhausting.

Long-lasting economic change—whether floating the dollar or deregulating the financial markets require all the powers of political persuasion.

We believe nine to 12 per cent is profoundly necessary, and we wish to calm the anxiety and explain the detail of what this reform would do.

This bill is pressing the advantage of doing the right thing by the nation, even if vested interests and loud voices opposite yelling 'no' make the going all the slower, all the tougher.

But this bill has an army of good voices and minds behind it.

Just as an army of commonsense, real world voices raised their game to advocate for and help deliver compulsory superannuation two decades ago.

I am inspired that always and every time, the agents of change in our national story already written—from both sides of the political divide—have had to consistently and persistently argue the merits of the case and keep a firm grip on the detail and sketch out—with daily alacrity—what would happen when the changes were actually implemented.

The superannuation reforms the Gillard government has announced—lifting the Super Guarantee from nine up to 12 per cent and how it's afforded through the mining tax—has been met with a fiercely hostile opposition. And so once again we find the going harder than such good ideas deserve.

Yet as the Minister for Superannuation I am finding that the strongest argument for these retirement savings reforms is not purely through a recitation of the details.

But a simple plea that we must, for dignity of hardworking Australians in retirement and to place less pressure on the age pension, secure the goal of adequate lifetime retirement savings.

A 70 per cent replacement rate in post work life—of average earnings prior to retirement constitutes the winning tape for adequate retirement.

This plea is especially applicable now because of the arithmetic we are in, in this parliament, compared with the years, in the 1980s and 1990s, of large majorities in the lower House, and of civilised reason in the Senate.

When it comes to lifting super to 12 per cent, I know that most of our nation absolutely get it.

Australians get it right in their bones.

We believe that longer life is a gift that should be celebrated.

We believe there's little point in working hard and retiring poor.

We want Australians to live long lives that have quality and meaning.

We want those lives that go up to and last beyond a hundred years to have been well-lived, both at the start and at the end.

Which means, as the numbers of the old go up, we want to deliver a better deal, a new deal, on superannuation.

Our starting point is that nine per cent is simply not enough, especially for women, who have breaks in their career rearing the next generation, when they are not earning, and therefore not putting in their nine per cent away for the nest egg.

It's why we are taking, as Paul Keating planned many years before, the nine per cent up to 12 per cent. And in doing this we are strengthening superannuation.

The Superannuation Guarantee charge percentage will be increased gradually with initial increments of 0.25 percentage points on 1 July 2013 and 1 July 2014. Further increments of 0.5 percentage points will apply annually up to 2019-20, when the SG rate will be set at 12 per cent.

These superannuation measures and others contained in the Stronger, Fairer, Simpler package of reform, along with the increases in the age pension which the government introduced in 2009, and the Stronger Super package of reforms will allow Australians to secure higher standards of living in retirement than ever before.

This bill also makes superannuation fairer for Australians of all ages.

From 1 July 2013, the Superannuation Guarantee will be payable for eligible employees over 18.

Currently, the Superannuation Guarantee only applies to people under 70. The amendments will align the SG age limit with the age limit for voluntary and self-employed contributions.

The increase in the Superannuation Guarantee age limit means that eligible individuals aged 70 and beyond will have superannuation guarantee contributions made on their behalf for the first time.

Making superannuation contributions compulsory for these mature-age workers will improve the adequacy and equity of the retirement income system, and provide an incentive to older Australians to remain in the workforce for longer.

The actuaries tell us the average Australian needs a 70 per cent replacement rate of his or her accustomed income to live in retirement comfortably. For example, the Melbourne-Mercer Global Pension Index recommends this.

Being satisfied with just nine per cent compulsory superannuation means being satisfied with a big percentage of Australians outliving the money set aside to see them through the Third Age.

As we live longer—nine per cent just doesn't build enough.

It's why the Minerals Resource Rent Tax is so important to our nation's future.

The MRRT pays for the tax concessional treatment of the additional three per cent Superannuation Guarantee—with workers retirement contributions taxed at 15 percent instead of their marginal personal income tax rate.

