Belinda Neal (Robertson, Australian Labor Party) Share this | Hansard source

I rise to speak on the Superannuation Industry (Supervision) Amendment Bill 2010. At a moment like this it is important that we examine the bill and ensure it is compliant with the grand policy position that the Labor Party has always pursued, which is to guarantee the retirement incomes of working-class people. This bill amends section 67 of the Superannuation Industry (Supervision) Act for the purpose of reducing the risk posed to superannuation funds invested in limited recourse borrowing arrangements. In straightforward terms this bill seeks to protect the superannuation savings of Australians by prohibiting superannuation fund trustees from borrowing money against assets in a way that exposes those assets to the risk of loss as a result of a default on the loan.

This bill amends the act to make sure that superannuation fund assets are protected in the event of a default on a limited recourse borrowing arrangement by ensuring that the right of the lender to recover against the superannuation fund in the event of a default is limited to the asset in question. This bill ensures that the term ‘asset’ will now be read in the singular so that it cannot be interpreted as allowing borrowing arrangements of multiple non-identical assets. This definition does permit borrowing arrangements over assets that are known collectively as a single asset or a single collection of identical assets. Also, the asset within the arrangement can only be replaced in prescribed circumstances that arise from owning the original asset. These amendments respond to issues arising within the regulatory framework surrounding superannuation investment which were raised by the Australian Taxation Office, the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission.

This bill is a further step in a genuine trend by Labor governments to progress policy in relation to retirement incomes and to safeguard the retirement incomes of Australians. This is a good opportunity for us to examine some of the history of superannuation and retirement incomes. A fairly cursory examination shows that Labor governments have achieved a great deal while our conservative colleagues have a history of failure and vacillation. Bills such as this provide a good opportunity to look at those issues. Back in 1900 the New South Wales Labor government introduced a means tested age pension of ₤26 a year. It would be pretty hard for us to live on that amount today but I assume it bought a lot more then than it would now. This was funded out of general revenue; it was a pension rather than a superannuation scheme. This scheme was replicated in Victoria and Queensland shortly thereafter.

In 1901 the Constitution established that the Commonwealth should have express power to legislate on the provision of aged care and invalid pensions. This has subsequently been interpreted to include superannuation—a very important step. In 1923 the conservative Nationalist government of Stanley Bruce established a royal commission to examine the possibility of a comprehensive national insurance scheme—which I suppose could be described as superannuation—but, after receiving the results of that royal commission, chose not to introduce the bill, which was known as the National Insurance Bill.

It is quite interesting to examine Stanley Bruce. It is a little-known fact that he was the only Prime Minister other than John Winston Howard to lose his seat in a general election. So he was outstanding not only for his failure to take action on superannuation but also for his electoral fortunes. He was also awarded a peerage to the House of Lords, which he took up later in his life. So, all round, he was a fine and outstanding member of the conservative political community.

We then had to wait until 1945, when Ben Chifley’s government introduced an additional levy on personal income tax which was credited to the National Welfare Fund. There was initially no direct relationship between the National Welfare Fund and pensions but it was envisaged that it would form the basis for a national superannuation scheme some time in the future. However, political events intervened and no further steps in this direction were taken.

At the time of the election of the Whitlam government in 1972, only 32 per cent of workers were covered by superannuation. For many people, particularly for working-class Australians, retirement meant a period of near-poverty and difficult circumstances. This was particularly the case for people who did not own their own homes and for whom the pension was their sole source of income, which can be quite difficult. In 1973 the Whitlam government established the National Superannuation Committee of Inquiry, chaired by Keith Hancock. It made a number of recommendations in 1975. In particular—and I think this is still important—it recommended that pensions be pegged at 25 per cent of average weekly earnings. That is a principle we still adhere to, and I think many people who rely solely on the pension still find it a very important principle.

The Hancock inquiry recommended a partially contributory universal pension scheme with an earnings related supplement. A minority recommendation suggested a non-contributory flat rate universal pension, a means-tested supplement and the encouragement of involuntary savings through expanded occupational superannuation. Labor again clearly put superannuation on the political and national agenda.

With the election of the Fraser government: further inaction. The Fraser government decided in 1977 not to establish a contributory national superannuation scheme—something that I think would have been greeted with a great deal of disappointment by many people out there in the community. He went on in 1979 to reject the recommendation of the Hancock inquiry, which recommended regular increases in pensions. I think the period of the Fraser government was very difficult for people on limited incomes and those who relied solely on the pension—a phenomenon that was repeated during the period of the Howard and Costello government.

In 1983 with the election of the Hawke government there was strong support for superannuation. It was certainly part of the political agenda as I recall. The May economic statement after the election began the process of reforming the taxation of superannuation: for lump sums at age 55 or later, the first $50,000 would be taxed at 15 per cent, the remainder at 30 per cent; and lump sums taken below age 55 would be taxed at 30 per cent.

People may recall that in 1986 Labor joined with the ACTU in seeking a universal three per cent superannuation contribution by employers to be paid into an industry fund or in lieu of a wage rise. That was a major principle embraced by Labor and the union movement to say that it was important for superannuation to be accumulated and that it was a partial way of those employed in the workforce to be paid and to ensure that in retirement they could rely on a standard of living close to what they enjoyed during the time they were working.

In 1988 only 51 per cent of people had their own superannuation. In 1989 the conservative government established the policy in Australia based on the twin pillars of age pension and private superannuation, therefore rejecting the idea that there should be some sort of compulsory superannuation. This tended to mean that those who were on lower incomes, working members in Australia, were less likely to have superannuation while those on high incomes were able to take advantage of superannuation and the beneficial taxation arrangements.

In 1991 in the budget, Treasurer John Kerin announced that from 1 July 1992, under a new system to be known as superannuation guarantee, employers would be required to make superannuation contributions on behalf of employees. This was groundbreaking not only in Australia but internationally. The argument I am putting forward today is that the superannuation system that we enjoy in Australia and the beneficial retirement incomes that will be enjoyed by Australians for many years to come is a direct result of the policies and far-reaching vision of Labor in government.

The superannuation guarantee also extended retirement savings to 72 per cent of workers—a sudden leap of 22 per cent in one stroke of the pen, essentially. Super contributions were to be progressively increased from 1992 to 2002 from three per cent to nine per cent, a figure which the superannuation guarantee was at at the time of the present budget.

There have been a number of changes made to superannuation in an incremental manner since then. But the boldest decision that has been made in relation to superannuation by this government has been the continuation of the co-contributions for low-income earners on a dollar-for-dollar basis. There was also the decision announced in this budget, arising from the Henry review, to increase the superannuation guarantee over time to 12 per cent—a very important decision which will ensure that everyone in Australia has a reasonable standard of living in retirement. A secondary but equally important step is to ensure that the savings of all Australians have increased and that investment in our local businesses has increased as a result.

I commend the bill to the House. Certainly it is in line with a continuing commitment by the Australian Labor Party and the government to maintain superannuation for all Australians. We are heading towards a 12 per cent guarantee, and I certainly believe it is in the interests of all Australians to continue to adjust and improve the superannuation system as we have here in this bill today, the Superannuation Industry (Supervision) Amendment Bill 2010.

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