Tom French (Moore, Australian Labor Party) Share this | Hansard source

I rise to speak in support of the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026 and the accompanying Superannuation (Building a Stronger and Fairer Super System) Imposition Bill 2026. These bills are about stewardship, but, if you had just witnessed that and listened to the member for Goldstein, I don't think you would know what the bill is about. They are about protecting one of the most important economic and social reforms in Australia's modern history and ensuring it remains aligned with its purpose for decades to come. Superannuation is not a theoretical construct. It is deferred wages. It is money earned by working Australians and preserved so that, when working life ends, they are not left dependent on chance, inheritance or bare subsistence. It was built on a simple but transformative idea that retirement dignity should be universal.

Labor built this system, and Labor has continued to improve it. We introduced compulsory superannuation. We extended its reach across industries and employment types. We strengthened preservation. We resisted attempts to freeze or weaken it. In this term of government, we've increased the superannuation guarantee to 12 per cent. We've legislated the objective of superannuation, embedding in statute that the system exists to preserve savings and deliver income for a dignified retirement in an equitable and sustainable way. We've introduced payday super so workers receive their super at the same time as their wages rather than months later. We've ensured that super is paid on paid parental leave. We've strengthened the performance test to protect members from underperforming funds eroding their savings.

Each of these reforms reinforces the same principle: superannuation must be universal, enforceable and fair. I remember very clearly what happens when those principles are absent. During the Work Choices era, I worked in hospitality. I was working behind a bar engaged in what was described as being a subcontractor. In practice, I was an employee in all but name. I turned up for rostered shifts and I took direction, but legally I was classified as running my own business. I was earning less than $10 an hour, and, because I was treated as a subcontractor, I was responsible for paying my own superannuation out of that already meagre wage. There were no employer contributions automatically set aside, and if I did not make contributions myself nothing accumulated. But when you're earning less than $10 an hour, the priority is paying rent and buying groceries, not making retirement contributions.

For many young workers at the time, superannuation was not automatic, it was not secure and it was not guaranteed. It depended on contractual labels and whether you could afford to sacrifice the income in the present for something decades away. For many it simply did not materialise. That experience reinforces why super must be compulsory and it must also apply to all earnings. It must not depend on artificial classifications that shift responsibility onto workers—or come out of a fever dream from the member for Goldstein—and it must be paid as it is earned, which is precisely why payday super matters. The bills before the House today continue that work of strengthening and safeguarding the system.

Superannuation tax concessions now cost the budget more than $60 billion each year. On current projections, they will exceed the cost of the age pension in the 2040s. Concessions are not a flaw. They are part of the architecture of compulsory saving, but their scale and distribution must reflect the system's purpose. Currently, around 38 per cent of super earnings concessions go to the top 10 per cent of earners. Around 54 per cent go to the top 20 per cent. A substantial portion of concessional treatment flows to individuals with very large balances—balances far in excess of what is required for a comfortable retirement. This standard addresses that imbalance in a measured way.

From the 2026-27 income year, earnings on superannuation balances below $3 million will continue to be taxed at 15 per cent. Nothing changes for balances under that threshold. For more than 99.5 per cent of all Australians, the tax treatment of their super remains exactly the same. For the proportion of earnings attributable to balances between $3 million and $10 million, the effective headline rate will be up to 30 per cent. For the proportion attributable to balances above $10 million, the effective headline rate will be up to 40 per cent.

It is important to emphasise the structure. This is not a cliff. It does not reclassify an entire balance once the threshold is crossed. The additional tax applies only to the proportion of earnings corresponding to the proportion of the balances above the relevant threshold. Both the $3 million and the $10 million thresholds are indexed to CPI. That indexation ensures that reform maintains its real value over time and does not gradually expand beyond its intent through inflation alone.

The reform operates through the insertion of new division 296 into the Income Tax Assessment Act 1997, with the accompanying imposition bill imposing the relevant tax. Under division 296, the Commissioner of Taxation will calculate and assess each individual's division 296 tax liability annually. Superannuation funds will calculate division 296 fund earnings attributable to each in-scope member and report those amounts to the ATO.

