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

I rise to speak on behalf of the shadow Treasurer and member for North Sydney on the Superannuation Legislation Amendment (New Zealand Arrangement) Bill 2012. Let me say at the outset that the coalition will support this bill. The bill seeks to enact the Trans-Tasman Retirement Savings Portability Scheme memorandum of understanding, which permits transfers of retirement savings between Australian APRA regulated superannuation funds and New Zealand KiwiSaver funds. The coalition supports initiatives such as this that strengthen the relationship that we share with New Zealand and also extend these benefits to citizens of not only our country but of New Zealand as well.

The 2011 census revealed that just over nine per cent of all overseas born persons living in Australia were of New Zealand descent, coming in at just over 483,000. New Zealand came in second behind the United Kingdom, which had the highest proportion of overseas born persons living in Australia at just over 1.1 million people. These statistics reveal just how close the ties are between our country and our Tasman neighbour, with Australia's population above 22 million.

The legislation before the House seeks to put in place provisions that allow for the portability of retirement savings between Australian APRA regulated superannuation funds and New Zealand KiwiSaver funds. It does so through various amendments to the Income Tax Assessment Act of 1997, the Tax Administration Act of 1953 and the Superannuation (Government Co-contribution for Low Income Earners) Act of 2003.

Once the funds are transferred, the rule of the country into which the funds have been transferred prevail, with some exceptions. Australian sourced retirement savings held in New Zealand KiwiSaver accounts may not be withdrawn to purchase a first home. Australian sourced retirement savings held in a KiwiSaver account may be accessed when an individual reaches age 60 and satisfies the definition of retirement at that age as set out in the Superannuation Industry (Supervision) Regulations 1994. Australian sourced retirement savings held in a KiwiSaver account may not be transferred to a third country.

New Zealand sourced retirement savings may only be transferred to and held by APRA regulated superannuation funds and may not be transferred to a self-managed superannuation fund. New Zealand sourced retirement savings held in Australia will not be able to be accessed until the age of retirement as defined in the New Zealand Superannuation and Retirement Income Act of 2001. Finally, New Zealand sourced retirement savings held in Australia may not be transferred to a third country. Due to the exceptions that I have just mentioned, the transferred funds must be separately identifiable once the funds have been moved.

As I said at the outset, the coalition welcomes this legislation. However, we note that the New Zealand government acted promptly on this agreement, with their legislation receiving assent back in September 2010.

Unfortunately, it has taken this government two years to bring this relatively simple bill to the parliament. This is a delay that the parliament is used to. The coalition would have expected to see these changes brought before the parliament a lot sooner.

The only other remarks I will make on behalf of the shadow Treasurer in relation to this bill centre around the fact that no explanation has been provided in the explanatory memorandum or the agreement as to why New Zealand residents cannot transfer their retirement savings into an Australian based self-managed super fund. Absent any evidence to the contrary, it seems that the restriction of transfers to APRA regulated funds has been driven for political rather than policy reasons. The SMSF Professionals' Association of Australia expressed their concerns in relation to this matter in response to the exposure draft of the bill. I will not quote them at length, but they certainly expressed their reservations and, on behalf of the shadow Treasurer, I can say that a future coalition government would seek to consult the New Zealand government with the aim of expanding the Trans-Tasman Retirement Saving Portability Scheme memorandum of understanding to allow for New Zealand sourced retirement savings to be transferred into Australian self-managed superannuation funds. As I said at the outset, on behalf of the shadow Treasurer, the coalition supports the passage of this bill.

Bernie Ripoll (Oxley, Australian Labor Party, Parliamentary Secretary to the Treasurer) Share this | Link to this | Hansard source

The Australian government is committed to the closest possible relations with the New Zealand government and also with the people of New Zealand, and that is something that has been true for many, many years. As part of our Closer Economic Relations, the CER, and single economic market initiatives with New Zealand in 2007, a working group was established to consider options for the portability of retirement savings between Australia and New Zealand. In 2009 the government and the New Zealand government signed a memorandum of understanding to develop the Trans-Tasman Retirement Savings Portability Scheme. The scheme enables Australians and New Zealanders to take their superannuation with them when they move from one country to the other. As we all know, there are many exchanges between our countries. The bill benefits Australians and New Zealanders who move from one country to the other and who wish to take their superannuation with them.

More than 50,000 New Zealanders move to Australia each year, while there are about 14,000 people that leave Australia permanently to take up residency in New Zealand. The measure will assist individuals to streamline their financial affairs when they move between the two countries, consolidate their superannuation in the country of residence and avoid paying fees and charges on multiple accounts held in the two countries. The scheme will also assist Australian superannuation funds by removing small or inactive accounts belonging to former members now living in New Zealand from the Australian superannuation system. The scheme removes an impediment to labour mobility between Australia and New Zealand and enhances the development of a seamless trans-Tasman labour market.

The scheme is an important step in Australia's Closer Economic Relations with New Zealand and supports ongoing progress towards a single economic market. Both governments are committed to this goal through the Australia-New Zealand Closer Economic Relations trade agreement. This is the first time an international superannuation portability scheme has been implemented in Australia, so it is indeed a landmark development and a historic one at that.

I understand that the commencement of this scheme has been welcomed on both sides of the Tasman Sea, including by two key Australian super industry bodies—the Association of Superannuation Funds of Australia and the Australian Institute of Superannuation Trustees. There has also been significant interest and attention in New Zealand welcoming the progress of the Australian legislation and the commencement of this scheme once the legislation has passed.

