Tony Smith (Casey, Liberal Party, Deputy Chairman , Coalition Policy Development Committee) Share this | Link to this | Hansard source

Let me say at the outset that the coalition supports these bills—the Superannuation Legislation Amendment (Stronger Super) Bill 2012 and the Superannuation Supervisory Levy Imposition Amendment Bill 2012—which were introduced on Thursday, 24 May 2012 by the member for Maribyrnong, the Minister for Financial Services and Superannuation and the Minister for Employment and Workplace Relations. I will run briefly through the schedules in the first bill, then the single schedule in the second bill and cover a couple of areas of detail that have been raised since the minister introduced this legislation in the last sitting fortnight.

As I said at the outset on behalf of the coalition, we support these bills and the principles that underpin them. With respect to the Superannuation Legislation Amendment (Stronger Super) Bill 2012, the first schedule of the bill introduces—as the minister outlined in his second reading speech and in the explanatory memorandum—a framework to support the implementation of superannuation data and payment regulations and standards that will apply to specified superannuation transactions undertaken by superannuation entities, retirement savings account providers and employers. The second schedule amends the APRA Act, the Australian Prudential Regulation Authority Act 1998—specifically section 50—to enable costs associated with the implementation of the measures to be included in the minister's determination specifying the amount of the levy that is payable to the Commonwealth. The amendments also enable the minister to make a determination that specifies the proportion of levy money paid to APRA that is to be credited to the APRA Special Account. The Superannuation Supervisory Levy Imposition Amendment Bill amends the Superannuation Supervisory Levy Imposition Act 1998 in a range of material respects to enable the Treasurer to make more than one determination on the imposition of levies for a financial year.

The coalition is supporting this legislation and supports the principle of measures that improve the efficiency, transparency and competitiveness of the administration of the superannuation system by making the system easier to use for employers, ensuring fewer lost accounts, providing a more timely flow of money to super fund members' accounts and delivering savings to employers and fund members. As part of the government's proposal, these bills provide for the implementation of data and payment regulations and standards, as I have outlined, that will allow participants in the super system to communicate by using standardised business terms in a consistent and reliable format. Electronic transmission using agreed transport and security protocols will allow for a more automated and timely processing of transactions with fewer errors. If properly implemented, these changes will deliver significant efficiency savings to the super industry and to employers. Indeed, the savings have been estimated by the Financial Services Council to be quite significant—of the order of $20 billion over 10 years. Much of the detail on these new standards will, of course, be in regulations, which industry participants consider to be appropriate.

Like most pieces of technical legislation, this has been before a parliamentary committee since its introduction on 24 May—that committee being the Parliamentary Joint Committee on Corporations and Financial Services, of which I am a member. That committee reported today—around lunchtime, to be accurate—recommending that the legislation be passed but also recommending:

That the ATO be required to provide a regular detailed breakdown of its costs and expenditure of the additional levies to the SuperStream Advisory Council, based on reporting guidelines developed in consultation between the council and the ATO.

That is a firm recommendation of the committee—and by all members on the committee. The cost of implementation, as outlined in the legislation and in the minister's speech, will be $467 million from 2012-13 to 2017-18, including $121 million in 2012-13. So we think that that recommendation in the report tabled earlier today is a relevant one. We on this side of the House note that it is supported by all members on the committee. As I said, we support this legislation and think if properly implemented it will certainly provide benefits and efficiencies right through the system.

Andrew Leigh (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

The Superannuation Legislation Amendment (Stronger Super) Bill 2012 and the Superannuation Supervisory Levy Imposition Amendment Bill 2012 introduce a framework to support the implementation of superannuation data and payment regulations and standards that will apply to specified superannuation transactions undertaken by superannuation entities, retirement savings account providers and employers. As the previously speaker noted, this is technical legislation, but it is legislation that will make a difference to Australians and their families.

SuperStream costs of $467 million will be collected through the superannuation supervisory levy from 2012-13 to 2017-18. That will enable the government to collect the implementation costs associated with the SuperStream measure. The opposition have acknowledged the efficiencies from the SuperStream proposal and have acknowledged that they have the potential to deliver real savings over time and will benefit superannuants.

The Association of Superannuation Funds of Australia calculates that $1.3 trillion of assets are in superannuation funds. Treasury forecasts estimate that this will grow to between $3 trillion and $5 trillion by 2025. When Bob Hawke took office in 1983, just 40 per cent of the workforce had superannuation cover. Thanks to Labor, that rose from 72 per cent in 1991 to 94 per cent in 2007. Australians have more money invested in managed funds per capita than any other economy in the world.

The Minister for Financial Services and Superannuation today released new research showing broad support for the superannuation system but that, understandably, many people continue to find it a difficult topic to understand. Senator Sherry, who recently stepped down after many years of public service, was one of those in the Labor caucus with a true passion for superannuation—but I cannot promise that the rest of us ever had quite his level of engagement with that topic. But it is important that Australian policy makers recognise the benefits to improving the simplicity and the efficiency of the superannuation system.

