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Tuesday, 15 September 2015
Page: 6866


Senator CAMERON (New South Wales) (18:27): At the outset I inform the Senate that Labor's position is to support the Tax and Superannuation Laws Amendment (2015 Measures No. 4) Bill 2015. I expect that would not be surprising to anyone who followed the debate on this bill in the other place, given that two-thirds of the bill are measures from previous Labor budgets. The bill implements previous Labor integrity measures on capital gains tax, rollovers and lost member superannuation accounts, and it unifies the tax treatment of all civilian and Australian government employees who work overseas. It is greatly pleasing that the government is proceeding with some of the measures that Labor had planned to implement. Up until recently, you could have been forgiven for thinking that the sole purpose of the government was to tear down prior achievements of Labor governments. So, it is good to see a tax and superannuation laws amendment bill that indeed implements these sensible integrity measures.

Going to schedule 1, improving the integrity of the scrip-for-scrip rollover, we welcome the government's move to implement our integrity measures on scrip-for-scrip rollovers. The scrip-for-scrip rollover regime ensures that tax considerations are not an impediment to takeovers or mergers involving companies or trusts. Recent court cases have shed light on the tax minimisation opportunities arising from ambiguity in the existing legislation. This reform, first announced by Labor in 2012, prevents entities from indefinitely deferring capital gains tax obligations and greater consistency to the taxation of trusts.

Schedule 2 is the exemption of income earned in overseas employment. The opposition is comfortable with the government's efforts to boost the integrity of our personal income tax system by standardising the tax treatment for workers delivering overseas development assistance. This integrity measure improves the consistency of our personal income tax system by upholding the principle that Australians should pay tax on their earnings somewhere. This provision was originally introduced to ensure that aid workers working overseas were not taxed on their income both in Australia and in the source country. However, the provision no longer serves this purpose, with Australians working overseas often able to avoid income tax in both jurisdictions.

While we welcome efforts to tighten the tax net, I contrast the government's approach to the issue of double taxation of individuals with its approach to the double taxation of corporations. Earlier this year Labor announced a multinational tax package which included a measure for tackling hybrid instruments. Under our proposal, we are allowing the Australian Taxation Office to look at how a hybrid instrument is treated by an overseas jurisdiction essentially to ensure that a hybrid instrument could not, effectively, avoid tax in multiple jurisdictions. It is striking that, while the government is willing to tackle this issue in the case of aid workers, it is not willing to tackle the same issue when it comes to big multinational corporations. The principle is a sensible one. Multinational corporations are looking at how a hybrid instrument is treated by the tax regime of another country and how it is treated by the Australian Taxation Office. The Australian Taxation Office should not be blind to the way in which an overseas tax office treats a hybrid instrument.

Unfortunately, while the Treasurer has been talking about acting on multinational tax for over a year and we have heard, again, the promise that he will act, we are yet to see actual legislation. By contrast, Labor's multinational tax plan, announced in the first half of this parliamentary term, would raise more than $7 billion over the decade. It is informed by work in the OECD and has been carefully costed by the Parliamentary Budget Office.

Schedule 3 of this bill covers the small lost member account threshold. Labor will support raising the threshold at which the government collects small lost member superannuation accounts. Labor invented Australia's universal superannuation system. It was fought hard against by the coalition at the time. When the Keating government introduced universal superannuation in the early 1990s, those opposite railed against universal superannuation. I remember going out and fighting for this on the job as a union official, trying to get equal access to superannuation for blue-collar workers, predominantly in places where white-collar workers had access to superannuation but blue-collar workers did not and where white-collar workers could vest their superannuation and blue-collar workers could not—all issues opposed by those opposite.

Before the 1996 election, the coalition promised not to tinker with superannuation but then froze the superannuation contribution rate throughout the period of the Howard government. History repeated itself in 2013 when the then opposition promised that they would not make adverse, unexpected changes to superannuation but went ahead and froze the super contribution rate at 9½ per cent, not allowing it to continue on its planned trajectory to 12 per cent, which would have guaranteed a more dignified retirement for many Australians.

