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Thursday, 12 September 2019
Page: 2756


Mr THISTLETHWAITE (Kingsford Smith) (10:49): The Australian superannuation system is the envy of the world. Established by a Labor government in the early 1990s, it's grown to a pool of $2.8 trillion in investment funds to boost growth in the Australian economy and, more importantly, to provide for adequate retirement incomes for Australians, particularly as the population ages. It provides a platform for Australians to retire comfortably and also to avoid having to rely on the age pension, which has budget implications for the nation moving forward.

Labor is supportive of the Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2019, which seeks to tighten up the superannuation system and improve its efficiency. Schedule 1 deals with multiple employers and amends the Superannuation Guarantee (Administration) Act to allow individuals to avoid unintentionally breaching their concessional contributions cap when they receive superannuation contributions from multiple employers.

Schedule 2 relates to non-arms-length income and ensures that non-arms-length income rules for superannuation entities apply in situations where a superannuation entity incurs a non-arms-length expense in gaining or producing the income. These rules are designed to prevent the inflation of superannuation fund earnings through those non-arms-length activities—for example, schemes involving non-commercial arrangements that stream income to the superannuation fund. These activities are sometimes used to evade superannuation contribution caps. These reforms will tighten that up to ensure that that evasion is reduced.

Schedule 3 of the bill relates to limited recourse borrowing arrangements and amends the total superannuation balance rules to ensure that, in certain circumstances involving limited recourse borrowing arrangements, the total value of a superannuation fund's assets is taken into account in working out individual members' total superannuation balances. Changes made to legislation in 2016 have led to attempts by certain self-manned super funds to use limited recourse loans to manipulate their total superannuation balance in order to retain contribution cap space and eligibility for certain measures. Under the changes, in certain limited circumstances the total value of an asset owned by the fund will be counted as part of the balance, even if there is an outstanding loan against it.

These changes will also go to ensuring that there's more certainty and less risk associated with certain self-managed superannuation funds. We all know how investing in the property market in Australia—or indeed internationally—can be a risky proposition. These rules will ensure that not only is the scheme tightened up but also some of that risk is removed.

We know that when it comes to superannuation there is, unfortunately, a campaign that's being waged by certain members of the government to undermine the planned increases to the superannuation guarantee levy. This levy—the compulsory levy of contributions for Australian workers—is currently at 9.5 per cent. But, of course, it was supposed to be at 12 per cent today, under the original plan that was put together by the previous government. The Abbott government's move to freeze the guarantee at 9.5 per cent has already left many workers thousands and thousands of dollars out of pocket. Since then, wages have barely moved as well. We all know the challenges that many workers and their families are facing in Australia at the moment, particularly related to cost-of-living pressure, because incomes haven't been increasing in Australia. We've had the wage price index data stuck stubbornly in that two per cent area for the last half a decade. Despite the fact that company profits have been increasing at generous levels, around 13 per cent a year on average for the last few years, wages have been stuck at that two per cent level. It means that many Australian workers and their families are under enormous cost-of-living pressure. Adding to that is the fact that the government doesn't have a policy on energy and electricity prices have been going through the roof. Private insurance and other necessary expenses that families are forced to undertake each year have been going up and up, but wages haven't. This has been putting a lot of pressure on family budgets.

When savings are inadequate and wages growth is sluggish, the Liberals want to short-change almost 13 million Australians out of super increases that they need and deserve and that, more importantly, were promised by this particular government and the Abbott and Turnbull versions of it. The party of wage stagnation, the party that has seen rampant wage theft under its watch is now going after workers' superannuation as well. And when the additional 2½ per cent should go into super, they would rather it flow to the already-high company profits that have been fuelling a record stock market.

The same party opposed universal compulsory superannuation when it was attempted to be introduced by Paul Keating in the early 1990s. They've frozen it multiple times. The Howard government froze increases to superannuation at the compulsory level, and as soon as the Abbott government got elected that was one of the first things that they did—they froze the increase in superannuation. This government has continued it and they've tried to abolish the low-income superannuation contribution scheme that the previous Labor government put in place, which was aimed at ensuring that more women are encouraged to be in the workforce and that there is not a tax disincentive to people being involved in the workforce when they're working casually or part-time. They can lose a lot of the benefit of that through taxation, particularly taxation associated with superannuation. So that incentive was put in there to ensure that workers who work on an itinerant basis have an incentive to remain in the workforce. And it boosts the nation's productivity. Well, they got rid of that.