There is $20 billion in lost super in Australia, and reuniting Australians with their lost superannuation is absolutely critical. I joined with Chris Bourke MLA, last year in running some mobile offices around the ACT. We found that there were particular postcodes in which there was a very high level of lost superannuation. We worked with a simple mobile office and a laptop computer helping people get back in touch with their lost superannuation accounts using the ATO's SuperSeeker tool. We were pleased on a number of occasions to assist people in finding their unclaimed superannuation.

The research announced today by the Minister for Financial Services and Superannuation showed that people's level of interest in their superannuation varied depending on how old they are, how financially literate they are and the amount of superannuation they had saved. It found that across all age groups, the majority of Australians were not confident that they have enough superannuation to retire and live comfortably on and that, overall, employers believe that superannuation is beneficial to their employees and the general population to reduce the reliance on the pension—giving lie to the claim by some of those opposite in the early 1990s that employers would not support universal superannuation.

The superannuation industry is currently dominated by paper based transactions. They are inefficient in both processing costs and the time taken for transactions to occur and superannuation to be deposited in to members' accounts. The superannuation data and payment standards will allow participants in the superannuation system to communicate using standard business terms in a consistent and reliable format. Using electronic transmission, with agreed security protocols, will mean that we will get quicker processing of transactions and fewer errors. Just as e-health is bringing about efficiencies in the healthcare system, so, too, greater efficiency in the superannuation payments system is a benefit to all Australians. It is an easier system for employers to use. There will be fewer lost accounts and Australians will get the money in their accounts more quickly—which, of course, means that they will begin earning returns more quickly.

The superannuation data and payment standards will be mandated for superannuation entities, including approved deposit funds, RSA providers and employers. The regulators—being the commissioner and APRA—will support the rollout of the new data and payment standards through education activities and a new compliance framework. Industry submissions to the super system review estimated that savings of up to a billion dollars per annum are achievable from implementing the SuperStream reforms.

Members will be able to look up and keep track of their superannuation, have low-value inactive accounts consolidated automatically, be able to consolidate larger accounts easily, have their contributions and rollovers processed more quickly and be able to more easily check if their superannuation contributions have been made. Employers will benefit from having standardised, simplified administrative processes when dealing with superannuation funds. Superannuation funds will benefit from standardised and simplified administrative processes when dealing with employers and other funds, and be able to make greater use of tax file numbers to facilitate matching and consolidation of accounts and of electronic validation services from the ATO that will help their administration and help ensure members are properly matched with their superannuation. Efficiencies for superannuation funds mean higher returns for fund members.

When Prime Minister Paul Keating moved to introduce the superannuation guarantee levy, Wilson Tuckey drew on his long history in the racing industry to compare the legislation to the 'worst type of jockey … both stupid and dishonest'. Mr Tuckey continued:

When the poor old employer levy gets to 12 per cent, what will it deliver? Luckily, it might deliver an overseas holiday and a few presents for the kids, but it will not deliver a retirement income at the inflated costs of those days.

As Minister Shorten has demonstrated, a 12 per cent superannuation guarantee will provide to a worker now aged 30 on average full-time wages a real benefit of over $553,000 at age pension age. That should leave a bit of change after an overseas holiday and a few presents for the kids.

The Leader of the Opposition once called Labor's superannuation guarantee a con job. Those opposite have either been uninterested in superannuation or outright critical. When Senator Bishop—as she then was—spoke in the other place on the introduction of universal super on 18 August 1992 she said:

On this side opposition members argued very logically and meaningfully that the imposition of this compulsory superannuation tax is a de facto federal payroll tax.

Yes, they were running their 'great big new tax' argument even against compulsory superannuation. Then Senator Bishop told the Senate about a conversation with a small business person who had said:

But now that this compulsory superannuation payment has gone through, yesterday I had to sack a part time employee and turn a full time employee into a part time employee.

The late Senator Peter Cook, a man for whom I was privileged to work, was moved by that statement to interject that given that the law for universal superannuation had not yet come into effect, it was hard to see how small-business people would be affected by it. You can see shades of that in the scare campaign those opposite are running against the carbon price, which has not yet come into effect. But Senator Bishop—as she was then was—was unmoved and finished up the debate as follows:

I heard Senator McMullan say, ‘The difference between our systems on superannuation is that ours is compulsory and theirs is voluntary’. That is very true. That is an essential difference. Our policy is designed to make it attractive for people to provide for themselves in later life whereas this Government’s is designed to penalise business, to regulate it out of existence.

