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Thursday, 12 September 2019
Page: 2752


Mr STEPHEN JONES (Whitlam) (10:26): This Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2019 concerns superannuation and the taxation treatment of superannuation. I can see members of the public who are in the public gallery now getting very excited about this subject matter!

The bill does three things. Firstly, it amends the Superannuation Guarantee (Administration) Act 1992 to allow individuals to avoid unintentionally breaching their concessional contribution caps. The concessional contribution caps of course are the concessional rates of tax that apply to employee contributions to their superannuation funds. Pre-tax contributions to a superannuation fund, or eligible contributions, attract the concessional taxation rate of 15 per cent upon those contributions, generally up to $25,000 per annum, as opposed to the marginal rate of tax that would otherwise apply to that portion of the employee's income.

It is the case that an employee that has multiple engagements could unintentionally breach this concessional contributions cap. It doesn't apply to a large number of taxpayers; it kicks in at around about $250,000 per annum. That's about what you would have to be earning before your natural contributions would exceed $25,000 per annum. So it's a small class of taxpayers who are working in a series of part-time jobs which are going to give them a compound annual salary of $250,000 per annum or more and, therefore, the SGL-driven contributions are a little over $25,000 a year. Perhaps directors who have multiple directorships on boards would trip the concessional contribution cap and there may be other highly paid professionals who fall into the category as well. We support the legislation.

Here's how it works. Instead of receiving contributions into superannuation, an employee may apply under the legislation to the commissioner to opt out of the SG regime in respect of an employer and negotiate with that employer to receive additional cash or non-cash remuneration. That part of the bill is absolute common sense and we're going to support it.

The second part of the bill deals with non-arms-length income rules for superannuation entities, which apply in situations where a superannuation entity incurs non-arms-length expenses in gaining or producing that income. These non-arms-length rules, quite simply, are designed to ensure that the concessional taxation arrangements for superannuation funds are not being abused; that the fund is being used not as a tax planning tool but as it was originally intended to be used by this place over successive governments—that is, as a means of saving for retirement income. So this part of the bill is about closing down loopholes and ensuring that the non-arms-length income provisions prevent the inflation of superannuation fund earnings through non-arms-length dealings. The amendments seek to remove any ambiguity and ensure that superannuation entities cannot circumvent the provisions by entering into schemes with non-arms-length expenditure. It sounds complex; it's not really. It will apply mainly to self-managed superannuation funds so that they are not being used to circumvent the proper purpose of the tax concessions designed to apply to them.

Finally, schedule 3 of the bill addresses the limited recourse borrowing arrangements. It amends the total superannuation balance rules to ensure that, in circumstances involving the limited recourse borrowing arrangements, the total value of a superannuation fund's assets is taken into account in working out an individual member's total superannuation balance. In Labor's view these are all sensible adjustments and we'll be supporting the bill in its current form.

I do want to note that this is not the first time this bill has come before the parliament this year. A bill was introduced in the Senate in June 2018, in the 45th Parliament, and that version of the bill did have a noxious provision within it. It included an additional schedule that would have introduced a one-off superannuation guarantee amnesty for employers who had done the wrong thing in not complying with payments of the superannuation guarantee to their employees—that is, they had not been paying their employees correctly. This schedule was not supported by Labor as it would have retroactively legislated to legalise employers withholding employee entitlements, something that, quite simply, we could not agree to. I'll say a little bit about this.

A parliamentary inquiry into the bill overwhelmingly found that the calls for an amnesty were coming from the employers—perhaps not surprisingly—and not from the superannuation industry, representatives of employees or, indeed, employees themselves. Labor welcomes the fact that that deeply unfair schedule has been removed from the bill in its current form. It does not obviate the need for us to do something about what I will describe as 'superannuation theft' in this country. The government should have attached to this bill an appropriate provision that deals with that matter.

Could I say something about superannuation theft. That's the way we should be describing it, because it is the deliberate nonpayment of an employee's superannuation entitlements, robbing the employee of a part of their pay and, more importantly, robbing them of the means to provide for a decent and secure retirement income. About 2.94 million workers lose around $5.9 billion—close to $6 billion—in unpaid superannuation a year. I'll say that number again because it's a very big number: about 2.9 million workers—close to three million workers—losing $6 billion a year in unpaid superannuation. Now, if this were occurring in any other area of the economy there'd be outrage, and quite frankly I can't understand why there isn't a long line of government speakers saying they want something done about this.

While unpaid superannuation affects every income decile, we know that low-paid workers are stolen from the most—particularly young workers, who are also more likely to miss out, reflecting their relative vulnerability to exploitation within the labour market. Since 2013, the number of Australian workers missing out on their superannuation has increased by more than 90,000, the equivalent of $300 million in unpaid superannuation. This crime warrants more of the parliament's attention. It's deeply disappointing that the government is not doing more to combat and to call out this growing issue. Six billion dollars; three million Australian workers not being paid correctly. They are being deprived of their right to save for a decent retirement income.

Another important thing to say about this is that those businesses who are doing the right thing, who are paying the superannuation guarantee levy or additional payments on behalf of their workers in accordance with the law and in accordance with the industrial instruments applying to their workplace, are being disadvantaged because of the unscrupulous acts of unscrupulous businesses who are not paying their employees correctly. They're getting a $6 billion per annum windfall, which is disadvantaging not only their workers but also their competitors. They are getting an unfair and illegal $6 billion a year advantage over their competitors because they are doing the wrong thing. It is incumbent upon this place—it is incumbent upon the government—to do something about this.

As with many pay disparities, the problem of unpaid super also disproportionately affects women. For example, women are more likely to be workers earning less than $450 a month in casual and low-paid work, and therefore quite often not eligible to take advantage of the superannuation guarantee legislation. Now, I note that recently the Australian tax office reported on its efforts to recover the superannuation of 250,000 workers. I commend them for going after the employers who are doing the wrong thing to those 250,000 workers. But when you compare the 250,000 workers who they were able to chase superannuation payments for to the three million workers who each year are being deprived of their lawful superannuation payments, you can see that this enforcement action is just the tip of the iceberg. There is a great need for more action by the regulators and the Australian tax office, but also an increase in penalties and compliance action in the growing number of superannuation theft cases.

Sadly, the government is going in the opposite direction. They've cut over 4½ thousand jobs from the Australian tax office over the last six years. Is it any wonder that we are only capturing a minute fraction of the superannuation theft in this country? Much more needs to be done. If the government want our full support in this area, they'll bring forward another bill into this House, one which has a fair dinkum go at addressing the growing problem of superannuation theft in this country. Three million workers are being robbed of $6 billion a year. That's simply not good enough. We support the amendments which are addressed at improving the circumstances for high-income earners, ensuring they do not unintentionally breach the contribution caps. But we'd like to see a lot more work done for the, on average, low-income workers who are losing $6 billion a year in superannuation payments. We commend the bill to the House.