Chris Pearce (Aston, Liberal Party, Shadow Minister for Financial Services, Superannuation and Corporate Law) Share this | Hansard source

I rise today to speak on the Tax Laws Amendment (2009 Budget Measures No. 1) Bill 2009. This bill has three schedules within it. Schedule 1 first deals with a tax measure, particularly around changes to tax exemption for foreign employment income. Currently, there is a tax exemption for income that is earned by Australian residents working overseas for at least 91 continuous days. This exemption will remain in place for workers undertaking certain aid or charity work, certain government work and other work that is deemed to be in the national interest. For all other Australian residents earning income from foreign employment their income will be taxed under the Australian income tax system. Those taxpayers will get a rebate for any tax they have paid on that income to other countries to ensure that they are not double taxed. We are keen that the Senate have an opportunity to conduct an inquiry into this legislation, and into this schedule together with the others, to assess any unintended consequences of the government’s budget measure.

The bill also has another two schedules: schedule 2 and schedule 3. Both of these schedules go to the area of superannuation and changes that the government has proposed to the law relating to superannuation. I want to begin my comments today first of all by saying that it was only 12 days before the last federal election that the Prime Minister was on 4BC Brisbane radio. When asked about any changes to superannuation, the Prime Minister said:

There will be no change to the superannuation laws—one jot, one tittle.

That was 12 days before the last federal election. And here, now, we are dealing with a bill before the House of Representatives that substantially alters the laws relating to superannuation. Is there any wonder that Australians know the truth behind Labor’s broken superannuation promises now, and that this is a Prime Minister who cannot be trusted when he says that he will not make changes, particularly 12 days before an election?

Schedule 2 goes to the area of the superannuation co-contribution scheme. This is a scheme that was introduced by the former coalition government. The scheme was particularly designed to assist low- and middle-income earners and it was particularly designed to encourage those low- and middle-income earners to set aside some of their earnings and put them into superannuation. It was designed to do that so that these low- and middle-income earners could accumulate even greater levels of superannuation so that they could be more assured of a better quality of life in retirement.

What the coalition government did when we introduced this policy was to say that, for every dollar that a low- or middle-income earner put aside to look after themselves in retirement, the government would support them and pay $1.50 in addition to their dollar, again helping them accumulate a level of superannuation savings that would provide for them in the future. Regrettably, this bill proposes—and this is what the government has proposed in the budget—to temporarily cut the superannuation co-contribution scheme.

Let me go to this use of the word ‘temporary’. We in this House all know that when the Prime Minister and the government say ‘temporary’, they do not mean temporary. We heard that we were going to have a budget deficit for a temporary period of time, and now we know that we are going to have a budget deficit for years and years and years—as a matter of fact, long enough that I will not be here, probably. My children will be paying off that ‘temporary’ deficit, and yet the government has now used the word ‘temporary’ again in relation to the wind-back of this very good superannuation co-contribution program.

The government has proposed to wind back the program so that, instead of paying a 150 per cent contribution, it will wind that back to 100 per cent in the years 2009-10, 2010-11 and 2011-12. Then it will go back up to 125 per cent, they say, in 2012-13, then back to 150 per cent—where it is today—in 2014. But we all know that we cannot rely on this government, because we remember that it was the Prime Minister who said that there were not going to be any changes to superannuation laws—’not one jot or one tittle’. This measure will impact over 1½ million Australians. As a matter of fact, around about 1.5 million Australians received superannuation co-contributions in the year 2007-08. So that is almost 1½ million low- and medium-income earners who are now going to have superannuation ripped away from them by this government. They are not going to be supported by the government of Australia like they were.

Schedule 3 goes to the area of superannuation concessional contributions. In this particular policy area the government announced in the budget it will halve the concessional contribution caps that currently exist for people to put aside superannuation contributions so that they can save for their future. All of this means, in a nutshell, that Australians will now work longer, they will retire later and this government is asking them to live on less—less than they would have had under the previous government.

