House debates

Wednesday, 28 February 2024


Superannuation (Objective) Bill 2023; Second Reading

6:32 pm

Photo of Angus TaylorAngus Taylor (Hume, Liberal Party, Shadow Treasurer) Share this | Hansard source

I move:

That all words after "That" be omitted with a view to substituting the following words:

"whilst not declining to give the bill a second reading, the House:

(1) notes:

(a) the former Government delivered major reforms to superannuation that supported better member outcomes, better performance, and transparent governance, and that were driven by the clear understanding that superannuation is Australians' money;

(b) the Prime Minister and the Treasurer promised no changes to superannuation prior to the election and the Prime Minister promised 'no major changes' to superannuation in February 2023, but have since broken that promise by introducing a new superannuation tax on unrealised capital gains, which is a world first wealth tax that will hurt farmers and family businesses and force Australians to pay tax on money they have not earned; and

(c) that the Government's failure to index their new superannuation tax means up to two million young Australians earning average wages today will face a wealth tax, according to analysis of Treasury modelling published in The Australian; and

(2) calls on the Government to abandon its broken promise on taxing superannuation".

I rise to talk on the Superannuation (Objective) Bill 2023. Australia's ageing population and lower rates of homeownership sharpen the importance of our retirement income system to all Australians. Indeed, those of us on this side of this place are absolutely convinced of the huge importance of our retirement income system, a system that delivers to Australians throughout their retirement.

Right now we have $3½ trillion in funds under management—within the superannuation part of that system, at least. That's more than Australia's total GDP. Our superannuation system is embedded as a key institution, not just in our retirement system but right across our economy. With that enormous institutional weight comes an enormous responsibility, a responsibility to every single Australian who has invested in superannuation over time. Let's be clear: it is Australians who have invested in superannuation, not the government, not employers; it's Australians who have done this.

In his 1991-92 budget speech, John Kerin stressed that the super guarantee's purpose was 'to ensure that all Australians have a secure income in retirement'. When the legislation was introduced in April 1992, John Dawkins called the superannuation guarantee 'the foundation for income security and higher standards of living in retirement for future generations of retirees'. Dawkins stressed that the purpose of super was to build Australia's pool of savings and to take pressure off the budget, not supplement it. It was never envisaged that superannuation be used to plug revenue gaps, to extend fiscal policy or to deliver on other government policies, other than ensuring that people have access to a good retirement. I think it's fascinating to go back to those debates—debates that I remember looking at at the time. But, going back to those, we observe Labor backbenchers breaking from the government of the day and arguing that the super guarantee should be complemented by investment controls for national projects, investments and secure employment for union members.

Above all, this is interesting because it's clear from the contribution of those backbenchers that this was not the intended purpose of super at the time. It was very clear from the senior ministers who spoke on the issue that all of those purposes were not the intended purpose. It's also interesting to observe the likes of Kim Beazley crediting Robert Menzies for the idea of superannuation from his national insurance policy from 1950, just a year or so after he was elected as the first Liberal Prime Minister after the war.

This positions Australia's super regime in the scheme of its welfare debates. Superannuation contributions are the closest thing Australians have to a social security tax, but Australia made a conscious decision across the Fraser and Hawke governments to abolish specific social security taxes through the gradual dismantling of the National Welfare Fund.

The arrival at a compulsory contribution scheme came after 70 years of debate, started by the Cook Liberal government in 1913 and pursued unsuccessfully by the Lyons and Menzies governments. Menzies preferred a contributory scheme because it preserved self-respect, remained liquid and removed the need for means testing that forced Australians to 'prove their poverty'. He didn't want Australians to have to prove their poverty, and so a contributory scheme was a natural consequence of that. This historical context is important because it reminds us that the trade-off to compulsion must always be choice. If you're going to have compulsion—and we do in our contributory scheme—you must have choice. These are private savings, not public savings. Fundamentally, super is Australians' money, not the government's. This is essential to understanding the original purpose of super and the purpose it still has.