Of course, if you carry on with that logic then the member for Mackellar should today be saying to this chamber that superannuation is penalising business and ought to be scrapped. But the fact is that no-one is making those arguments. I quoted some of the statements made in the 1990s because they illustrate an important point, not just about superannuation but also about economic history more generally. The economic reforms that have made Australia great, like universal superannuation, were hard fought at the time. Many of them were opposed by those opposite and many of those opposite at the time said they would scrap them if they were to win government. But when they did in fact take the Treasury benches, they did nothing of the kind. Universal superannuation is now part of the Australian social fabric. It was attacked at the time, demonised as being a big new tax and is now recognised as being an important pillar of a dignified retirement in Australia.

Australian workers, 8.4 million of them, will benefit from an increase in the superannuation guarantee rate from nine per cent to 12 per cent. This government is also abolishing the age limit for the superannuation guarantee so, no matter what your age, if you work you will get super. It will provide an extra contribution for the 3.6 million Australians who are earning up to $37,000. That includes plenty of part-time workers as well as low-income earners. It is a recognition of the point made in the Henry tax review that the superannuation concessions were, under the Howard government, significantly more generous for high-income earners than for low-income earners.

We are putting in place simplification reforms, which will allow people to see their superannuation account and will give employees certainty by requiring superannuation information to be on every pay slip so people can check to make sure they have got what they are entitled to. We are also introducing a MySuper product, recognising that most employees will take the default fund and within that fund will take the default investment plan. So it is important that the defaults are good and that defaults get good market returns. We are also putting in place more efficiencies to ensure lower fees for fund members. All of these reforms will ensure Australians get the superannuation they are entitled to and ensure the system is as simple, efficient and equitable as it needs to be.

I commend the bill to the House.

Paul Fletcher (Bradfield, Liberal Party) Share this | Link to this | Hansard source

It is always a pleasure to follow the member for Fraser, who gave us a discursive exploration of superannuation policy after briefly deigning to come to the specifics of the bill before us. Naturally, I am going to be more limited and—some might say—small minded by concentrating purely on the provisions that are before the House this afternoon.

What I would like to say is that, in the broad, the coalition is supportive of the legislative direction contained in the legislation the House is considering this afternoon. It is an uncontentious proposition that the superannuation sector is dominated by paper based transactions, and that there are real inefficiencies, real deadweight costs and transactions costs. There is clearly capacity to secure efficiencies through the use of information technology standardised formats for the exchange of data and so on.

Coming, as I do, into this place from a background in the telecommunications sector, I became quite surprised as the Parliamentary Joint Committee on Corporations and Financial Services on which I served learnt about the challenges currently facing the superannuation sector and the extent to which information is exchanged in paper based form. By contrast, and as one example of the kinds of efficiencies which can be secured on an industry wide basis through the use of information technology, in the telecommunications sector the mobile number portability standard requires that if a customer wishes to port his or her number from one mobile operator to another, it needs to take effect within the course of one day—and often it takes very much less time than that. Therefore I have in my own experience seen the efficiency benefits which can be delivered when standardised information technology systems are used and data transfer standards are applied to a range of participants in an industry.

Let me readily concede that the superannuation sector challenge is an even more daunting one than the one which applies in the telecommunications sector because of the fact that, in addition to all of the superannuation funds—and there are of course hundreds of them—you also have millions of employers, ranging from the very, very large to the many very small businesses. That does present some specific challenges and it also presents some areas of concern with particular aspects of this bill—areas which I am pleased to say were acknowledged by the committee in its unanimous report.

In the brief time I have to speak about this bill today, I want to make essentially three points. Firstly, I want to say that the provisions underpinning greater efficiency in superannuation contained in this bill and the legislative scheme, in the broad, make sense. Secondly, I want to highlight the fact that there are real reasons for doubt and for questioning why the amount of money which has been sought by the Australian Taxation Office to implement this set of information technology changes, and which is funded ultimately by a levy on the industry, is so high. Where is the justification for the costings? Thirdly, I want to question why it is that the legislation takes a particular approach which in particular bristles with penalties and strict liability provisions.

Let me turn firstly to the broad rationale for this bill—a rationale which, as I have indicated, the coalition supports. As the explanatory memorandum states:

The purpose … is to improve the administration and management of super accounts making the processing of everyday transactions easier, cheaper and faster for members and employers.

I think any Australian who has ever sought to transfer a superannuation balance from one fund to another would very much empathise with the proposition that, as it presently operates, the superannuation sector is grossly inefficient. That acts to the detriment of members of superannuation funds and all stakeholders, because the costs of the inefficient processing are borne across the sector when it comes to matters such as error, rework, misdirected or lost transactions—all of these things cause cost, inconvenience and inefficiency.

Accordingly, the coalition strongly supports as a principle measures to improve the efficiency, transparency and competitiveness of the administration of superannuation system. We want to see a superannuation system which is easier to use for employers; which ensures fewer lost accounts; which provides a more timely flow of money to the member accounts of superannuation fund members; and which delivers efficiencies and cost savings to employers, to funds and, ultimately therefore, to members.