Those opposite even tried to weaken penalties for employers who don't pay the right amount of superannuation. We saw that they wanted to have an amnesty for employers who'd been ripping off workers and not paying the right amount of superannuation for years and years. They wanted to say: 'Well, okay, we'll just let them have a holiday on that. But from this point in time we'll try to make them abide by the rules.' That demonstrates their commitment to superannuation and boosting retirement incomes for Australian workers.

It's a fact that those opposite have never really agreed with compulsory superannuation, because they can't get over the notion that workers do a better job at managing retirement income pools than do the retail funds run by the big banks and the big investment houses in Australia. The industry funds' fees are lower, their returns are better, they are not for profit and they're run by a collective of workers through unions and employer associations, managing those pools of investment and retirement funds, and they do a consistently better job than the banks. Those opposite have never gotten over that. They've never gotten over that and they do all that they can to try to undermine that scheme whenever they get the opportunity.

Their latest attack is many of those on the opposite side arguing for a permanent removal of the staged increase in compulsory superannuation. Many have heavily contested this proposal. They base it on the research—that is disputed—from a think tank report that claims an increase in superannuation would lower the living standards of some Australians. But this conclusion is partly driven by the tougher pension assets test which penalises retirees for saving, and which the government introduced, with the Greens, to cut the pension for 370,000 pensioners and kick 88,000 pensioners off the pension altogether. Australians know that these are just excuses aimed at undermining and diminishing the retirement income system that Australians are so proud of—the superannuation system that the Liberals and Nationals have never believed in from the beginning.

The Prime Minister and Treasurer say that the superannuation guarantee will go to 12 per cent on the legislated trajectory. But I don't think they can be trusted on this because we know that in the past they had those freezes when Howard was in government. We know that there are many on that side—and here is one of them coming into the parliament now—who argue that there shouldn't be an increase in the compulsory superannuation and savings rate in Australia.

Mr Tim Wilson: That's not true! Mr Deputy Speaker, a point of order.

The DEPUTY SPEAKER ( Mr Rob Mitchell ): Look, before you raise a point of order, check that you know what a point of order is about! It's about deliberately misleading the House. He never used that term. You can resume your seat if you want to get up and speak in a minute.

Mr THISTLETHWAITE: The retirement incomes review could indeed become a stalking horse for more cuts to superannuation and worse, such as including the family home in the pension assets test. And yet the research from the Association of Superannuation Funds of Australia shows there continues to be a significant gap between the $640,000 that it recommends and considers necessary for a comfortable retirement for couples and what people are actually retiring with in Australia and accumulating at the moment. That's why it's so vital that the superannuation guarantee be lifted from 9½ to 12 per cent on the current legislated timetable, and analysis by Rice Warner shows that, without the further lift in super, most Australians will be forced to rely on the age pension for most of their retirement income.

From a budget perspective, from a living standards perspective and from a productivity perspective, that's not a good outcome for our nation. We should be encouraging more Australians to save more for their retirement, and a compulsory system that achieves that should be encouraged. But a gradual rise to 12 per cent would provide most with an adequate income after they finish working. And the balance on retirement for median workers will rise by 20 per cent for men and 19 per cent for women if that scheme is continued. But it's the positive impact for the poorest Australians that underpins the case for this legislated increase. Workers in the bottom 10 per cent of the incomes distribution will retire with an additional 30 per cent in accumulated superannuation balances if this legislated increase continues, and Australia's retirement savings system needs to ensure that that occurs.

We already have a $2.8 trillion pool of savings. It's bigger than our gross domestic product. It's bigger than the GDP of all but seven countries. It provides an important pool of investment funds for infrastructure development, for growth in businesses and for improved productivity in our economy. It has some imperfections; there's no doubt about that. But lifting the guaranteed rate to 12 per cent by 2025 is not one of them. When the adequacy of retirement incomes is a pressing challenge and when our ageing population puts pressure on pensions, Australians need more superannuation, not less. So the government must ensure that we're doing more, not less, to increase the compulsory rate of savings in this country, and the best way to do that is to stick with the legislated increase from 9½ to 12 per cent.

The government also needs to be doing more to combat superannuation theft and underpayment. I mentioned earlier trying give a holiday to big employers to ensure that, if in the past they haven't been paying their correct superannuation, there would be an amnesty for employers. That sends the wrong message. That sends the wrong message to Australian employers and to Australian workers about the importance of the compulsory superannuation system and getting those payments right in a timely fashion. In that respect, I move:

That all words after "That" be omitted with a view to substituting the following words:

"whilst not declining to give the bill a second reading, the House criticises the Government for not doing enough to combat superannuation theft and superannuation underpayment, which is costing Australian workers more than $6 billion every year".

The DEPUTY SPEAKER ( Ms Bird ): Is the amendment seconded?

Mr Perrett: I second the amendment and reserve my right to speak.