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Thursday, 26 September 2002
Page: 5035

Senator COLBECK (5:25 PM) —With this motion Senator Sherry attempts to paint the government as inactive on superannuation, but a wander through history checking Labor's record on superannuation over the years paints quite a dismal tale. Going to the Labor web site today to find a Labor policy on superannuation, I was led to a statement from their leader which essentially says, `We have no policies. We do not have a clue, but if you have any ideas we would love to hear from you. Please help us fill the gaps'—the gaping hole—`in our policy portfolio.' Senator Sherry today presented some arguments which could essentially form part of a discussion paper but certainly not a policy. As Senator Watson said earlier, they had no policy at the last federal election either. There is absolutely nothing available with respect to their policy there, and there is actually evidence to suggest that they went to the 1998 federal election without a policy. You would have to question the way the Labor Party are lecturing the government at this point in time about its level of activity on superannuation. They have been sitting there since at least 1998 without having done a jot of work. Senator Sherry rushes out every now and again from committee hearings and makes an announcement in the media, but apart from that he has really nothing to suggest.

The government's record on superannuation since 1996 shows that a significant amount has been achieved. The initiative announced by the government, A better superannuation system, will enhance the overall attractiveness, accessibility and security of superannuation. The policy builds on the government's outstanding record of achievement in retirement income policy and further demonstrates its commitment to assisting Australians to build financial self-reliance. The government put tax concessions in place which amounted to approximately $9.5 billion in 2001-02, and it has also moved quickly to deal with its election commitments. It allows working individuals aged 70 but less than 75 to make personal contributions to superannuation. This followed on from the government's earlier initiative that increased the age for voluntary contributions from 65 to 70 and increased the age for employer contributions to 70 years. It is allowing beneficiaries of the baby bonus to contribute to superannuation even if they have never worked before and parents, relatives and friends to make superannuation contributions on behalf of children of up to $3,000 per child over a three-year period.

The government has been extremely active in enhancing superannuation policy since it came to office in 1996. From July 2002, the attractiveness of superannuation was further enhanced by the government's initiative to increase the limit of full deductibility of superannuation contributions by self-employed persons from $3,000 to $5,000 while retaining 75 per cent deductibility on any amounts above this threshold. Other initiatives already implemented by the government will require employees, from 1 July 2003, to make at least quarterly superannuation contributions on behalf of their employees, further enhancing the security of superannuation, and from 1 July 2002 temporary residents will be allowed the option of accessing their superannuation benefits after they have permanently departed from Australia, subject to withholding tax arrangements. Progress is also well advanced on a number of measures contained in A Better Superannuation System to increase the attractiveness of superannuation. A discussion paper has been issued on the commitment to allow couples to split their superannuation contributions, ensuring that single income families have better access to ETP tax-free thresholds and two reasonable benefit limits in the same way that dual income families do.

Other elements of the announced package include committing the government to examining whether market linked income streams should be afforded concessional tax and social security treatment, reducing the tax on the excessive component of ETPs from superannuation funds to lower the tax-effective rate to no more than 48.5 per cent and reaffirming the government's policy of portability of superannuation benefits, which gives workers the right to move superannuation benefits from one fund to another. I really question why the Labor Party is so opposed to portability of superannuation. Why can't some of these thousands of funds that are lying around idle be gathered together to provide a decent benefit for workers? I would have thought that that would have been a fundamental staple of what the Labor Party would have been trying to protect.

It is very important to note the new measures that build on the government's previous achievements in superannuation and retirement income policy. These include: amendments to the Family Law Act 1975 to allow superannuation benefits to be split between couples who separate; the introduction of the superannuation spouse rebate, which allows individuals to make superannuation contributions on behalf of their low-income spouses; capital gains tax relief to allow the proceeds of a sale of a small business to be used for retirement income purposes; the removing of anomalies in the means testing arrangements for retirement income streams for pension purposes and encouraging the take-up of new life expectancy products which promote the prudent use of superannuation savings for retirement; capital gains tax reforms which amend the tax arrangements so that the nominal capital gains of superannuation funds are taxed at the concessional rate of 10 per cent when the assets are held for at least one year; strengthened preservation arrangements to help people accumulate larger superannuation benefits for retirement; the introduction of a retirement savings account—the government legislated to allow banks, credit unions, building societies and life offices to directly offer low-cost superannuation accounts; the establishment of the Australian Prudential Regulation Authority, in line with the Wallis committee recommendations; improved regulation for small superannuation funds— self-managed superannuation funds are now regulated by the ATO and are no longer subject to the full prudential requirements faced by larger funds; twice annual indexation of Commonwealth civilian superannuation pensions to the CPI from January 2002, increasing in real terms the benefits of some 100,000 superannuation pensioners; new investment rules to ensure that superannuation savings are not put at risk through investments with employers, trustees and their associates; higher tax rebates for senior Australians; and increased access to the aged pension and Commonwealth seniors health care card.

With respect to cuts to superannuation taxes, as part of its election commitments, the government announced a broad range of measures to improve the attractiveness of superannuation. These include: allowing couples, as I have said, to split their superannuation contributions; allowing superannuation contributions to be made on behalf of children; reducing the superannuation and termination payment surcharge rates by a tenth of their current level each year over the next three years—a maximum of 1.5 percentage points each year; increasing the deduction allowable for superannuation contributions made by self-employed persons; and allowing the people who receive the baby bonus to make contributions to a superannuation fund.

In relation to compensation to victims of theft and fraud, the government in section 229 of the Superannuation Industry (Supervision) Act 1993 has provided a framework for the grant of financial assistance to superannuation funds regulated by APRA which suffer losses as a result of fraudulent conduct or theft. Grants of financial assistance are subject to a number of conditions including: the loss must have led to a substantial diminution in the fund leading to the difficulty in payment of benefits; the appropriate minister must decide that public interest requires that a grant be made and must consult APRA on this issue; if it is determined that a grant be paid, it may be funded either from consolidated revenue or from a levy on certain superannuation funds.

The Labor Party continues to claim that the government has been inactive in relation to superannuation during the term of its government. It is quite clear that the government has made significant improvements to superannuation. In this respect, the Labor Party's motion fails.