The scheme of this legislation is to provide for the implementation of data and payment regulations and standards to allow participants in the superannuation system to communicate by using standardised business turns in a consistent and reliable format. The government estimates that the SuperStream measures will save $1 billion a year in processing costs. The Financial Services Council estimates that the reforms are likely to deliver savings of up to $20 billion in aggregate by 2020 based on the current rate of growth of the asset base in the superannuation system.

Anybody who has had any experience with large information technology systems and businesses involving the processing of hundreds of millions or even more transactions would know that very small cost savings per transaction can readily add up to a very large amount of money saved in aggregate across the system. I think that is what we can expect this set of changes to achieve if the scheme has the desired effect.

Stakeholders in the sector are certainly supportive of the objectives. The Association of Superannuation Funds of Australia commented that it:

… considers the SuperStream measures to be the key component of the Government’s Stronger Super reforms as they have the greatest potential to improve members’ retirement outcomes through the creation of a more efficient superannuation system.

The Financial Services Council in its submission to the committee noted that there has been for a long time agreement in principle across the industry of the desirability of establishing superannuation data standards; however, it has not proven possible, to date, in a cooperative fashion to establish those standards and have all the stakeholders sign up to them. Accordingly, there is broad acceptance of the need for legislative action.

That brings me to the second point I want to make which is that, although there is broad acceptance of the need for legislative action, there are eyebrows raised across the superannuation sector as to the surprisingly large amount of money which the Australian Taxation Office has identified it needs to implement these new arrangements. Under this bill a levy is to be imposed on the superannuation sector which amounts to $467 million. That is a very large sum of money by any standard yet at the same time the degree of transparency and justification that has been provided for this very large sum is disappointing. It is a notorious truth that information technology systems development can be an extraordinary black hole. It is very tempting for those involved in the process to inflate their costs and identify a whole range of requirements which add to the total cost of the exercise. It is often difficult for those receiving the bill to assess the validity of the amounts that are claimed but, as a very first step, you need to be provided with details, specifics and justifications for the amount of money proposed to be spent on the new information technology system changes. That is a principle which is true in the private sector and it is equally true in this particular context which is essentially a hybrid of private and public sector activity.

It is not surprising that one of the strong themes which emerged from the committee's inquiry into this legislation is that there has been an inadequate level of justification by the Australian Taxation Office and the government for the amount of money stated to be required, which is to be extracted from the industry by means of a levy to fund these changes. That is an observation which has been made by quite a number of stakeholders. Let me quote, for example, the Association of Superannuation Funds of Australia:

… it remains unclear what the levies will actually pay for … The Explanatory Memorandum only has information on the proposed year by year funding with no further detail on what the money will be actually spent on. Given the substantial amount sought to be recovered ($467 million in total) much greater accountability should be demanded from the Australian Taxation Office.

Submitters also made the point that it would be wholly inappropriate for the Australian Taxation Office to obtain benefits funded from this specific levy on the superannuation sector which extended to its broader operations. I note that the concerns which were expressed by a number of industry stakeholders were acknowledged by the committee in its unanimous report and the committee has recommended that the Australian Taxation Office be required to provide a regular, detailed breakdown to the SuperStream Advisory Council of its costs and the expenditure of the additional levies.

Finally, I want to note that the compliance burden which will fall upon employers as a result of these changes will be a material one and it is therefore concerning that the legislative scheme adopted here is one which bristles with penalties and strict liability provisions. Employers are required to provide very detailed data associated with superannuation payments and failure to provide that data exposes them to penalties. It is not just superannuation funds which are exposed to penalties under this legislation; it is every employer including, of course, small employers. A number of stakeholders who made submissions to the committee pointed out the nature of the challenge that employers including, in particular, small employers will face in complying with this legislation. The Australian Chamber of Commerce and Industry suggested that the government ought to consider including a 'safe harbour' provision in the legislation to allow employers, who with the best will in the world find themselves unable to strictly comply, protection against being hit with arbitrary penalties. The Financial Services Council submitted that the proposed compliance measures are overly severe.

I particularly want to note concerns that the bill is bristling with strict liability provisions. A strict liability provision is one where the mental state of the person who commits an offence is deemed to be irrelevant. Accordingly, even if you set out with the best will in the world and make every reasonable effort to comply but fail to do so, you are exposed to penalties under this legislation. The Australian Taxation Office acknowledged that it would have the legal right under this legislation to impose penalties on a small employer such as a butcher with two or three employees. If that butcher were to pay the amount of superannuation contribution required for each employee when it is required to be paid, but failed to include all of the items of data included under the standard, then that butcher is open to a criminal prosecution and there is no defence open to him or her. That is the reality of what a strict liability provision means.

The committee noted its concerns that the tax office ought to be what you might paraphrase as 'gentle' in the application of these powers. I would argue that trusting the tax office to be gentle is an inherently risky proposition and this is an area of significant concern. The coalition supports these provisions in principle but we have some implementation concerns as I have outlined.