This is good work that has been done in a timely manner by this government and forms part of a broader objective of having increasing and ever closer relations and relationships with New Zealand and benefits both countries. It benefits Australia and it benefits New Zealand. It is supported on both sides of this House and I commend the bill to the House.

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

This is a very important piece of legislation that is part of a suite of significant reforms in the superannuation area that this government is undertaking. I am pleased that those on the other side are also here articulating their support for the Superannuation Legislation Amendment (New Zealand Arrangement) Bill 2012.

As the parliamentary secretary has indicated, Australia absolutely is committed to the closest possible relations with New Zealand government. In fact, the moment that we are now at is a natural development of a long-term and sustained relationship. As early as the 1920s there were significant formal arrangements between our two countries to ensure and facilitate the free flow of people between both New Zealand and Australia. The landmark 1973 trans-Tasman travel arrangement has allowed Australian and New Zealand citizens to enter each other's country to visit, live and work without the need to apply for authority to enter the other country before travelling. Obviously that has enhanced the movement of New Zealand citizens to and from Australia and this has enhanced, I would argue, the economic conditions of both countries.

The number of New Zealand citizens in Australia certainly increases when economic times in Australia are good relative to New Zealand and decreases when the economy slows. The capacity to have people moving in and out of our labour market to enhance our own economic growth is a very sound arrangement that benefits the people of both our nations. At the heart of all of our legislation should be that consistent concern for the benefit of people.

As of 30 June there were approximately 647,000 New Zealand citizens present in Australia. This piece of legislation attends to that significant number of people who want to be able to ensure their retirement funds are safe. In considering the options for a portability retirement savings scheme between Australia and New Zealand, a formal working group was established in 2007. By 2009 both the Australian government and the New Zealand government had signed a memorandum of understanding to develop the Trans-Tasman Retirement Savings Portability Scheme.

To all those people who were involved in articulating a vision of what was possible and then preparing the necessary documentation—making agreements with relevant authorities to ensure a sound and safe and just structure—this is a red-letter day. It is an achievement of a goal that has been sought for some time by people with that interest. Essentially what this legislation will enable Australians and New Zealanders to do—and I want to stress that this is a voluntary thing—is take their superannuation from one country to the other. If someone wants to move their superannuation, this legislation will benefit that.

In terms of movement across our two countries, more than about 50,000 New Zealanders move to Australia each year and about 14,000 leave Australia to live permanently in New Zealand. When you are making such an important decision for the benefit of your family, obviously you would want to be able to be sure that there was a great deal of probity around it. This piece of legislation, at the end of a long period of consultation, has ensured that individuals will be able to streamline their financial affairs when they undertake a significant movement of their life and their family from one of these two great nations that formed the ANZUS Treaty and served so valiantly in the cause of freedom over many years as Anzacs.

As I said at the beginning of my commentary, this is just part of a suite of significant improvements and streamlining of superannuation capacity for Australians—and in this case to the benefit of New Zealanders as well.

This government has increased the superannuation guarantee from nine to 12 per cent, we have introduced low-income superannuation contributions—effective from 1 July this year—we also implemented a one-off refund of small excess concessional-contribution cap breach from 1 July 2011, and the superannuation guarantee for people who are 70 years of age, as a limit, will be abolished as of 1 July 2013.

I commend this bill as part of a significant suite of important reforms that have outcomes delivered by a determination to improve and enhance the life outcomes for Australians, and in this case New Zealanders as well. I certainly understand that the legislation and the commencement of this scheme have been welcomed by the governments and the people on both sides of the great Tasman Sea. I am pleased to report that ASFA, the Association of Superannuation Funds of Australia, and the Australian Institute of Superannuation Trustees have also indicated that they welcome this legislation. I understand that the New Zealand press has been particularly welcoming of the progress of this legislation and the commencement of this scheme, once the legislation is passed, and with those words I commend the bill to the House.

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

I would like to thank those members who have contributed to the debate on the Superannuation Legislation Amendment (New Zealand Arrangement) Bill. I take this opportunity to acknowledge all the members of the House who have supported this bill and thank them for their support.

This bill introduces a scheme to allow the transfer of superannuation between New Zealand and Australia. Currently, Australians and New Zealanders working in Australia cannot transfer their superannuation when they leave Australia permanently; it must remain in their Australian superannuation fund until they are eligible to claim it, usually on retirement. The new scheme will permit individuals who move both ways across the Tasman to take their superannuation with them. Australians moving to New Zealand may transfer their superannuation to a New Zealand KiwiSaver scheme, New Zealanders moving to Australia may transfer their KiwiSaver benefits to their Australian superannuation fund. In this way many thousands of people will be able to consolidate their retirement savings in their country of residence. They will no longer have to pay fees and charges on accounts held in two countries. There are 483,000 people who were born in New Zealand who now live in Australia. This will be a marvellous development for those people. Superannuation funds will benefit from the removal of small or inactive accounts from the Australian superannuation system. These are accounts that belong to people who no longer live in Australia and who are no longer making contributions to their Australian fund.

This bill also enhances the development of a seamless trans-Tasman labour market by removing an impediment to labour mobility between our two great countries. The introduction of the scheme is an important step in our closer economic relations with New Zealand and supports ongoing progress towards a single economic market. Both governments are committed to this goal through the Australia-New Zealand Closer Economic Relations trade agreement. I commend this bill to the House.

Question agreed to.

Bill read a second time.