Claire Clutterham (Sturt, Australian Labor Party) Share this | Hansard source

I rise today to speak in support of the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026. Australia's superannuation system is a savings system for retirement, and it is the envy of the world. It has a simple foundation. Over your working life, your employer puts money on top of your wages into a super account which stays invested until you retire. It's pretty clear: the more savings you've invested, the more you have to live on in retirement.

As of 1 July 2025, the minimum amount—called the superannuation guarantee—is 12 per cent of an employee's wage. Our national superannuation rates have increased from three per cent, when the modern super system was established in 1992, rising incrementally to nine per cent by 2002 and then significantly higher in July 2025.

There are two main reasons super is such a powerful way to save for retirement. Firstly, it is taxed concessionally at a lower rate than other forms of taxable income. Secondly, super is reinvested and compounds over time, meaning that, in some cases, up to 75 per cent of the final balance at retirement has been generated by earnings rather than employer contributions.

Super was created to boost the financial security of Australians in retirement. Its objective, as stated in section 5 of the Superannuation (Objective) Act 2024, is:

… to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.

It's now compulsory, but it wasn't always so. In the 1970s, most Australians relied on the aged pension in retirement, and only about one-third of the workforce, mainly public servants and white-collar males, received super. It wasn't portable, and the payment was restricted to workers who retired with the employer controlling the fund. In the 1980s, the Australian Council of Trade Unions began a concerted effort to extend the benefits of superannuation to their members, which included blue collar workers, and a concerted effort to ensure that contributions were well managed and governed in funds that were designed to benefit members.

When the Hawke Labor government took power in 1983, they had as a key objective the creation of a universal superannuation system so that all Australians, not just some, could benefit. Labor is and always has been the party of working Australians, and benefits to workers after they conclude their working life are a natural extension of this. A decade later in the early 1990s, the superannuation guarantee was passed, and all workers became entitled to minimum superannuation rates of three per cent. Coverage grew over time, and by 2019 national superannuation coverage increased to just under 80 per cent. Today it is over 90 per cent.

Super is now the key driver of retirement savings. It's there together with the aged pension and personal savings and assets, but it's the key driver. All three of these pillars work together, and there will be a different mix for everyone. But super not only provides the bulk of retirement savings. It boosts living standards and drives investment. Other features in place to make it equitable and sustainable in accordance with its objective include tax concessions and the practice of paying super into employer default funds, all of which must be MySuper compliant. This is important so workers who are perhaps not financially literate or just not interested—and there are some—still receive employer contributions. Stapling and performance benchmarks set by the Australian Prudential Regulation Authority are also key elements underpinning the integrity of the superannuation system together with the equal representation model, where profit-to-member boards comprise an equal number of employer and worker representatives, keeping a focus on the best interests of members.

Super in Australia is good policy and good politics. It is essential that the objective of super remains front of mind and that improvements and adjustments are made fairly and transparently to further those critical objectives of equity and sustainability. At its heart, this bill speaks to the objectives by making Australia's super system stronger by examining those foundational principles of equity and sustainability. In terms of equity, the bill operates to boost the low-income superannuation tax offset, or LISTO, so low-income workers receive a fairer tax concession on their super earnings. From July 2027 the maximum LISTO payment will increase by $310 to $810, and the eligibility threshold will increase from $37,000 a year to $45,000. The number of low-income workers, mainly women, who are eligible for LISTO, will increase to over three million working Australians, with each of those receiving an average LISTO increase of $410, resulting in an average extra $15,000 in retirement. This will depend, of course, on the trajectory of the person's career, but an extra $15,000 will make a difference. Importantly, the LISTO eligibility threshold and maximum payment amount will automatically adjust in line with any future changes to income tax thresholds and the superannuation guarantee rate.

Another key feature of this bill is the reduction of tax concessions available to people with balances over $3 million. This feature can be found in schedules 1 to 3 of the bill. Under this arrangement, the headline concessional tax rates applying to superannuation earnings are as follows. Firstly, for superannuation balances up to $3 million—that's almost every single working Australian—the concessional tax rate will remain at 15 per cent on earnings. This is unchanged. Secondly, for superannuation balances between the $3 million large superannuation balance threshold and the $10 million very large superannuation balance threshold, it's up to an overall 30 per cent on a percentage of earnings equal to the percentage of the individual's total super balance between these thresholds. Thirdly, for superannuation balances above the $10 million very large superannuation balance threshold, the rate is up to an overall 40 per cent on a percentage of earnings equal to the percentage of the individual's total superannuation balance above $10 million.