Shayne Neumann (Blair, Australian Labor Party) Share this | Link to this | Hansard source

I speak in support of the Superannuation Legislation Amendment (Stronger Super) Bill 2012 and the Superannuation Supervisory Levy Imposition Amendment Bill 2012. With about three million Australians currently over the age of 65 years, and 8.1 million Australians over the age of 65 years by 2050, reform in superannuation is not an optional extra but a necessity and a must. I think this federal Labor government has much to be proud of in its reforms of superannuation.

The super system review chaired by Jeremy Cooper recommended many of the reforms that were undertaken here today. Industry submissions to the review estimated that the industry could save up to $1 billion, achievable through the reforms that we are undertaking. Ernst and Young said similar things in its submission. We have confirmed our commitment in the budget to the SuperStream reforms, which will make a difference, and previous speakers have talked in part about those.

This is a package of reforms to make the superannuation scheme more flexible, more effective, more efficient and easier for members, funds and employers across the country. Currently it is pretty difficult to understand, and a young person who has had three or four different jobs in different locations, vocations or roles might have picked up a bit of superannuation working for one employer after another, sometimes with different funds, and it is easy for their super to be lost. We have an industry worth $1.36 trillion, but according to the Australian Taxation Office we have about $20 billion in lost superannuation. That is money which could be used for the retirement of Australians and to put less reliance on the pension system. So it makes sense to reform the system, to make it more effective and efficient, to reduce reliance on old technology like paperwork and to increase reliance on IT and computerisation.

The reforms will help members keep track of superannuation. An online portal is crucial in that regard so that people can have a look at superannuation, have a look at their accounts and track them, and employers can do the same. It assists people to consolidate those accounts electronically. I do not always agree with the member for Bradfield, but anyone who has ever rolled superannuation from one account to another—I have done this personally and I am sure members of this place and other Australians have also—knows the absolute idiocy of the procedures involved at times. It is extraordinary. I know of a circumstance where one constituent of mine was telling me that he had to arrange for a cheque to be flown to Sydney because they could not change the superannuation from the fund based in Brisbane to the one in Sydney. They had to fly a cheque down to Sydney to deposit it face to face into the fund. This is crazy stuff in the 21st century.

We have a lot of low, inactive accounts, many under $1,000, and these will be automatically consolidated into another of the member's account unless they opt out, saving members' fees and making super easier to control, manage and keep track of. There will be a lot of changes in this process, and I notice the SuperStream Advisory Council has been called for with nominations as well on 4 June 2012.

This government has a proud record, as Labor governments have, of making reform in this country. I am pleased to be advocating locally for the NDIS to come to my electorate, particularly Ipswich. There are great Labor reforms, like the minimum wage, the age pension, Medicare and superannuation. Lest anyone thinks that these came about because those opposite sat over here in government, they should be prepared to have a look, as did the member for Fraser, at speeches made by those opposite on superannuation. They should note the fact that those opposite opposed our reforms to increase the superannuation guarantee from nine to 12 per cent as part of what we have said on the minerals resource rent tax. If those opposite had been on this side of the House they would have deprived 43,000 people in my electorate of an increase in superannuation from nine to 12 per cent.

We have made a lot of changes. Specifically, this legislation amends the Superannuation Industry (Supervision) Act 1993 and the Retirement Savings Account Act 1997. We are talking about a framework introduced to ensure the implementation of superannuation data and payment regulations and standards so that there are no inconsistencies and siloed arrangements between the different funds and so that it is standard across the whole industry. This legislation ensures superannuation transactions can be undertaken by various super funds and entities as well as retirement savings account providers, employers and employees, and will give consistency across the whole sector. The legislation also provides for amendments to the Australian Prudential Regulation Authority Act 1998, ensuring that costs associated with the implementation of the SuperStream measures are included in the determination of a levy, which the member for Bradfield accurately mentioned is paid by the sector to the Commonwealth.

The levy itself will be a levy on the industry. It is important that the legislation before the chamber be passed by 1 July this year, giving the industry time to implement the changes and the superannuation supervisory levy to make sure we collect the implementation costs from the SuperStream reforms. The levy will be on the industry in this particular matter, and it is not unusual for that to take place in a sector. As part of our stronger super package we have announced that this is the case. The industry and the stakeholders know it is coming. All the super funds want to make sure that the industry is viable, effective and efficient, and that the government costs associated will be, by virtue of the APRA regulated funds, $467 million from 2012-13 onwards. The minister can make a determination specifying the proportion of the levy money that is to be credited through the APRA special account.

These are important reforms. Members will be able to look up what their superannuation is. I know that during the global financial crisis many constituents in my electorate have talked to me about the fact that their superannuation funds have suffered. I know of a number of people who have put off retirement because of their superannuation being much lower than it once was. They are particularly interested now in keeping track of their super if they are in their late 50s or early 60s. Employers will benefit through simplified standard provisions, and funds will benefit by making sure they are able to have greater use of tax file numbers to facilitate matching consolidation funds, because the Australian Taxation Office administers super funds and has that overall responsibility.

