Chris Bowen (Prospect, Australian Labor Party, Shadow Assistant Treasurer) Share this | Hansard source

The Superannuation Laws Amendment (2007 Budget Co-contribution Measure) Bill 2007 seeks approval for a one-off additional government contribution to the superannuation accounts of those people who made eligible contributions in the 2005-06 income year, as announced in last night’s budget. This legislation will effectively double the government contribution for those who have already made voluntary contributions in the 2005-06 financial year. The cost is estimated at $1.1 billion, with most payments being made in this financial year at a cost of $990 million. Labor is supporting this bill.

The co-contribution scheme grants a $1.50 government contribution for a $1.00 employee contribution, capped at a maximum government payment of $1,500. The current scheme allows the maximum government co-contribution of $1,500 to be paid up to the income threshold of $28,000 and phasing down at a rate of 5c for every dollar of income above the threshold and then completely phasing out at $58,000.

Up until 1987, the benefits of superannuation generally flowed to only 40 per cent of the workforce—in the main, middle- and high-income earners. The majority of low- to middle-income earners—often people in casual and part-time occupations such as retail, hospitality and transport, of which over 60 per cent were women—did not receive superannuation payments. It is one of the most abiding and proud achievements of the Hawke and Keating governments that that is no longer the case. Labor introduced a compulsory superannuation scheme using the principle of basic fairness to spread superannuation coverage to all employees earning more than $450 a month. This represents not just a critical social policy but also a very important economic policy. One of the biggest challenges that was facing this nation in the 1980s and 1990s was how to lift our savings rates, and the superannuation scheme was a huge addition to the national effort to do that.

Savings is no longer the issue that it was in the 1980s and 1990s. Today there is in excess of $1 trillion in superannuation savings, which has been overwhelmingly driven by the Superannuation Guarantee—the reform of the last Labor government. The government now pretend to be friends of superannuation. They vigorously opposed these reforms at the time. They criticise us for opposing some of their measures and say that they supported all of our good reforms in the eighties and nineties. They supported some of them but they did not support superannuation.

The one-off increase in the legislation that we are discussing tonight does deserve some comment. The one-off increase represents a rebuff to my honourable friend the Assistant Treasurer, who in a splashas I recall, it was a front page splash—in the Australian earlier in the year sought an ongoing expansion of the scheme for those up to 45 years of age. It was not a one-off payment but an ongoing expansion for many years to come—a major addition. This is not what we saw in the budget. The Assistant Treasurer, unfortunately, was clearly rebuffed in the Expenditure Review Committee.

The co-contribution scheme is supported by Labor and will be continued if Labor are successful in winning office later this year. We support any sensible and reasonable measure to increase the superannuation savings of Australians and, as such, we support this bill. However, there are a couple of inconsistencies that we feel duty bound to point out. Yesterday in the Australian, on the morning of the budget, there was a drop—a conveniently leaked article—which described the impending announcement as:

It is a way ... to help ... encourage younger people to invest in superannuation ...

Let us call this measure for what it is. This is an important addition to the superannuation savings of low-income earners. We accept that. That is why we are supporting it. But let us not pretend that it is something that it is not. Let us call it what it is. It is not an encouragement for people to put more money into superannuation. If that is what it is, it would be prospective not retrospective. We would be saying: ‘If you put in more money in the coming financial year, we’ll match it to a greater level than we have in the past. We’ll double our matching.’ But that is not what this is.

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