It's of great concern to me, and I know of great concern to the Prime Minister, that whilst women live longer than men, their super balances are in fact on average around 40 per cent lower.

This is a serious challenge to Australian women's financial independence.

Currently, around 2.1 million women get no tax benefit from contributing to superannuation, due to the 15 per cent superannuation contribution tax being at or above their income tax rate.

The Gillard government is therefore acting on the recommendation of the Henry Review which said that superannuation tax concessions be distributed more equitably.

From 1 July next year, we will make the system fairer by ensuring no tax is paid on the nine per cent superannuation contributions for Australians earning up to $37,000 and that the money is instead directed into their superannuation.

Sixty per cent of the beneficiaries of this policy are women.

The superannuation savings of 2.1 million women earning less than $37,000 will be boosted by $550 million in 2012-13 alone.

So a 30-year-old woman on full-time average wages will have an extra $108,000 in retirement savings providing her with an extra $2,900 to spend each year of her retirement.

This is what good law—from a government that is confident in Australia's future—is all about.

In August 2011 looking at the great economic reforms of Hawke and Keating and Kelty—reforms like superannuation—can be a bit like looking at the silverware in our nation's economic trophy cabinet.

But I believe each generation has to make its own history.

To build new achievements.

We can respect our history—as families, as tribes, as nations—while still making our own history as a generation.

Surely we don't want to look back in 20 years time and regret not raising superannuation to 12 per cent.

We want to say, 'Do you remember when we lifted it to 12 per cent—to where it needed to be.'

Do any of us really think we would have saved $1.3 trillion without compulsory super?

I believe there are four pillars which today assure a quality of Australian life for all our fellow citizens:

the minimum wage;

the age pension;

Medicare; and

compulsory superannuation.

I might add that I think a National Disability Insurance Scheme has the potential to be the new fifth pillar. So early August was a wonderful time measured by the significance of first big steps.

In mid-2011, two decades after compulsory superannuation was introduced, superannuation stands as one of Australian Labor's most enduring and far sighted reforms.

The mission of adequate retirement savings is not yet completed, but the journey here has been a great national direction.

We will know that we have succeeded when all Australians recognise that superannuation is as vital a pillar for our quality of life as Medicare or the minimum wage.

And let me say when that happens, after 12 per cent is achieved, governments need to step right back and stop the tinkering with the tax treatment of superannuation.

I truly believe we are not quite there yet, but the government's reform agenda together with the good work the industry is doing on building the brand will help us get there.

Our superannuation reforms will deliver a great good to Australians upon their retirement and the Australian economy more generally.

The great good of a more comfortable post work life.

The great good of Australians retiring on a 70 per cent replacement rate.

The great good of concessional tax, compound interest and dividend imputation.

The great good of seeing Australia become even better at financial services.

The great good of reducing the cost of capital.

The great good of more capital becoming available for nation-building infrastructure.

The great good of low inflation, high savings and a future some Europeans now dream of.

The Gillard government understands the forces of change that we have to navigate to secure future waves national prosperity.

That the ageing of our population is one of these forces is undeniable and the need for greater retirement savings is therefore irresistible.

And I submit, is logically inevitable.

We always hear a lot from financial planners and investment strategists about savings and investment but it is politicians who can make the real difference. And it is the politicians who need to grasp the relative immediacy of longer life spans—with it's all too predictable dislocating consequences.

Under Prime Minster Gillard's leadership our national government is acting for the long term and we are strategically placing the nation where the challenges and opportunities of the future can be met with confidence and conquered with commonsense.

Lifting the Superannuation Guarantee change to 12 per cent is profoundly sensible.

Australians need not fear the future—we should be optimistic.

This bill keeps faith that Australians should and can live long lives full of quality and meaning. This bill keeps faith that the goal of lifetime income security for Australians is achievable.

And this parliament, I believe, should not miss the opportunity to do good.

Debate adjourned.