What is so concerning about these budget announcements to those of us in the coalition is that it is the first time in years and years that the government has said to Australians: ‘We don’t want you to set aside funds for your own retirement anymore.’ For years and years there has been a very much bipartisan approach to superannuation public interest policy in this nation, but now the government is actually saying to people: ‘We don’t want you to put aside as much and we’re not going to give you as much support. So even if you do try and put money aside we’re not going to support you in the way that we used to support people.’

This is a very troubling development, because the whole emphasis behind superannuation and the accumulation of superannuation for individual Australians has been the principle that all Australians, wherever possible in their daily lives and within their own circumstances, should be encouraged as much as possible to set aside savings so that they can be self-sufficient in their retirement and, secondly, so that they can have a comfortable standard of living in their retirement. Those have been the two overarching principles from all sides of politics in this nation: (1) an objective of trying to be self-sufficient and (2) an objective of ensuring quality of life and a comfortable standard of living.

Now, for the first time in many years, we have a government that is saying to low- and middle-income earners: ‘Don’t put aside as much and, whatever you put aside, we’re going to support you less.’ To other income earners, the government is saying: ‘We’re not going to allow you to invest in your superannuation in the order that we used to.’ That is what the government is saying to this group of people. It is saying: ‘Don’t put as much aside.’ The end result of both of those two things will be that Australians will put less aside for their retirement. The whole purpose of superannuation has been to enable people to be self-sufficient so that there will not be any need for them to access the public pension system.

These government changes are very short-sighted. They may suit the government in the short term because they might claw back over $4.3 billion worth of tax savings for the government which it desperately needs, given that it has got the country into such a terrible situation with debt. So they might serve the government’s short-term objective, but in the long term they are going to mean that more people will end up on the public pension system. How is that a good outcome for Australia going forward? If people save less today they will have less for tomorrow; and if they have less for tomorrow they will need to call on the public pension system. That will mean that the Australian taxpayers will have the burden of paying for the public pension system. So how can it be good policy to say to Australians: ‘Don’t put money aside for your own retirement. Don’t try and be self-sufficient. Don’t put as much in because if you don’t put as much in we’re not going to give you as much either’? These are retrograde changes which are deeply concerning for Australians because, yet again, the superannuation goalposts are being moved.

The government wanders about the countryside repeating the rhetoric about difficult times, the global financial crisis and the impacts of the world on Australia, yet on the other hand it is ripping away any degree of certainty that Australians have had about planning for their future. A lot of these particular changes have, of course, come out of the Henry income retirements paper that was released on the same day as the budget. The increase in the age for access to the age pension was part of that paper. Another recommendation in that paper was that the preservation age, the age at which Australians can access their super, should also be increased to align with the age pension age—in other words, from a maximum of 60, which is the current preservation age for super, up to the proposed 67. This has created an even higher level of uncertainty and instability in the Australian community because, yet again, Australians are very nervous about their savings plans for the future. As I said, this recommendation is part of the Henry report and the government has said that it is going to look at the entirety of the Henry report, which is due at the end of the year.

I noted that the other day the Prime Minister said on radio that he had ‘no plans’ to change the preservation age. Mr Deputy Speaker, I have to say to you that I do not believe the Prime Minister. I do not trust the Prime Minister. It was the Prime Minister who said 12 days before the last election that there would be no change to the superannuation laws ‘one jot or one tittle’, and now he is going on radio saying he has no plans to change the preservation age. Well, I do not believe him. When you are talking about the preservation age and access to superannuation you are talking about access to an individual’s private savings. When you are talking about access to the public pension you are talking about access to a taxpayer funded pension. They are two very different arguments indeed. What we have got coming out in the budget are these retrograde changes to the co-contribution scheme and the concessional contribution caps for superanuation. And we have got this recommendation coming out of the Henry income streams paper that is hanging out over there and says the preservation age should also be jacked up so Australians would have to wait even longer to be get access to their own money—not access to the public pension; we are talking about access to their own superannuation. This is again deeply concerning. This is why I say that what this government is on about is forcing Australians to work longer, forcing them to retire later and forcing them to live on less. What a trifecta for the Australian Labor Party. What a badge of honour for the Australian Labor Party.