The system of collecting lost member accounts is sensible. It is easy for Australians to be reunited with their lost superannuation accounts using a simple tool available on the tax office website. But the decision that the government made in the past was that when accounts fell below a certain amount they should be transferred to the Australian Taxation Office to ensure they were not completely eaten up by fees and charges. Many young people know the experience of moving from casual job to casual job, ending up with a collection of superannuation accounts and wanting to consolidate those accounts. Before we had the lost super regime, those accounts would often be gone within a matter of months. Thanks to the lost super regime these accounts, when found, contain a reasonable chunk of money—about what the individual put in.

In May 2012, Labor increased the threshold at which an account could be shifted to the ATO from $200 to $2,000. In the 2013 budget, Labor proposed an incremental increase in the threshold from $2,000 to $6,000. I note in passing that when it comes to unclaimed moneys the coalition is happy to run a scare campaign with crazy talk of 'trousering', with the suggestion that anyone who believes in having a different duration after which bank accounts should be moved to the government is somehow trying to steal people's money. At the same time we have a government bill in the Senate whose effect is going to be to move more superannuation accounts to the government. The principle in both cases is the same: we want to make sure that people who have lost their bank accounts or their superannuation accounts do not find them again only to discover there is nothing in them. We also want to guard against the possibility that someone who has simply not accessed an account for a while may not want it transferred to the government. The thresholds—duration or financial—aim to get that balance right. But the government is clearly pursuing an approach to superannuation accounts that is somewhat different from its approach to bank accounts.

In the spirit of constructive bipartisanship, Labor will support this measure. We do so knowing that, as of 30 June this year, over 14 million Australians have a superannuation fund account and approximately 45 per cent of these people have more than one account. We know, through figures from the Australian Prudential Regulation Authority, that the median figure for fees and charges for low-cost superannuation accounts is $532 a year. If a person has a superannuation balance of $1,000, they will see it entirely eroded by fees and charges in a couple of years. That is the principle of lost super laws, which see accounts moved to the tax office when they fall below a certain threshold—currently $2,000 but, under this bill, $6,000. These measures will, hopefully, ensure that low wage workers and those working casual jobs are able to retire in more dignity, knowing that their accounts have not been eaten up by fees and charges.

At the same time, it is not possible to talk about super in this place without acknowledging that there is only one party of government in this parliament who believes that our superannuation tax concessions are not fair and not sustainable. The age pension is set to grow around five per cent a year over the next four years. The government says that the age pension is out of control because of that, but superannuation tax concessions are growing at more than four times this rate. The earnings concessions alone are set to double over the next four years to more than $30 billion. It will soon be the case that we spend more on superannuation tax concessions than we spend on the age pension entirely.

A Grattan Institute report on tax reform found that more than half of the benefits of super tax concessions go to the top 20 per cent of households. Indeed, the top one per cent of households gains more from our super tax concessions than the bottom 40 per cent. To improve the fairness and sustainability of our superannuation system, the opposition has made clear that we will ensure that earnings in excess of $75,000 in the retirement phase are taxed at a concessional rate of 15 per cent rather than being tax-free. This represents a partial unwinding of one of Peter Costello's many imprudent decisions in the late phase of the Howard government—this one removing entirely the tax-free status of earnings in the pension phase. That is a measure which has disproportionately benefited high-income earners and done little to take pressure off the age pension but instead had the effect of acting as a windfall for those who are able to recycle their earnings through the superannuation system.

Labor do not propose to entirely reverse that Costello decision of 2006. But we do propose, if we are fortunate enough to win government, to ensure that earnings over $75,000—and just the marginal amount over $75,000—are subject to a 15 per cent tax rate. We have also indicated that we will lower the threshold for the 15 per cent high-income superannuation charge from $300,000 to $250,000. Those two measures together save the budget in excess of $14 billion over the decade. They are responsible, they are fair and they will put our superannuation system on a more sustainable footing for the future.

