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Thursday, 28 October 1993
Page: 2775

Senator WATSON (4.14 p.m.) —I rise in support of Senator Ian Macdonald's private member's bill which I believe remedies a defect and fulfils a promise that was made by the government during the passage of the Superannuation Guarantee (Administration) Bill. I would like to point out that the position of councils at the present time is quite unfair. It is this unfairness that my colleague Senator Macdonald, a Liberal from Queensland, seeks to rectify.

  He wishes to ensure that the superannuation guarantee levy can be paid on behalf of elected councillors and aldermen. As a result of this contribution on their allowance, they could be ineligible for deductibility for private superannuation, particularly if 10 per cent or more of their income comes from a source which provides employer superannuation support.

  It could have the impact of discouraging people from volunteering their services to become aldermen or councillors. This is unfair. It is something that the government never intended. It is something the government indicated quite strongly it intended to rectify but has not done so. I pay tribute to Senator Macdonald for his initiative.

  It is appropriate that I begin with a reference to page 145 of the second report of the Senate Select Committee on Superannuation. There the government made a formal response to the issue of local government councillors and the operation of the superannuation guarantee legislation—an issue which I must acknowledge was raised by the Australian Democrats at the time. This response was instrumental in gaining the Australian Democrats' support for the superannuation guarantee charge legislation package last year.

  At the time the government publicly stated, by means of this response, that it intended to move an amendment to the superannuation guarantee charge legislation to remove what the government itself characterised as a technical defect. The government said that it `seemingly brings local councillors automatically within the definition of employee'.

  The government's response went on to state that local councillors who received a monthly payment for attending meetings would not be covered by the Superannuation Guarantee Administration Act. These statements were made in a report issued June 1992, some 15 months ago or more. The government's apparent intention at the time to exclude these particular councillors is clearly set out in a letter that the former Minister for Local Government, the honourable David Simmons, wrote to local councils in July 1992. His letter stated:

As far as Local Government elected members are concerned the new superannuation arrangements will only apply to councillors who are in receipt of salaries.

Honourable senators should note the distinction between that and allowances. Yet section 12(10) of the Superannuation Guarantee Administration Act unequivocally states that a person who holds office as a member of a local government council is an employee of that council. Further, the definition of local government councillors' salaries or wages in section 11(1)(e) is so wide as to include mere allowances paid in respect of attending council meetings.

  What conclusion can then be drawn from the sharp contradiction between the legislation and the government's statement which has been made more than once on the public record. It is generally accepted that the government's failure to effect its promises on this particular issue is not a result of political dishonesty. Is it just pure indolence?

  What is the government undeniably guilty of? Is it incompetence in drafting and promulgating legislation contrary to its own publicly declared position and intention? Or is it indolence in failing to act or even to show the slightest inclination to act to remedy this incompetence or defect? It is difficult to decide what sort of culpability is worst—dissembling and dishonesty or indolence and incompetence. I leave the government to judge that.

  It confers no credit on a government when an opposition has to be relied upon to repair legislatively the damage wrought by the government's inability to execute properly its own promises. It is fortunate that the opposition's spokesman on local government, Senator Macdonald, has proved to be equal to the task of remedying the government's carelessness. He has introduced a bill which effectively and succinctly removes those local government councillors who receive only limited allowances arising from the execution of their duties from the operation of the superannuation guarantee legislation. Such a result is consonant with the reasonable and intelligent view that councillors whose substantive form of employment or work is not with a council of which they are members and whose payment reflects this reality, cannot then be considered, according to Senator Macdonald, as employees.

  The Income Tax Assessment Act articulates this view of their proper status by virtue of section 221A(1). This interpretation section specifically excludes payments by way of remuneration or allowances to a member of a local governing body from the meaning of `salary or wages' under the PAYE system. Therefore, to argue that to remove local government councillors of the type with which we are concerned from the ambit of the superannuation guarantee charge is discriminatory or confers some sectional interest is to misapprehend the nature of their employment as well as their remuneration.

  In conclusion, while this is just one problem caused by the superannuation guarantee charge, it is a problem which I believe is very easily remedied by this private member's bill introduced by my colleague Senator Macdonald. I believe that there are greater and more serious problems with compulsory superannuation, but their very gravity means that they are more intractable, at least in so far as it is within the opposition's power to effect a change in the short term. Further, it is a problem which the government has admitted and has promised to fix. The government should, on the basis of its own words, have no difficulty in accepting the amendments in Senator Macdonald's private member's bill.

  We cannot afford, in effect, to penalise those who seek to serve the community as local government representatives for no real remuneration. This clearly is what the present provisions do. I therefore commend the amendments in this private member's bill, organised by my colleague Senator Macdonald, which overcome this very unsatisfactory situation. I commend the private member's bill to all my colleagues in the Senate.