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Wednesday, 21 April 1999
Page: 4082


Senator SHERRY (7:43 PM) —I wish to draw to the attention to the Senate tonight a very serious and iniquitous situation that has arisen as a consequence of the Liberal government's superannuation surcharge tax. This superannuation surcharge tax was introduced in the 1996 budget—the first budget of the Liberal government. This new tax was introduced in direct contravention of the commitment given in the lead-up to the 1996 election by Mr Costello, the Treasurer, and Mr Howard, the Prime Minister, that there would be no new taxes and no increase in existing taxes. Of course they tried to be half smart and called it a surcharge in order to avoid an accusation of breach of promise during the 1996 election.

The super tax—and it is a tax, not a surcharge; that is certainly what the Senate called it in respect of an amendment that was moved—has been widely criticised, and rightly, in the Australian community. I have spoken on this matter on a number of occasions. The so-called superannuation surcharge has resulted in a dreadfully iniquitous situation in respect of superannuation contributions of people earning below $72,000.

I have had my attention drawn to groups of Australian workers being seriously adversely affected by this new superannuation tax. I remarked earlier that it is almost impossible to find any respected, knowledgeable commentator, accountant, actuary, lawyer, economist or funds manager who supports this superannuation tax and the way it is being administered. In fact, I do not know of any. Last year I had representations from two groups of workers at Pasminco's processing plant located in Hobart and their mining operation located in Rosebery on Tasmania's west coast. Both groups of workers had their superannuation guarantee contributions tied to a base earnings rate of approximately $24,900 per year.

In the case of both the workers at the refining operation in Hobart and the workers at the Roseberry mine, they earn much more than $24,900 per annum. The amounts vary according to their particular job classifications, but their effective contributions to superannuation fall below the current superannuation guarantee contributions of seven per cent by virtue of industrial agreements which apply at both sites which equate superannuation contributions to $24,900, despite that not being their earnings. Whilst this was to the advantage of those workers when the superannuation guarantee was introduced, with the effluxion of time and the increase in the superannuation guarantee to a level now standing at seven per cent, moving to nine per cent, such an arrangement is no longer to their advantage.

Through their union, the Australian Workers Union, which I might say is a union that has actively pursued their case, they have been seeking to have the base level of contribution that is included in the industrial agreements changed in order to reflect the seven per cent superannuation guarantee of the current earnings of an employee. The difficulty these workers face with respect to the mining side of Pasminco's operation is that they are receiving less than seven per cent of current earnings into the superannuation fund because of this formula. But the difficulty for the workers at the Rosebery mine is that, depending again on job classification, they earn, including overtime, between $68,000 and $80,000 a year.

If we look at the definition of income for the purposes of the Liberals' new superannuation tax, it includes salary or wages and it does include, for example, overtime. Whether or not the workers at the Rosebery mine operation are earning overtime, the fact is that most of them do earn between $68,000 and $80,000 a year, and therefore a substantial proportion of them are required to pay the superannuation tax. Yet they are not receiving superannuation contributions that equate to seven per cent of their current earnings. This is a grossly unfair, unjust and absurd situation. It is a further example that highlights the difficulties with the superannuation tax. If there were some logic to the superannuation tax—and I do not believe there is, particularly in the way it is administered—it certainly should not include overtime; but it does. Australian workers do not have superannuation guarantee contributions paid in respect of overtime, they have it paid only in respect of ordinary time earnings. So we have clearly got a serious anomaly that impacts substantially.

The other group of workers that has been drawn to my attention includes an electrician who I know is not alone with this particular problem. He earns substantially less than $72,000 and does receive superannuation guarantee contributions of seven per cent of whatever his earnings are from year to year, but those earnings are less than $72,000, excluding overtime. However, he does substantial overtime, and that overtime takes him over the $72,000 cut-off for the application of the superannuation tax. Therefore, he is required to pay the new superannuation tax. Again, he is receiving superannuation contributions on his earnings excluding overtime, but because he works substantial overtime—and there would be many workers in this situation—he is taken over the $72,000 threshold and has to pay the superannuation tax when effectively he is not receiving the superannuation contributions equating to that level of income. This is similar to the situation of the workers employed at the Rosebery mine operation.

I gave notice in the Senate of a five-part motion that outlined the particular problems that I have touched on only briefly this evening. It certainly was my hope that the government would support the motion that called for, firstly, changes to the SG legislation, to ensure that no employee receives less than seven per cent of their annual earnings— whatever that may be from time to time—and, secondly, the removal of overtime from the definition of earnings for the purposes of a superannuation tax. Regrettably I have to say that the government, callous in its disregard for the application of a superannuation tax—and, indeed, for superannuation generally—did not allow that motion to proceed yesterday and to be passed by the Senate.

We know that Senator Kemp has proposed some further amendments to the superannuation tax or surcharge. It will be interesting to see if the government deals with this issue, but I make it clear to the Senate that I intend to persist with it to see that justice is done for the groups of workers that are adversely affected in this way. (Time expired)