Labor is hardly a voice in the wilderness amongst those who believe that our superannuation settings need to change. We can go through those who support some changes to our superannuation system, and we will start with the Secretary to the Treasury, John Fraser. The government's own tax white paper asked the question, 'Are Australia's superannuation tax concessions sustainable?' A range of groups across the political spectrum have called for the government to engage in a sensible debate over superannuation tax concessions. They include the Association of Superannuation Funds of Australia, the Business Council of Australia, the Australian Council of Social Service, AustralianSuper, the Grattan Institute and Rice Warner actuaries. Indeed, the recent reform summit cosponsored by The Australian newspaper and the Financial Review newspaper saw, as part of its communique, a recognition that we need to look carefully at our superannuation tax concessions. We need to make sure that they are fair for this generation and fair for generations to come, such as students.

What does the government have to say about these unfair and unsustainable superannuation concessions? It depends on who you ask in the government, as with many things. The Treasurer—for the moment—Mr Hockey, has refused to rule out changes, but the former Prime Minister slammed the door on him, having said that there would be no changes whatsoever. Now it falls to the new Prime Minister, Mr Turnbull, to set aside the policy approach of his predecessor and engage with the opposition in some constructive reform.

Labor's policy on superannuation is one which has been announced early in this term of government. We did that in order to promote exactly the sort of healthy public debate that I know some on the opposite side of the chamber believe in. We recognise that superannuation changes are not universally popular, and that is why we have begun the community conversation about Labor's changes. Yes, they raise $14 billion over the next decade, but they do so by reversing a Peter Costello change, which I hope those opposite no longer believe was a fiscally prudent one, and by changing the high-income superannuation charge.

But the real question here is where the government stands. It is unusual for a member of the opposition to be saying this, but we do not know. Mr Hockey does not want to rule out any changes, but the Mr Abbott did want to rule out changes. What does Mr Turnbull believe? We know indeed that the government was considering making superannuation changes right up until the day Labor announced its policy package. Indeed, plausibly, some of the talented Treasury officials sitting in the boxes today were working on the memorandums that we know— thanks to freedom of information laws—were being sent up to the government during this period. We know that there were four briefs that went to the government in the lead-up to the 2015 budget, but they stopped on a particular day. No prizes for guessing which day that was—that was the day that Labor made its superannuation announcement. How is that a coincidence? As always, we have the government playing politics over the policy.

Let us be clear: when we are talking about superannuation, as this bill does, we need to recognise the role of the superannuation tax concessions. They do two things. They recognise the public benefit in reducing the number of people who claim the age pension, and they recognise the public benefit in having a larger pool of savings. That second public benefit is tangible and was important in the global financial crisis but surely must be accorded less weight than the first. For people with multimillions in their superannuation accounts, Labor says: 'Good luck to you. Congratulations, but you should not necessarily be claiming the same superannuation tax concessions as you did in the past.'

Labor's policy is costed and sustainable and is something which I hope the government will engage on. I hope the government will go back to those excellent briefs which I am sure were being prepared for them by the Department of the Treasury in the lead-up to Labor's announcement and will come to a bipartisan consensus with Labor to make sure that our super tax concessions can be sustainable in the future. We have no problem with the government's proposal to increase the threshold for collecting lost members' accounts, but we want to make sure that the government engage in the bigger conversation over superannuation concessions. It is such an important conversation, particularly for those of us on this side of the chamber, who were responsible for creating universal superannuation and who will continue to defend a strong and accessible superannuation system.

Labor calls on the Prime Minister to get over the false start that he has had, the bad start that he has had, as Prime Minister of this country by conceding to the claims of the National Party to do things that are not in the national interest and only in a sectional interest. Prime Minister Turnbull has not started well. Prime Minister Turnbull has started by caving in to the National Party, and we know what that means in terms of good economic policy in this country. If you cave in to the National Party, you end up causing problems for the economic future of this country. The National Party are narrowly focused. The National Party are concerned only for their own interests, not for the interests of the regions that they have seats in. They do not look after rural communities and they do not look after Indigenous communities; they do not look after their health and they do not look after their education. Yet this new Prime Minister has caved in to the Luddites in the National Party. He has started off weakly; he has started off badly. It does not fill anyone with confidence that there will be any change. We know there will be no change because we know this Prime Minister supports the first bad budget, so he supports bad economics and bad policy.