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Thursday, 22 November 2012
Page: 9506

Senator CORMANN (Western Australia) (12:45): The coalition will not oppose these bills. In fact, the coalition strongly supports the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill 2012 and thinks that we should have been dealing with this a long time ago. People across the superannuation industry who are focused on the best interests of their members and people across the superannuation industry who have been exploring opportunities for mergers to achieve efficiencies and benefits of scale which can then flow through in terms of lower fees and higher net returns have been waiting for some time for this bill to be passed by the parliament.

The coalition have been indicating for months that the government had our support. Of course Minister Shorten, the Minister for Financial Services and Superannuation, has known for months that he had our support to get this bill through the parliament, yet he has not progressed it in an appropriately timely fashion. This measure has broad support, is very sensible and does the sorts of things that we all agree with—which is ensure that super fund trustees can make decisions on mergers based on whether they make sense and whether they are appropriate in the best interests of members rather than be prevented, because of tax considerations, from making decisions that otherwise make sense. Instead of pressing ahead with that, Minister Shorten thought he was going to be a bit clever, which is what this government always does. He thought he would slip something in that is somewhat controversial. He put together two bills that have nothing to do with each other.

We have the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill 2012, which provides capital gains tax relief for merging superannuation funds, and we have the Superannuation Auditor Registration Imposition Bill 2012, which, consistent with the terrible track record of this government over the past five years, seeks to impose further red tape on a sector of the superannuation industry—self-managed super funds—which this government fundamentally dislikes. This government has an ideological dislike of self-managed superannuation. This government does not like those Australians who are working hard and saving hard to help achieve a self-funded retirement. It is always looking for ways to come up with more hurdles, more red tape and more costs and to make it less attractive for people across Australia to work hard and save to achieve a self-funded retirement. The second bill, which we are opposed to, is attached to the first bill for no reason other than that the minister and the government know that, because of our strong support for the first bill, attaching the second bill to it and making a package will force our hand so that we eventually roll over and let something go through that otherwise would not attract our support. That is a very bad and very dishonourable process. People across Australia need to understand what this government is up to.

Over the last five years, this government has given us more than 21,000 new regulations. This government is choking our economy in red tape. The Superannuation Auditor Registration Imposition Bill 2012 is a very insidious part of that agenda by this government because it is targeting those Australians who are doing the right thing, who are doing everything they can to achieve a self-funded retirement, which ultimately helps take pressure off the public purse.

It is quite extraordinary that, despite our publicly indicated support for the best part of this year, the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill has not come before us until the second last week of the sittings. To go through a bit of detail, capital gains tax considerations can be a barrier to the merging of superannuation funds, even where that merging otherwise make sense and would deliver benefits to fund members. Whenever superannuation funds merge, this will typically trigger a capital gains tax event, which leads to capital gains and/or losses being applied to those assets being transferred. When a merger takes place and the assets have been transferred, the merged fund is typically wound up; however, when the merged fund comes to an end, any previous capital or revenue losses that existed at that time will be foregone. Capital losses can be used to offset present and future capital gains tax liabilities. Revenue losses can be offset against current-year income.

This bill permits the rollover of both revenue gains and losses in addition to capital gains or losses to the receiving fund. Due to the prevailing economic and financial market conditions in late 2008, a temporary taxation relief measure was passed in the form of loss relief and asset rollover to assist the superannuation industry and, through the industry, relevant fund members. However, the relief provided in that legislation was time limited to 1 October 2011. We not only supported at the time the relief that was provided but have indicated in the past that the time limited nature of that relief was going to be a problem. So we supported the tax relief for merging super funds at the time as a sensible measure to ensure that otherwise sensible mergers of superannuation funds were not prevented based on taxation considerations. The truth of the matter is that, if there are significant capital gains tax implications from a merger, then that in itself can prevent a merger from going ahead that otherwise would make sense. Any loss of revenue in that context is largely academic and theoretical because it would not otherwise be realised. If the capital gains tax implications were significant, a merger would not occur and the revenue would not be realised in any event.

This current bill is temporary, this time for mergers that occur on or after 1 October 2011 and before 2 July 2017. We are very conscious of the fact that across large parts of the sector, including, I might add, the not-for-profit industry super funds sector, a lot of people have been waiting for the parliament to deal with this legislation. I place on the record that the only person that is to blame for the delay is Minister Bill Shorten himself. No other person can be blamed for the fact that this legislation has been delayed until today. As well as having delayed it, he has put the passage of this legislation—this legislation which makes a lot of sense—at risk, by attaching to it the Superannuation Auditor Registration Imposition Bill, a bill that is clearly somewhat controversial.

Schedule 2 of the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill introduces a new registration regime for auditors of self-managed superannuation funds. Currently SMSF trustees are required to appoint an approved auditor to audit the financial reports and operations of the fund annually. This bill introduces a new definition of an approved SMSF auditor. It sets out who may apply for registration and the requirements that they must meet. It sets out the necessary ongoing obligations of SMSF auditors, including needing to meet a range of continuing professional development requirements and complying with a range of competency and independence standards. It allows ASIC to create a register of approved SMSF auditors in addition to a register of disqualified SMSF auditors. It allows ASIC to charge relevant fees—here we go again—including in relation to the application to be an approved SMSF auditor and for the compulsory competency examination. It provides ASIC with the power to determine and set competency standards for all SMSF auditors. It provides powers to the ATO to monitor SMSF auditors' compliance with relevant standards and refer any non-compliant SMSF auditor to ASIC. Registration processes are to commence from 31 January 2013.