With the economic challenges here now, and I've outlined them many times in this place, it is more essential than ever that our superannuation scheme remains focused on the end user—the consumer, the members. I should point out that we've seen a collapse in disposable incomes for Australians in the last 18 months—8.6 per cent in 18 months. That's $8,000 that's disappeared from every Australian's standard of living. They're responding to this in a number of ways. They are responding by cutting back on both discretionary expenditure and, sadly, in some cases, essential expenditure. We see that in the people turning up at food banks who would have never had to turn up at food banks 18 months ago. We see it in them taking on extra work—extra hours. But we also see them digging into their savings. In fact, savings from disposable income have almost entirely disappeared. They are down to one per cent. It is completely unsustainable. Australians are essentially not saving any more. Finding a way to make sure that everyone in this place is doing everything they can to ensure that the investments Australians make are delivering the best possible returns—and are being managed for those investors, not for the government—is more crucial than it has ever been. Additional mandates, targets or missions for superannuation over and above the purposes of the investor, the individual, the Australian, miss the fundamental point of super spelt out in the Hansard by members of the Keating government: 'The basic principles of superannuation are very simple. They are about providing for people, for Australians, in their retirement.' When the Treasurer argues that superannuation should be used for nation building, he doesn't just misunderstand that it's not his money; he fundamentally misunderstands how the economy works.

Arguments that super is not doing enough by delivering returns to members are Trojan horses for directing funding to areas that the government of the day determines are priorities. But it's a Trojan horse that we should not adhere to. This Treasurer, in his long, 6,000-word essay that he spent his first Christmas as Treasurer writing, decided that superannuation wasn't Australians' money; it was his money to be spent as he saw fit on the nation-building projects that he prioritised—no doubt, in consultation with his mates amongst the union officials. It was going to be his pick about where that money was to go. But it's Australians' money; it's not a piggy bank to be spent or a tax to fill budget holes. Labor does not have a mandate to tax and spend Australians' super.

Alongside that, we do see Labor taking the view that one way they can get at Australians' superannuation money is not just by directing how it's spent but by taxing it more. Labor's new superannuation tax is an absolute shocker. It's a doubling of taxation on many Australians' retirement savings. It's a regime that proposes a different approach for a farmer or small-business owner than for a public servant, judge or politician. It's extraordinary that we could be at a point where a public servant, judge and politician get different treatment for their superannuation than a farmer or small-business person would get, but that is exactly what this government has chosen to do. We know who they don't like; we know who they can't unionise—it's the small-business person or the farmer.

Those lucky enough to have a defined benefit scheme—and, of course, that includes the Prime Minister—will enjoy deferred payments and rates of tax set entirely by regulation, by the government. The government will be deciding how much the Prime Minister will be paying in tax. It won't be done by legislation. That's what is so extraordinary about the legislation proposed by this government. The Prime Minister will have a guaranteed income stream. I certainly hope the Prime Minister will exclude himself from the discussion about that regulation, but his income over the course of his life will be determined by that regulation to be decided by the government.

Everyone else faces an unindexed annual tax on unrealised capital gains. Now, unrealised capital gains are unrealised. It would seem, to me, to be self-evident that an unrealised capital gain is unrealised, but it is. The problem with having to pay tax on something that's unrealised is that you've got to realise it! If you're a small-business person or a farmer—and, let's face it, that's a very big proportion of the people who are in self-managed super funds—the asset that you've got to realise will often be a fundamental part of your business. I see what this government is saying: you're going to have to sell up part of your business to pay tax. But those opposite simply don't understand how small-business people and farmers work. Perhaps, even if they do understand, they don't like what these people do and they don't care.

What we have under Labor's division 296 tax is an unindexed wealth tax—it is a wealth tax. We're going down this pathway in this country, as far as Labor is concerned, and, according to Treasury's own case studies, this policy will double the taxes on the retirement savings of an average 21-year-old today. An average 21-year-old today is going to be subjected to this tax at exactly the time when we need Australians to be saving more. Of course, it's probably unreasonable to expect that, having seen their standard of living smashed so hard in the last 18 months, they will be able to save anything. But we desperately need Australians to be able to save.

This tax is also a tax on aspiration. It's the first of many policies that weren't taken to an election that are now standing as broken promises on taxation, flaunting well-established principles of tax reform that, when bundled across the economy, will make Australians worse off. We know it will primarily hurt people who utilise, as I say, self-managed super fund structures. Combined with other changes like those to the NALI provisions and with the response to the Quality of advice review, it's clear that it's part of a broader attack on self-managed superannuation. It's a regulatory approach that favours one form of superannuation fund, particularly—let's face it—industry funds run by the unions, over another. I have no problem with industry funds. I think they're an important part of the retirement income system. But what matters is that all the savings in these funds are treated without discrimination. Of course, that's not what we're seeing in what Labor is proposing.

As I said, superannuation is compulsory, but with that option should come choice. Australians can't opt out, even if it means they face lower take-home pay and higher non-compulsory payments than the OECD average. The trade-off must be choice about whether they use an industry fund or establish their own fund. There must be choice about the risk profile of their investment mix and whether they use their savings for a first home or for investment in bonds and equities. It's an extraordinary situation right now. In your superannuation fund, you can invest in anybody's home except your own. How did we get to that? We know the single best indicator of whether someone is going to have a great retirement is whether or not they own their own home. It's the single most important indicator.