Superannuation is a particularly important reform for my electorate. The bills here, and the part of the package that we are undertaking, are particularly important. I lobbied hard to make sure that we lifted the superannuation guarantee age limit from 70 to 75. We have done that, meaning another 18,000 Australians aged 75 years and over will get the benefit of superannuation if they continue to work. I talked about that issue just last week at the Ipswich Association of Independent Retirees and superannuants. I received a very favourable response about that because, as many of them said to me briefly, they were undertaking or have undertaken a transition in relation to their work-life situation. The days when people always just decided to retire and go from work to retirement are over. Often people transition all the way through. Making sure that they can pick up superannuation in those latter years is an important reform.

That is something that came up recently in relation to superannuation reform for my electorate. I know how important it is. When I talked to those people about the need for young people in our community to get more superannuation, lifting the guarantee from nine to 12 per cent, they supported it, having experienced that in their personal lives. Many of them told me that at times they wished that they had been able to get superannuation much earlier in their working lives, but it took a federal Labor government—the Hawke and Keating government—to actually bring in this great reform.

The second bill that is associated with this legislation is the Superannuation Supervisory Levy Imposition Amendment Bill 2012. That will make some amendments providing that the Treasurer of the Commonwealth government has the capacity to make a subsequent determination for any financial year of the restricted and unrestricted levy percentages and the superannuation entity levy base. It gives the Treasurer the capacity and flexibility to make those determinations when he or she is required to do so.

These reforms are important reforms. They should be seen as part of a package that we have undertaken, lifting the superannuation guarantee from nine to 12 per cent, making sure that older Australians can still get the superannuation guarantee no matter what age they are, making sure that there are extra superannuation contributions for the 3.6 million Australians who are earning up to $37,000 a year, which includes a lot of part-time workers, cleaners and shop assistants in my electorate. That will benefit about 23,600 electors in my electorate of Blair in South-East Queensland. It will make sure that people can get access and see their superannuation accounts, whether those accounts are active or inactive. It will make sure that we have a simple MySuper product available and it will ensure that there is greater effectiveness and efficiency in the whole sector.

These reforms are major reforms in the sector, long overdue to reduce red tape, long overdue to make sure that the sector works efficiently and effectively for those Australians in the future—not just the three million Australians currently 65 years of age and over, but the 8.1 million Australians who will be around in 2050 when many of us may not be around. Future Australians will benefit from these reforms. When people look back in the future at what this government achieved, I think they will look at superannuation and see it is an area where we made major changes in the Labor tradition of progressive reform to assist working men and women to have dignity and financial security in their retirement. I commend the legislation to the House.

Deborah O'Neill (Robertson, Australian Labor Party) Share this | Link to this | Hansard source

I rise to support the Superannuation Legislation Amendment (Stronger Super) Bill 2012 and the Superannuation Supervisory Levy Imposition Bill 2012. It is with some considerable pride that I stand to make this speech because the bills continue the great Labor tradition of making sure that superannuation is well managed. We were the ones who put superannuation in place and we are the ones who are continuing to make sure that Australians who are going through the process of collecting superannuation, those who are managing it and ordinary Australians who are standing just to receive the benefits from it are going to get the very best that this system can offer.

I note the comments from the member for Fraser about the significance of superannuation in the history of our financial literacy in this country and how critical it is that Labor got that going and that we are continuing to attend to it. I also note some of the great comments from my colleague, the member for Blair, about some of the practical inefficiencies that are currently a part of the superannuation structures. These were noted in particular in the Cooper review. The real reason for this legislative program that is before the House today is that the current problems with superannuation are that it is obviously too complex, it is unnecessarily expensive and it is very slow. The member for Bradfield made a very sound point in articulating a comparison with mobile telephones and the changes that have happened there in terms of people being able to transport their telephone numbers. We have come to take it for granted that we can all be advantaged by the options that modern technology provides. In terms of the superannuation structures, we have a system that is very clunky, where we have 33 million accounts around the country with only about 11 million workers. There is unnecessary duplication, and some of the points made by my colleagues here this afternoon might explain why people have three accounts and just let them do their own thing rather than go through the processes, that are currently so difficult, to compile those into one.

We know that the legislation that is before the House today will really make superannuation easier, for the funds to administer, for the members and for employers, and we know that there are significant gains—savings of up to $1 billion—that will be achieved through the implementation of these SuperStream reforms. Obviously the industry has been key in the conversation on the way we have planned for this to be implemented, and I am very pleased to say that, in our recent hearing, the Financial Services Council was very clear in welcoming this piece of legislation. They let us know that over the past decade the industry has actually endeavoured to agree on a set of data standards for managing these transactions between entities, but they articulated that they lack the capacity to compel external stakeholders, and sometimes even their own stakeholders, to comply with industry developed standards. They welcomed this legislation because these compulsory standards help standardise the process for employers and funds in dealing with one another. That can only be a good thing for Australians, who sometimes leave their superannuation on a 'set and forget' strategy.

