Dean Smith (WA, Liberal Party) Share this | Hansard source

I am glad to rise and make a contribution on this bill, the Tax and Superannuation Laws Amendment (2015 Measures No. 4) Bill, because it is one of those important, if not exactly very exciting, pieces of legislation that will better align our superannuation system with the realities of our day-to-day lives. The bill makes three changes—two to our tax laws and one, of course, to superannuation law. The two tax changes are part of the government's determined effort to make our tax system fairer and more robust, and I am sure that is an aspiration that all of us in this chamber would support. We want to make sure that everybody pays their fair share of tax and that there are no loopholes in our tax system that afford any unfair advantage to some over others based on their ability to gain the system. I would add to that coalition senators would also aspire to Australians paying the least amount of tax they possibly can.

These two changes are integrity measure that will remove the ability of certain companies, trusts and individuals to obtain an unfair tax advantage that was never intended for them. This will make our tax system harder to circumvent and more sustainable for the future. These changes will remove the ability for some entities to access tax relief from the Australian taxpayer when two merging companies are owned by the same people or the same business. This will be achieved by making definitions clearer and by ensuring that the integrity structure cannot be circumvented by businesses, trusts or companies. These changes will make our system stronger and easier to understand—a simpler, clearer set of rules for business is in the best interests of job creation and stimulating economic growth, which everyone would agree are the key priorities of economic reform for our country at the present time. However, the superannuation amendment in this bill is the aspect that is of most interest to me and to coalition senators, and is the focus of my brief contribution this evening.

This reform is about making sure we have a superannuation system that actually meets the needs of today's modern workforce. I am referring specifically to the fact that there are a large number of Australians in the community who have multiple superannuation accounts. It is a phenomena, I suspect, that is particularly widespread amongst younger Australians as they take employment opportunities, test their skills and decide for themselves what the vocations are that they aspire to in their later years. There was a time, probably more so in my parent's generation than in my own, that you took a job with one organisation or company and you stayed with that organisation or company right through your working career—that is certainly true of my father's working career—but for most Australians, and particularly younger Australians, these days are long gone.

We have a situation where people develop their skills and move onwards and upwards with various different employers. I think that is something that should be encouraged as young people and not-so-young people test their skills, move in and out of the workforce and take advantage of employment that best suits their particular needs or their family's needs at any point in time. That upward economic mobility, if that is a term I can use, should be celebrated. It makes us more competitive; it makes us more flexible; and ultimately it makes us a more prosperous nation.

But, of course, it also means superannuation accounts are being established, used to make deposits for a couple of years and then, more often than not, forgotten about as people move on to new opportunities and chose to go with new employers and their preferred or default superannuation fund. In fact, we know that about 70 per cent of Australians simply sign up with the default superannuation provided by their employer without any real active consideration in regards to its suitability or how it might fit with previous superannuation accounts that they might already have in existence.

We also know that 45 per cent of working Australians have more than one superannuation account. I suspect that trend is growing. I am sure a good many people have every intention of consolidating their hard-earned moneys into one pot but life does get busy and life does go on, and those sorts of administrative things more often than not get put off and get put off until they are forgotten about altogether. Consequently, these various amounts of superannuation sit idle and if you have a few accounts with money in them, these sums can total up to a significant amount over time. As we all understand when it comes to retirement incomes, every penny counts.

As the law currently stands, these forgotten accounts will be transferred to the Australian Taxation Office for safekeeping after five years if the provider has lost contact with the account owner and the account has less than $2,000 in it. The benefit of that scenario is that it can then be held until the original owner is found. While the ATO holds the account, the owner of the account is not being charged fees or premiums, which ultimately can swallow up or eat away at these savings and line the pockets of others instead of being used by the person who earned the money to fund their retirement in the first instance.

However, more significantly, the Australian Taxation Office will pay a reclaimed account with interest in line with CPI. That means we are not just preserving the superannuation account and protecting it from being frozen, but if the account holder is located and can be linked back to their superannuation account then the Australian Taxation Office will pay a reclaimed account with interest in line with the CPI—that has to be a good thing for Australian superannuation holders.

The provisions of this legalisation will boost that $2,000 threshold, which is quite a low balance in terms of superannuation accounts being held these days. The reforms contained within the bill will see the threshold gradually move to $4,000 and then progressively upwards to $6,000. This move will mean that more of these forgotten accounts can be captured and held until such time as they are reunited with the person who actually earned the money. This is an imminently sensible change, one that takes account of an increasingly mobile and flexible workforce. I will add to that: this is a very fair outcome.

This measure was first announced by the former Labor government in its 2013-14 budget. Quite soon after coming to office, though, the coalition announced that it would continue with this measure as intended. The government's decision to proceed with the increase to the small or lost member superannuation account threshold is a sensible measure. I have no trouble saying that. I am sure my colleagues—

Debate adjourned.