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Thursday, 28 October 1993
Page: 2777

Senator BELL (4.21 p.m.) —The Australian Democrats will be supporting the Superannuation Guarantee (Administration) (Exemption of Council Allowances) Amendment Bill, and I would expect the government to support it as well. As indicated by Senator Watson, this matter was the subject of the deliberations and the recommendations of the Senate Select Committee on Superannuation. I make no apology for reminding the Senate, as did Senator Watson, in part, of the recommendations of the committee. I will quote extensively from the committee's recommendations because I think they need recognition. Point 2.9 on page 145 reads:

The Australian Democrats propose that:

. local government councillors be exempt from the SGC unless they are on normal salaries; and

. the contractors provision be clarified.

These are two of several proposals that the Democrats put forward. Under the heading `Local government councillors', the government response reads:

The Government intends moving an amendment to the SGC legislation to remove a technical defect that seemingly brings local councillors automatically within the definition of `employee'. The Australian Taxation Office has advised that the word `payment' in the relevant clause of the Bill be changed to the word `remuneration'.

I will say a little more about that soon. The government response continues:

. . . this amendment will result in local councillors who receive salary or wages being covered by the Superannuation Guarantee. Other local councillors, who typically receive a monthly payment for attending meetings, will not be covered by the Superannuation Guarantee.

Senator McMullan, as parliamentary secretary, clarified and confirmed that when speaking on this matter on 24 June 1992. Senator McMullan was granted leave to incorporate a document in Hansard. Under the heading `Minimising impact on employers', the document stated:

As a result of consultations with the Australian Democrats and the recommendations of the Senate Select Committee, the Government has decided to move certain amendments to the Bill with the object of reducing the initial impact on employers.

The current exempt salary level below which contributions do not have to be made for an employee will be raised for $250 per month to $450.

That is relevant to local government councillors. It is a first step in looking at the typical sort of salary that the legislation would refer to. It is also an indication of the degree to which the government had consulted and made moves to change the way that this superannuation guarantee was to be applied. Further down, under the heading of `Local councillors', Senator McMullan's document stated:

The Bill presently defines "salary or wages" to include payments to local councillors.

The amendment proposed will replace the word "payment" with "remuneration" to make it clear that only payments for work done by councillors will be salary or wages. This amendment will also apply in respect of other Commonwealth, State or Territory employees.

I do not know whether the effect of that was fully understood by those who were required to interpret it, but I remind the Senate of the genesis of that movement. We were told—and I have just quoted this statement:

The Australian Taxation Office has advised that the word `payment' in the relevant clause be changed to the word `remuneration'.

Those of us who read and took note of that comment—this included Senator Cheryl Kernot and Senator Richard Alston—rightly assumed that that would be the way to get the technical defect addressed. But it seemed that it was not. When speaking on 24 June 1992 during the committee stage consideration of superannuation legislation, I thought Senator Alston interpreted the position correctly when he said:

The same can be said in relation to local government councillors. Our fundamental objection—

that is, that of the coalition—

is that a whole series of people are being unnecessarily swept up in this legislation to the extent that we will have many more inaccurate accounts than ever before. To the extent that this amendment at least makes it clear that only payments for work done by councillors will be salaries or wages, it is an improvement and is in line with the representations that have been made to us. We therefore welcome that amendment.

Senator Alston correctly interpreted from what had been said by Senator McMullan and from the recommendations that had been made that the amendment would be able to redress the situation. At the time, Senator Kernot said:

I agree with the comments of Senator Alston in respect to payments to a complying fund, local councillors and the consequent technical amendments.

I would have thought nothing could have been clearer. I would have thought nothing could have been clearer to anybody who was required to read the second reading speeches and interpret the intent of the government. However, as Senator Macdonald has explained—he is to be congratulated for bringing this matter forward—and as Senator Watson has observed, this interpretation has not been shared by the Australian Taxation Office. For the life of me, I cannot understand why because it was the Taxation Office that recommended this course.

  As Senator Watson noted, Mr Simmons, who should have known exactly what was intended, wrote to councils expressing the opinion and the intent of the government. I have a copy of the same letter that Senator Watson quoted from; and I think it is worth quoting from another part of that letter. The very first sentence reads:

I am writing to dispel any concerns your Council may have concerning the application of the Superannuation Guarantee (Administration) Bill.

The intent was to dispel concerns. The paragraph after the one that Senator Watson quoted reads:

The Government avoided arrangements that would have characterised elected members as employees of councils.

What could be clearer than that?

   I have been contacted by the Hobart City Council which has had a very blunt and clear communication from the Australian Taxation Office which flies in the face of the express intent of the government. The rulings that have come from the Taxation Office in relation to the Superannuation Guarantee Act deem—there is that famous word. It seems that it is possible to deem so much these days which is not fact. For the purpose of the convenience of those who are administering things, it seems too easy for deeming to ignore what is fact and certainly to ignore what is the intent of the government.

  The taxation ruling that I was shown by the Hobart City Council directly contradicted the Taxation Office's own recommendation to this government that the word `payment' in the relevant clause be changed to `remuneration' to indicate that those who were in receipt of those payments were not in fact employees of the council. As a matter of fact, the coincidence here is that before I came to this place I was an elected member of the Hobart City Council.

Senator Robert Ray —Don't apologise!

Senator BELL —I do not know whether to apologise or to spend time regaling the Senate with the wonderful time that I had there. One of the things that gave me the experience to comment on this particular situation is that the assumptions made in much of the decision making connected with this matter do not apply to that council at least. Even payments for attending meetings did not exist. The elected members of that council were not in receipt of such payments. In fact, no cash payments whatsoever were made. However, some benefits were derived. One was simply the replacement of petrol used in travelling on council business and another was the sharing of council meals during meetings. I would be struggling to evaluate those benefits. I hardly think that would qualify the elected members to be classified as employees.

  The intent in that situation was that those who were serving the community were in fact doing that and not receiving any payment whatsoever. I do not know how many other local governments in Australia are in a similar situation. I do not think it is right to assume that all elected local members are paid sitting fees. I think that is a pretty broad assumption and one which certainly does not accord with my experience or the experience of those who have spoken to me about this matter.

  I do not think there is any need to elaborate on this matter. The more talking we do on it, the more confused those who are trying to interpret the intentions of the government might become. I would have thought that the few things that I read were patently clear. How they can be interpreted in any other way beats me.

   The addition of a considerable amount of administrative mumbo jumbo, the cost to the community, the inconvenience to individuals and to local governments and discouragement from serving local communities—all those factors—have derived from this clumsy attempt by the Taxation Office to cover a loophole which I do not think exists. If the amendment moved by the government did not have the effect that it was supposed to have, I would also blame the government to some extent for not getting it right in the first place. I think that continuing the debate would only serve to confuse the matter.

  However, I cannot conclude my speech without making one observation. I think it is fair to make this observation because it is supported by Hansard. Normally, it is quite easy to induce a sort of Pavlovian response from Senator Ian Macdonald by saying the word `Democrat'. We usually get a lot of fuming, fussing, scratching of the ground, pawing of the dirt and steam escaping from the orifices. That is something which is fairly predictable; it is a Pavlovian response. But in this case, we have an initiative—which was a Democrat initiative—and we have a wonderful response from Senator Macdonald. I cannot let this opportunity go without congratulating him for seeing the benefit of some of the actions that we have taken.