The idea that you can consider what's right for the retirement system without thinking about the implications for homeownership is just plain wrong. We need to be able to make sure that Australians can have that balanced retirement system, which includes homeownership. That's why Peter Dutton is—and a Peter Dutton government would be—committed to allowing Australians to access their superannuation to secure a housing deposit. Under our policy, first-home owners and women over 55 will be eligible to draw down on their superannuation for a deposit while preserving the value on the sale of the home back into their superannuation funds. It's not sufficient for a compulsory retirement system to stay silent on an institution as iconic in Australia as homeownership. It's such an iconic institution for our retirement system.

It's certainly one of many policies that we're committed to that will improve outcomes for Australians from our retirement system. The policies also include implementing in full the Quality of advice review in a timely manner. We are waiting for the Assistant Treasurer to do that. He's getting started, but, I've got to say, he is certainly dragging the chain on implementing it in full in a timely manner. We are supporting sensible deregulation of our financial system to reduce complexity and red tape and improve customer outcomes, and we are driving a revitalisation of our financial advice industry to ensure that Australians can access the finance and also the advice they need. That advice is fundamental to them being able to make the right choices for their circumstances.

As we develop further policy, the first principles we will apply throughout are that superannuation is Australians' money—not the government's, Prime Minister's or Treasurer's money. As research has pointed out this week, when it comes to super, Australians trust themselves first, funds second and the government last. I'll repeat that, because it's incredibly important. Australians trust themselves first, funds second and the government last. That's why our superannuation system must put the individual, their choices and their control at the heart of the entire system. The government doesn't seem to get this yet, and certainly the Treasurer doesn't, as we saw in his 6,000-word essay. As I pointed out, the government should not only be cautious about raising taxes on Australians' super but also be cautious about watering down consumer protections on APRA regulated funds or trying to direct Australians' retirement savings to meet political goals rather than the goals of individuals.

Everything I'm saying here is part of a broader economic plan to be focused on Australians' aspirations, boosting productivity and growing the economy so that every Australian can benefit from a bigger pie. The way we deliver prosperity and aspiration to every Australian is not by dividing up the pie in new and different ways; it's by growing it. It's by having small-business people, farmers and others right throughout the economy making investments, taking risks and making choices that can realise their aspirations. But, in the process, when an Australian has a go—when they build a business, when they make investments and when they take risks—they don't just benefit their own families; they benefit others. They employ others, they support the community, they grow country towns and they grow the suburbs they live in. All of that flows from empowering people to make their own choices, to make their own investments, to take risks and to do the things they want to do in their lives. That means supporting small-business aspiration and entrepreneurship.

That's why we've said that we will bring back accelerated depreciation to the levels and thresholds it was at prior to COVID. Labor has scaled it back. As I've said, they're not big supporters of small business, but we will bring that back to those levels that we know had big impacts in our suburbs and regions. I know the member for Forrest saw it in her part of the world, and I certainly saw it in my part of the world. We will deliver an incentive-based tax system that returns bracket creep and supports lower, simpler, fairer taxes. We will focus on rewarding work, not welfare. That's why we've said that we'll support Australians who are on the pension to take on extra hours of work without being penalised. We will focus on containing the growth of government spending and overreach, not committing to the failed referendum we saw last year—$450 million.

We will not waste money on spin units. This doctor of spin we have as the Treasurer is not a doctor of economics. It's very important that everyone understands that he's a doctor of spin. His thesis was on Paul Keating. This Treasurer has decided that he's spending $40 million on a spin unit. He's setting it up. He could do with a few economists, I'd say, because his economics is very dodgy—voodoo economics most of the time. I think he would benefit greatly from having a stronger backbone in the economy. We're not seeing that. Instead, he's decided to spend $40 million on a spin unit.

Containing the growth of government and waste is enormously important, but getting the basics right is too: affordable, reliable energy; high-quality education; and well-targeted critical infrastructure. We'll continue to announce policies, as we have been, in those all-important areas.

As I said, Australians are facing a real challenge right now. Our retirement system is crucial to realising their longer term aspirations and dreams for their own retirements. The first port of call for this government should be realising that it is a system committed to the interests of the individual investor, the individual Australian who has invested in that system. That's where it should start, and that's where it should end. We will continue to hold the government to account on that all-important issue.


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