The amendments in schedules 1 to 3 reduce the tax concessions by imposing additional tax of 15 per cent on earnings based on the percentage of the total superannuation balance exceeding the $3 million threshold and a further 10 per cent on earnings based on the percentage of the total superannuation balance exceeding $10 million, with the thresholds being indexed to CPI each year. We've heard statistics quoted in this House today that this will affect about 0.5 per cent of the working Australian population.

This bill is instructive of the way governments seek to maintain sustainability and equity. The difference in financial position between someone with an annual taxable income of $45,000 and someone with a total superannuation balance of $3 million or $10 million is stark. Whatever bucket you fall into or whether you fall somewhere in between, like most Australians, you've worked hard to get there, and the government respects that. You've worked hard to build a nest egg of whatever size to seek to provide for yourself in retirement and to enjoy a retirement as dignified and fulfilling as possible. The government respects that and, in crafting this bill, respects that but also, in this instance, places the weight of sustainability and equity of the superannuation system on those best placed to bear it.

Risks and burdens are part of equity and sustainability and should be borne by those best placed to manage them. That is the fairest way to ensure the sustainability of our superannuation system. Managing risks and burdens is an essential consideration in every aspect and in every transaction, because risk determines whether a transaction is viable, and it is always a component of the total overall cost of any transaction. The effective allocation of risks and burdens reduces the likelihood of failure. Poorly or unfairly balanced risk allocation, by contrast, can increase cost, deter participation, lead to unintended consequences and frankly defeat the purpose of the objective—in this case, a dignified retirement for all Australians founded on equity and sustainability. Systems and transactions can never be completely devoid of risks and burdens entirely, but these can be managed intelligently if the aim is to fairly allocate each risk to the party best placed to control it or bear it.

When this reform to large and very large superannuation balances was being floated, I was contacted by a small but concerned group of individuals in my electorate of Sturt who had concerns with initial suggestions that earnings on large and very large thresholds would not be indexed and that unrealised gains would form the basis upon which the new headline concessional rates would be applied. I thank those residents who wrote to me and came to see me for a number of reasons. Firstly is for civic engagement. My door is always open to people who wish to share feedback and have a constructive, courteous and professional discussion with me, and pleasingly that was the tone of every discussion that I had on this topic.

Secondly, I thank those residents for explaining patiently the genuine consequences—what might happen—if their concerns were realised, and the genuine arguments against some of the initiatives that were being floated. I listened to those and passed those concerns on, as did a number of my colleagues, which has resulted in a bill that is fairer, is built on solid principles and is justifiable. That is civic engagement at work.

Thirdly, what really struck me in all of these conversations that I had, particularly with two gentlemen, Paul and Nigel, both of whom had built successful careers and businesses—along with others who came to see me, they absolutely understood and in fact accepted that they were best placed to bear the risks and burdens associated with the ongoing equity and sustainability of the superannuation system. Did they love extra tax on their large super balances? Of course they didn't. But they understood and accepted the rationale for it. And this came across to me very clearly in every discussion I had and in most of the email correspondence that was sent to me on this topic.

Many speakers in this House have spent most of their time talking about unrealised capital gains and the lack of indexation. They have asked a lot of questions about that, instead of spending their speaking time discussing what's actually in this bill. What's not in the bill is the taxing of unrealised capital gains. It's not there. What is in the bill is indexation of thresholds. That is there. So neither of those concerns remains justifiable; they are not in the bill.

This bill is the product of genuine consultation with communities like mine, and it reflects the collective spirit of Australians who want to see the superannuation system become stronger and even fairer so that it continues to deliver a more secure retirement for millions of working Australians today and into the future, and not just some working Australians. Of the three pillars of retirement savings in this country—the age pension, super and personal savings and assets—super needs to be maintained as the driver, and this bill is part of the reform necessary to further the objective of an equitable and sustainable system, providing all working Australians with a dignified retirement. I commend the bill to the House.

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