I want to give credit to Paul Keating. I never thought I would actually be able to do that, but I want to give credit to him for the introduction of the compulsory superannuation guarantee contribution scheme. But I know, and this has been on the public record, that Paul Keating himself is horrified at what this government is proposing with this recommendation about lifting the preservation age. Superannuation in this country has always been supported with the intent that people should be encouraged as much as possible to save for their own time retirement so that they can be self-sufficient, so that they do not have to fall back onto the public pension. If you look the approach that has been taken for years, at one end of the spectrum you would have all Australians in retirement totally dependent on the public pension and at the other end of the spectrum you would have all Australians being entirely self-sufficient. Every government, of every political persuasion, for years has worked towards trying to move as many people from the left-hand side up to the top side to make them more self-sufficient. That is what Paul Keating had in mind. But now, for the first time in years, what we see coming out of the government by way of policy in relation to superannuation, and what we see coming out of this recommendation as part of the total Henry review, is the government encouraging Australians to take a hybrid position between those two points.

What the Labor government wants into the future is for Australians not to be entirely self-sufficient. It wants Australians to have a little bit of super, so they can draw on a little bit of their own savings, and it wants them to draw on the public pension as well. It wants them to take from both, instead of giving Australians the objective and the encouragement to save for themselves at a time when we are faced with the ageing of our population, a massive demographic challenge that we all know about and that the coalition government brought onto the agenda with the introduction of our intergenerational reports. Instead of facing up to the intergenerational challenges that we will have—that is, Australians growing older, fewer people working and so fewer people paying tax and fewer people funding the public pension—and instead of encouraging Australians to save for themselves, what this government is actually doing is discouraging people from doing that. It is saying, ‘We didn’t want you to do that anymore.’

It is the first time in years and years that a government of Australia has sent such a negative signal to the people of Australia. It is the first time in years that a government has said, ‘It doesn’t matter whether you’re a high-income earner, it doesn’t matter whether you’re a medium-income earner, it doesn’t matter whether you’re a low-income earner, we are going to whack your superannuation savings,’ because these budget measures impact on low-, medium- and high-income earners. Nobody in Australia who is striving to save for their future is exempted from this government’s policy changes in the budget.

That is what concerns us in the coalition; it concerns us greatly. The short-termist grab of over $4.3 billion in these policy changes might help the government reap back some tax savings in the short term, but you really have to ask yourself: what is it going to do in the long term? What is it going to do to our national interest? What is it going to do in terms of undermining Australians’ confidence in saving for their future?

This government lacks any degree of certainty in and around superannuation policy. We have the minister against superannuation—he used to be the minister for superannuation; now he is the minister against superannuation—as recently as the other day announcing a further review of superannuation, a further inquiry into the root and branch, the structure, of the superannuation system. What I find interesting about yet another review being announced by the minister is that in the last parliament he was actually a member of the Parliamentary Joint Committee on Corporations and Financial Services that conducted an inquiry into the structure and operation of the superannuation system, and that report has been sitting in the minister’s office since the day he was sworn in. He has not even bothered to respond to that report. Now he is off doing these other half-baked reviews with, I have to say, only select people on the reviews. There is nobody on this systemic review of superannuation who represents the self-managed superannuation fund industry and nobody who represents the retail funds sector, although these are two of the most substantial sectors in the Australian superannuation system. It is all very strange how we have these people who have been especially chosen—with a particular agenda in mind, I am sure.

So we are very concerned about these changes to superannuation, as I know Australians are very concerned about them. These changes undermine confidence in superannuation for the first time in years and years. The government’s superannuation contributions for low- and middle-income earners have been slashed by a third, while tax relief for people who want to put in their own superannuation contributions has been cut in half. The end result, as I said earlier, is the trifecta that the Labor Party has come up with: Australians needing to work longer, retire later and live on less. This is from a Prime Minister who, 12 days before the last election, said:

There will be no change to the superannuation laws, one jot, one tittle.

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