That view, of how important this legislative change is for superannuation and ordinary Australians, was echoed by Mr Murray from Treasury and Mr Olesen from the Australian Taxation Office, who actually articulated exactly the same sort of story—that, for many, many years and for various reasons, the industry had been unable to come to an agreement, and that this failure to agree has led to a number of different processes being established between the funds, which led to a lot of deadweight costs in the industry. Obviously, we need to make sure that we respond to that reality and improve the situation.

I noticed that Mr Fletcher made some comments acknowledging that this is a unanimous report but raising some questions, as the member for Bradfield, about the Australian Taxation Office. I think it is very important that we actually get on the record that there has been a significant number of reviews and reforms to superannuation over the years. If we go back to the period of 2006-07, under a different government with a different leadership, we will see that there was an amount of $445 million—which was revised upwards to $525 million over five years—for a plan to simplify and streamline superannuation at that time. It is all well and good for members of the opposition to raise questions about why the ATO have come up with these numbers, but the reality is: there are comparative figures that indicate that this is a reasonable claim and, further, it is very important that there is consultation, with the industry sector and also the people who are going to be part of the supervisory panel, to ensure that these things are considered and to make sure that we get good value from the dollars as this money is being implemented to bring about change.

Indeed, to make sure that there is fair and open scrutiny, we have made a recommendation that the ATO be required to provide a regular, detailed breakdown of its costs and expenditure on the additional levies to the SuperStream Advisory Council, based on reporting guidelines developed in consultation between the council and the ATO. So I suppose it is like any major project that any person might commence on: you always hope that it might cost less than the numbers indicate. But, in the end, to make change and to undertake reform does cost money, and we do have a very high level of acceptance and, indeed, encouragement from the sector to move to make these changes, to make it so much easier for people who are employers—small, medium and large—to comply.

I want to also put this on the record in response to some of the comments made by the member for Bradfield as to concerns about strict liability regarding the ATO. We had evidence from the Australian Taxation Office on the day to indicate that, while there are strict liability provisions, this is supported by those in the industry, who understand that they need these tools to ensure compliance. But the ATO made a very clear point: they have the capacity, the administrative flexibility, to waive or limit penalties where employers are attempting to comply with data standards but perhaps commit inadvertent technical breaches. Of course we were very pleased to hear that, and we wanted to make sure that the ATO were encouraged to do so. So we have done that in our report, urging the ATO to use its discretion to waive or limit penalties in appropriate circumstances.

But, lest the fear campaign—even with regard to this—get some legs, I want to put on record that it will not be until 2015 that small employers will be required to actually comply with this piece of legislation in total, and that, during that period of time, there will be significant consultation with the providers of software such as MYOB or QuickBooks, which are used by many small businesses, to help the small businesses do all of their transactions regarding superannuation at the same time as they are lining up to make payments to their employees.

We have many employers who might be running a small hairdressing salon or a boutique in a local strip mall, who have a number of employees. Currently they have to fill in different forms for different employees and send any number of cheques off to different agencies—it is extremely inefficient and it is quite a paperchase to try and keep track of that. Large companies that use payroll providers will obviously be working very carefully with them to make sure that that is implemented, and it will be in the first period of time that that will occur. But, by the time this comes down to the local businesses—such as Snips Hairdressers at Copacabana or any of the other great local businesses in my seat of Robertson—the providers of the software will be well and truly across this material and be able to provide employers right across Australia, no matter how small the number of employees they might have, with adequate software to enable them to bring these provisions into their workplace and comply with the requirements of the Australian Taxation Office.

We are committed as a government not only to ensuring the superannuation system is reformed but to making sure that it boosts Australians' retirement savings. We are progressively increasing the super guarantee from nine per cent to 12 per cent, starting from 1 July next year, and we know that that stands to benefit 8.4 million workers. If you are a 30-year-old on earning an average full-time wage right now, the changes that we as a Labor government are proposing will bring an extra $118,000 to you at retirement. We are also introducing from 1 July a much-needed superannuation contribution for 3.6 million Australians who are on very low incomes. This is effectively going to refund $500 of contributions tax into the super accounts of people with incomes of up to $37,000.

As part of a range of responses to the real-life superannuation issues of Australians, we have abolished the maximum age limit on superannuation reforms of the super guarantee from 1 July next year, so that 51,000 hard-working Australians who want to keep working past the age of 70 will now be entitled to what we consider should always be their due—that is, superannuation contributions.

These two bills that are before the House today are, in fact, a natural extension of Labor's concern for doing the best we can for ordinary Australians. We are working with business and with peak bodies to make sure that we provide a degree of reform that is very enabling, that will increase productivity, that will reduce costs and that will improve outcomes for ordinary Australians. I commend the bills to the House and urge their prompt passage.

