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Wednesday, 9 October 1991
Page: 1525


Mr MacKELLAR(12.20 p.m.) —-In his recent Budget Speech, the Treasurer (Mr Kerin) stated that `the Government's retirement income policy aims to ensure that all Australians have a secure income in retirement'. I believe that very few Australians would disagree with that principle. Indeed, as far as I can establish from my readings, it is supported across a wide spectrum of our community.

For example, the chief executive officer of the Business Council of Australia stated in the Council's September bulletin that `the development of a fundamentally sound retirement incomes policy has to be supported when one considers the future demographics of Australia'. Similarly, the Committee for the Economic Development of Australia warned in February last that a universal superannuation scheme for workers must be introduced to cope with the ageing population of the future. And the Opposition's 1989 retirement incomes policy stated that it will ensure that superannuation or similar saving arrangements are available to the entire work force, with the objective of achieving universal coverage on a voluntary basis.

There are numerous other examples of business and community support for the principle of universal income security in retirement. What is at issue is not the principle but the nature and timing of the many and diverse steps taken by the Labor Government to achieve this objective.

The history of superannuation in Australia over the past eight years has been the classic story of two paces forward and one pace back. If it had been just the two paces forward and one back, it might have been acceptable. But instead, this pattern of ill-considered and poorly timed and structured advances has gone on year after year, with constant adjustments and backtracking as weaknesses and errors have been identified.

The 1991 Budget is a case in point. The Treasurer had to admit that the 1986 3 per cent superannuation package has not been fully complied with and that the Government has decided to respond with a superannuation guarantee levy, to commence in 1993. As part of that legislative package, the Government proposes to set prescribed levels of superannuation support which must be provided by employers to all employees--in other words, a compulsory non-contributory scheme. Employers not meeting the prescribed levels will be liable to a levy which will not be deductible for tax purposes. The overall objective is to increase the prescribed level of superannuation to 9 per cent of earnings by the year 2000. The Treasurer indicated that concessions would be available to small businesses and that employee contributions might be a future option.

In looking at the history of superannuation over the eight years of Labor administrations, it is interesting to note that the Australian Labor Party came to office in 1983 with a platform which called for a national superannuation scheme. However, this was overtaken almost from the start by the lesser objective of occupational superannuation.

Whether it be occupational or national superannuation is not the real issue for the business community, superannuation funds and individuals. For them, it is having to cope with the complexity and confusion of eight years of changes made by this Government since coming to office in 1983.

Consider the following summary of just some of the changes over those eight years. From July 1983, lump sum superannuation and retirement benefits became subject to new taxation arrangements. From July 1984 the 30/20 rule was abolished. From July 1985, employee contributions to employer sponsored funds lost their rebatable status and lump sum benefit taxation arrangements were adjusted.

On 4 September 1985 the Government announced that it had reached agreement with the ACTU for the discounting of wage indexation and for ongoing wage restraint. One element included a delay and moderation in the national productivity case, where the 4 per cent productivity claim was reduced to 3 per cent and paid in the form of improved occupational superannuation.

On 16 November 1985, the Government issued guidelines for the implementation of the proposed productivity decision. Subsequent modifications to those arrangements were made on 11 June 1986, 30 July 1986 and 22 December 1986. On 14 May 1987, extensive superannuation legislation was introduced into Parliament to give effect to the above decisions. In 1988, another round of major reforms occurred largely intended to correct inadequacies arising from earlier decisions. The August 1988 Budget saw another round of considerable modifications with the main change being intended to reduce the differential treatment of contributions from different sources. At the same time, the Government announced its retirement incomes policy, sections of which had and will have important implications for superannuation beneficiaries. Finally, we have the present Budget with its guarantee levy and compulsory non-contributory superannuation arrangements for all employees of up to 9 per cent of earnings by the year 2000.

What can be said about all this? At the best of times, superannuation is a subject of considerable complexity and one that is little understood probably by most ordinary people. Surely of concern to the Government must be the frequency with which informed superannuation industry spokespersons are commenting on the increasing difficulty they are facing in having their own advisers understand the implications of these continually changing policies and the very important concern about their ability to give accurate and appropriate advice to their clients. Even more worrying is that, despite eight years of piecemeal change, it is widely acknowledged within the industry that superannuation is still in a state of flux and in need of further considerable and significant modification to meet much needed policy objectives and to overcome the existing inadequacies and uncertainties.

What has been overlooked by this Government, in my view, is that superannuation is basically a long term arrangement that influences the behaviour of government and the community over many decades. Because of that, it is a subject which does not lend itself to piecemeal adjustment. Businesses and individuals alike want a stable, certain and predictable environment in which to plan for their employees' or their own retirement futures. This becomes the more so when it is apparent that there are vitally important changes taking place in the relationship between superannuation and the age pension and in the eventual outcomes. I believe it is no exaggeration to state that businesses and individuals find themselves, in 1991, in a position where the complexities and confusion are so great that long term planning is, at best, fraught with uncertainty and is, at worst, well nigh impossible.

A number of matters require urgent attention, the most important being the effect of these many changes on saving and investment patterns; the eventual role of the union in industry superannuation funds; the cost of administering such a complex set of arrangements; the continuing weakness within these arrangements for lump sum payments to be taken and spent--and I am talking about the double-dipping problem; the timing of the latest round of changes and the need for some flexibility with the introduction date of July 1992, if the present recession should persist well into 1992; and, finally, whether future accord based national wage case decisions will be consistent with the superannuation program. Each one of those subjects warrants detailed and careful consideration and is obviously beyond the scope of the time available to me today. However, they have been well covered by a number of respected analysts and their implications should be well known to this Government. The real need now is for the Government to have the leadership and the resolve necessary to effectively address these remaining weaknesses.

In conclusion, I would make the observation that there appears to be a well identified trend overseas to decrease the role of social security and the provision of retirement income and increase the role of occupational superannuation and private retirement savings. This Government has made a somewhat impetuous and disorganised start in the direction of occupational superannuation and has really done little more than scratch the surface of encouraging increased personal responsibility. The move towards greater personal responsibility in providing for retirement coupled with the inevitable freeing of the Australian labour market will put enormous pressure on government for increased flexibility in our superannuation arrangements. The Government must meet that challenge with more effective and visionary policy directions than we have witnessed to date. Businesses and individuals deserve a more certain climate than they have been presented with over the long term of this Government's mismanagement of the superannuation problem.