You are getting the gist—there is a whole lot of additional bureaucratic involvement on top of the already quite burdensome arrangements that are in place so far, all of it at a cost that ultimately will have to be passed on to those people who have chosen, or will choose in the future, to manage their superannuation affairs through a self-managed super fund because in their judgement this gives them more control and more options to manage their own financial affairs as they work towards retirement.

Minister Shorten's approach to the SMSF sector more generally, which is egged on by commercial interests in other parts of the industry, has been consistent all the way through. He is trying to make it harder for people to manage their superannuation affairs through self-managed super funds because he does not like people managing their affairs through self-managed super funds. He would much rather have people invest their superannuation funds perhaps with an industry super fund. As well as his bad track record when it comes to imposing additional red tape, consistent with what the Labor Party in government has done more generally, he also has a bad track record in relation to the taxation of superannuation. In the first four budgets, and in the most recent Mid-Year Economic and Fiscal Outlook, the current government has imposed more than $8 billion in new taxes on superannuation, through a range of measures, including by reducing concessional contribution caps from $50,000 and $100,000 down to $25,000 across the board, by changing the definition of income and doing a whole range of things that always looked like a bit of fiddling at the margins, but always with a significant revenue sting in the tail.

In the House of Representatives, the coalition moved amendments to excise schedule 2 from the superannuation bill. We were also opposed to the associated auditor registration bill. The coalition did this because we see the registration regime as being yet more red tape and cost to the financial sector, which is ultimately passed on to consumers and to those Australians saving to achieve self-funded retirement. Under the new regime, new registration fees are set to not exceed $1,000. However, there is no detail in the legislation, with the actual fee to be determined by regulation. We put up those amendments in the House. Sadly, they did not succeed. Given the approach and attitude that the Greens have taken in relation to this whole issue, we understand that these amendments would not succeed in the Senate either, because the Labor-Greens alliance government is a high-taxing and high-red-tape kind of a government. Consistent with that general attitude of the Labor-Greens administration, that is the approach that they have taken to this particular bill.

This is exactly the position that Minister Shorten wanted the Senate and the coalition to be in. The government wanted us to be in a position where we would feel so strongly about the importance of the capital gains tax relief provisions that we would have no choice but to ultimately roll over on the other aspects of this package of bills. And that is exactly what is going to happen. In recognition of the importance of the capital gains tax relief measures to the superannuation industry and to the people in relevant superannuation funds, we will not be insisting on those amendments again in the Senate, but we do however restate in the strongest possible terms the coalition's opposition to unnecessary red tape being imposed by this government.

At the next election, people will have the opportunity to make a choice. They can continue with this high-spending, high-taxing, big red-tape government which is taking Australia in the wrong direction by making us less competitive internationally and reducing productivity growth—or they can opt for a change of direction. They can choose a coalition government which would be serious about living within its means, which would be serious about spending less, which would be serious about taxing less and which would be serious about cutting red tape instead of adding red tape. A coalition government would deliver $1 billion worth of savings for business per annum through cutting red tape. These savings would flow through the Australian economy to consumers through lower costs and charges. As a government we would spend less, tax less, cut red tape and reduce the level of sovereign risk—which has been rising because of the constant chopping and changing by this government—by being more predictable. If we were successful in doing all that, we would grow our productivity more strongly and grow our international competitiveness instead of reducing it. In doing so, we would end up growing our economy more strongly than it otherwise would have grown. A more strongly growing economy would not only improve our prosperity as a nation, it would also lead to better superannuation returns. Guess what? That would also lead to more revenue for the government—without the need for all these new and ad hoc Labor Party and Greens taxes.

That is the choice the Australian people will have in front of them sometime next year. They can choose to continue in the current direction. That direction has included more than 26 new or increased taxes and more than 21,000 new regulations, regulations which are choking business and making the delivery of goods and services more expensive than it needs to be. That direction has seen significant new sovereign risk generated through this government's constant chopping and changing.

This government hates success and hates people who aspire to be successful. It is a government which does not like people who are doing everything they can to achieve self-funded retirement—which is the right thing to do. Surely we want to see as many Australians as possible achieve a self-funded retirement. But this is the bad direction this government has been taking Australia in—our productivity growth is slowing and our international competitiveness has been going down. Ultimately that imposes a cost on our economy and on the people of Australia. There is a better way—the coalition way. Under a coalition government, pieces of legislation such as this one, which massively increases red tape, would not be on the agenda. A coalition government would focus on cutting red tape rather than indiscriminately continuing to add to it week after week and month after month.

The coalition will not oppose this package of bills on the basis that we strongly support the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill—certainly we support the schedule 1 provisions which provide tax relief for merging superannuation funds. We are concerned about schedule 2, the self-managed superannuation funds auditor registration provisions, and the second bill. However, in the interests of providing certainty to superannuation funds that may be considering fund mergers which make sense other than for the capital gains tax implications of those mergers, we will not be opposing the package of bills. We do reserve the right in government to revisit the additional red tape the government has imposed through the self-managed superannuation provisions I have talked about.