The mechanics are detailed but principled. First, an individual's total superannuation balance, their TSB, is identified. The greater of the TSB, at the end of the income year or just before the start of the year, is used to prevent avoidance through temporary balance reductions. Second, the proportion of TSB above the $3 million threshold is calculated. That proportion is applied to the individual's total superannuation earnings for the year to determine taxable superannuation earnings for division 296 purposes. If the TSB exceeds $10 million, an additional calculation identifies the very large superannuation balance earnings component so that the higher rate applies only to the portion above that second threshold. The division 296 tax is imposed directly on the individual. Individuals may pay from outside super or elect to release funds from their superannuation.

Defined benefit increases are treated in a commensurate fashion. For defined benefit interests not in retirement phase, liabilities may be deferred until retirement—with interest. That recognises structural differences while preserving equity across the system. At the fund level, division 296 fund earnings are calculated by reference to the relevant taxable income or loss, adjusted for assessable contributions, net exempt current pension income, non-arms-length components and pooled superannuation trust components. The legislation contains specific rules addressing segregated current pension assets to ensure that capital gains supporting retirement-phase interests are appropriately included for division 296 purposes. It provides tailored rules for pooled superannuation trusts and retirement savings account providers, including life insurers, to ensure consistent treatment across different superannuation structures. The definition of 'total superannuation balance' has been refined so that all Australian superannuation interests are counted, with appropriate exclusions such as foreign superannuation funds.

Regulation-making powers allow for valuation methods that reflect the diversity of superannuation products and schemes. These are sensible exclusions. Child recipients of superannuation income streams are excluded from division 296 tax. Individuals who have received structured settlement contributions for personal injury are excluded, recognising the purpose of these large contributions.

This reform reflects more than two years of consultation and refinement. Practical changes announced in October 2025 have been incorporated. The design leverages existing reporting systems to minimise compliance burdens, while achieving the policy objective. The measure is expected to affect less than half of one per cent of Australians with superannuation accounts in 2026-27. The higher rate, above $10 million, applies to an even smaller subset. Schedules 1 to 3 are estimated to increase receipts by approximately $2.15 billion over five years. In a system where concessions are projected to grow substantially over time, this is a modest but meaningful recalibration that contributes to long-term sustainability.

Superannuation exists to provide income for a dignified retirement. It does not exist to provide unlimited concessional treatment for very large balances functioning as tax-preferred wealth stores. Even after these changes, concessional treatment remains generous relative to many personal marginal tax rates.

But this legislation is not solely about recalibrating concessions at the top; it is also about strengthening support at the bottom. Schedule 4 enhances the low-income superannuation tax offset, the LISTO. The eligibility threshold has remained at $37,000 since 2020-21, despite changes in income tax brackets. As a result, workers earning between $37,000 and $45,000 have received no LISTO payment. From 1 July 2027, the threshold increases to $45,000. The maximum payment increases to $810 to reflect the 12 per cent superannuation guarantee.

Because of these changes, around 770,000 additional Australians become eligible for LISTO. Around 490,000 receive a higher payment. In total, around 1.3 million Australians benefit. Approximately 60 per cent of those are women. Workers who stand to benefit include over 100,000 sales assistants, over 50,000 administrative workers and over 50,000 carers for the aged and disabled. Over a working life, the boost could translate to around $15,000 in additional retirement savings.

There are 14 times as many people who will benefit from the LISTO boost as there are people with super balances above $3 million. Schedule 4 is estimated to decrease the underlying cash balance by $435 million over the forward estimates. Some revenue gained from better targeting concessions at the top is directed towards strengthening retirement outcomes for low-income workers.

Taken together, these measures reinforce the legislated objective of superannuation to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way. It preserves concessional treatment for the overwhelming majority of Australians. It modestly recalibrates concessions at the extreme upper end. It strengthens support for low-income workers and it continues Labor's long history of building and improving superannuation so that it works for working people.

For those of us who remember insecure work under WorkChoices—earning less than $10 an hour and responsible for paying our own superannuation out of that wage—the importance of a strong, enforceable and universal superannuation system is not theoretical; it is lived experience. It should be paid as it is earned, it should be preserved for retirement, and the concessions that support it should be equitable and sustainable. This legislation advances that purpose. I commend the bills to the House.

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