House debates

Thursday, 30 November 2023


Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023; Second Reading

10:26 am

Photo of Stephen JonesStephen Jones (Whitlam, Australian Labor Party, Assistant Treasurer) Share this | | Hansard source

I move:

That this bill be now read a second time.

The bill makes targeted, responsible reforms to support better economic, fiscal and regulatory outcomes.

Schedules 1 to 3 to the bill reduce the tax concessions on total superannuation balances which exceed $3 million.

The government's proposed objective of superannuation, which was introduced into the House by my friend and colleague the Treasurer last week, is 'to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.'

In line with this objective, the measure implemented by these schedules is a modest and responsible change to better target tax concessions in the superannuation system. From 2025-26, the concessional tax rate applying to future earnings of superannuation balances above $3 million will be a headline rate of 30 per cent. Earnings corresponding to amounts below $3 million will, of course, continue to be taxed at the headline rate of 15 per cent.

This measure maintains concessional taxations within the superannuation system, and does not place a limit on the total amount that can be held within superannuation, beyond, of course, what is constrained by relevant annual contribution caps. It ensures that concessions are better targeted at amounts that deliver income for a dignified retirement.

In 2025-26, the additional tax on earnings imposed by the bill is expected to apply to around 80,000 people, which is less than 0.5 per cent of individuals within the superannuation system or with a superannuation account—that is, 99.5 per cent of people with a superannuation account will be unaffected by these measures.

The change will increase revenue by $950 million over the five years from 2022-23. In 2027-28, the first full year of revenue collection, the measure is expected to increase revenue by $2.3 billion.

Schedule 4 will allow the Commissioner of the Australian Charities and Not-for-profits Commission, the ACNC, to make disclosures about new or ongoing investigations where the disclosure would prevent or minimise the risk of significant harm.

Current secrecy provisions prevent the ACNC from disclosing whether it is investigating an alleged misconduct by a charity. This can adversely impact public trust and confidence in the sector and the ACNC as an effective regulator.

The reform will allow the ACNC to assure charities and donors that it is acting on issues of public concern and strengthening compliance, which will boost public confidence in the sector, and that the sector is doing the right thing.

By increasing public trust and confidence in charities and the ACNC, this reform will help to ensure donors and philanthropists continue their support for the sector. This will contribute to the government's election commitment of doubling philanthropic giving by 2030.

Schedule 5 of this bill changes the frequency of the Financial Regulator Assessment Authority, hereafter FRAA, review cycles. Increasing the frequency of FRAA review cycles to every five years will support the FRAA to deliver more comprehensive reviews of ASIC and APRA. It will facilitate the delivery of more considered recommendations than is possible under the current biennial review cycle, which will improve the effectiveness of our financial system regulators.

This will be done by ensuring that regulators will have additional time to respond to and implement the recommendations between reviews, allowing future review panels to assess implementation meaningfully and direct their focus more productively.

Schedule 6 amends various laws in the Treasury portfolio to ensure that those laws operate in accordance with their policy intent, make minor changes to improve administrative outcomes and remedy unintended consequences, as well as correcting technical and drafting defects.

Schedule 7 provides licensing relief to facilitate access by Australian professional and wholesale investors to global investment opportunities so that they can diversify their financial holdings. This improves outcomes for millions of Australians as these services are commonly used by superannuation funds and institutional investors, among other financial firms.

I want to stress that, to date, this relief has generally been provided by way of an ASIC instrument. However, the legislation and this schedule in the bill will elevate the relief to primary law and improve oversight for the regulator. This gives certainty to the industry that financial institutions and eligible investors can access the financial products and services offered by foreign financial service providers.

This schedule provides targeted exemptions for foreign financial services providers that are either authorised in a comparable regulatory regime, a market maker in respect of derivatives that are traded on prescribed licensed markets, or providing financial services to professional investors.

This schedule will also exempt certain foreign companies from the fit-and-proper-person assessment when applying for a standard financial services licence in Australia if they are regulated by a comparable regulator and it is a restricted licence that enables them to service wholesale clients only.

Schedule 8 updates the payments system regulatory framework to address the risks posed by new and emerging technologies.

The amendments expand the definitions of 'payment system' and 'participant' to ensure the Reserve Bank of Australia has the ability to regulate all participants and payment systems, including digital wallet providers and buy-now pay-later service providers.

Further, it also introduces new ministerial designation powers that will allow the Treasurer to designate payment services or platforms that present risks of national significance, allowing them to be subject to additional oversight by the appropriate regulators.

Finally, schedule 8 in this bill gives the Reserve Bank of Australia greater powers to regulate a broader range of players in the payment system, as well as extending these powers to other relevant regulators where there is a material risk to the 'national interest'. These changes will modernise our payment regulation framework to ensure that it is fit for purpose, now and well into the future.

The Legislative and Governance Forum on Corporations were notified in relation to amendments in schedules 6, 7 and 8 in accordance with the Corporations Agreement 2002.

Full details of the measure are contained in the explanatory memorandum.

Debate adjourned.