Bill Shorten (Maribyrnong, Australian Labor Party, Minister for Financial Services and Superannuation) Share this | Link to this | Hansard source

I would like to thank the member for Robertson for her contribution, and to thank all those who have spoken on this legislation. I rise to sum up this cognate debate on the Superannuation Legislation Amendment (Stronger Super) Bill 2012 and the Superannuation Supervisory Levy Imposition Amendment Bill 2012.

Our superannuation industry is one to be proud of, a distinct national advantage and one that is forecast to grow very significantly over the next 20 years. Our superannuation system currently manages $1.4 trillion for Australians. This amount will reach $6 trillion by 2030. Despite this, there are many inefficiencies still to be fixed in our system. There are currently approximately 12 million members with superannuation, yet there are over 31 million accounts, and there are over five million lost member accounts with a total value of over $20 billion—that is, an average of one lost superannuation account for every two working Australians.

The superannuation industry can do better in processing transactions, and there are still too many paper based systems. These inefficiencies lead to higher administration costs. Currently, different superannuation funds require different information from employers. This unnecessarily increases the compliance burden on Australia's employers. Ultimately, these inefficiencies lead to higher administration costs which consequently reduce the retirement incomes of all working Australians. The industry has attempted to develop its own voluntary standards over many years but has been unable, thus far, to achieve consensus. This is why the government has decided to take a leadership role by introducing this legislation, which will improve the efficiency of the superannuation industry under the SuperStream reforms. These reforms flow from the recommendations of the Cooper review inquiry into the superannuation industry.

Schedule 1 of the Superannuation Legislation Amendment (Stronger Super) Bill 2012 introduces the framework for the development of common standards and processes for superannuation transactions. Supporting regulations and legislative instruments will prescribe the detailed requirements underlying this framework. By setting down standardised rules for how funds transact with each other, and by setting standardised requirements for the information that funds can request from employers, significant efficiencies will result, ultimately lowering administration costs, simplifying processes for employers and for funds, and resulting in a more timely allocation of contributions to member accounts.

The government has adopted a staged approach to implementation to minimise the impact on the superannuation industry and on employers. Rollovers between superannuation funds will be required to comply with the new standards from 1 July 2013. New standards dealing with contributions from employers with more than 20 employees will apply from 1 July 2014. These standards will then apply to smaller employers from 1 July 2015, subject to further consultation on their impact.

Schedule 2 of the Superannuation Legislation Amendment (Stronger Super) Bill 2012, together with the Superannuation Supervisory Levy Imposition Amendment Bill 2012, enables costs to government associated with the implementation of the SuperStream measures to be recovered by a levy on APRA regulated funds. The superannuation industry's own estimates show that the SuperStream reforms of this government will deliver savings of up to $1 billion per annum. The benefit of these savings will flow through to members in the form of lower fees and charges. When averaged out across the number of accounts in the superannuation industry, the savings are in the order of $30 per account each and every year which significantly exceeds the transition costs involved in implementing these reforms.

The government will be bringing forward further legislation to complete the package of SuperStream reforms. This will include announced reforms to further benefit members, such as a new facility to enable members to easily look up and keep track of their superannuation. Fund members will also benefit from having low, inactive accounts consolidated automatically.

There are costs associated with implementing all these reforms. The most efficient way to meet these costs is by collecting them directly from the superannuation industry. The levy is a temporary one. It will only collect the costs that the government incurs in supporting the implementation of all these reforms. The costs will be recouped over six years, but must be considered in the context of the annual long-term savings of $1 billion estimated by industry.

These are real, important, significant and wide-ranging reforms. They will be implemented in a staged approach across a number of years. For these reasons, the government is establishing a SuperStream Advisory Council which will have the role of providing advice to government on issues relevant to the successful implementation and maintenance of the reforms.

I must acknowledge that the coalition has also acknowledged that the SuperStream measures have the potential to deliver real savings that will benefit superannuants, and that it supports changes that make the superannuation system more efficient, transparent and competitive. Valid feedback has been raised in relation to the provision of additional ongoing information in relation to SuperStream. While the government has already released some of the information on the breakdown of costs, further information will be released shortly. The government also acknowledges the contribution of the Parliamentary Joint Committee on Corporations and Financial Services, and will consider how best to implement its recommendations about enhanced reporting by the ATO.

Finally, in relation to the matter raised by the member for Bradfield with respect to the strict liability provisions, I can advise the legislation provides a flexible compliance framework so that compliance action can be taken where necessary. However, the Australian Tax Office will take an educative approach in the first instance, as advised at the committee hearings. Secondly, I note numerous strict liability provisions that already exist in superannuation legislation were introduced by the Howard government in 2000. I commend the legislation to the House.

Question agreed to.

Bill read a second time.