Wednesday, 24 June 2009
Tax Laws Amendment (2009 Budget Measures No. 1) Bill 2009
Nick Xenophon (SA, Independent) Share this | Hansard source
I indicate my support for the Tax Laws Amendment (2009 Budget Measures No. 1) Bill 2009. As Senator Milne indicated, I will confine my remarks largely to schedule 3 in terms of superannuation matters, although I would like to raise the changing of taxation arrangements for overseas workers—and I do not think Senator Sherry would mind if I say that I have raised this briefly with him. There has been some concern raised that by changing the taxation arrangements for Australians working overseas there could be some quite significant unintended consequences, that firms would rather employ locals overseas than Australians overseas.
My questions to Senator Sherry are broadly along these lines. Firstly, to what extent do the tax gains in respect of this take into account that there will be a leakage, so to speak, whereby workers will lose their jobs or, alternatively, firms will use local workers overseas rather than Australian workers who are lured to these jobs to a large extent by virtue of the more favourable tax arrangements but are still Australians who have a job not here but overseas? Secondly, how would any exemptions work? What would the criteria be for any exemptions? Thirdly, further to the issue of exemptions, how will transitional arrangements be dealt with? For instance, how would an Australian worker who is working overseas with a contract for three or four years be caught up by this? Would that simply be a factor for the exemption or would that be a significantly material factor that would give comfort to those workers and firms who have arrangements in terms of working overseas? Whilst I understand the government’s policy intent in relation to this, what will the consequences be? Will it deliver as much in revenue as the government thinks it will, if it simply causes a shift from employing Australians with particular expertise on overseas projects, and result in Australians not getting a job at all and firms employing locals on these overseas projects? Senator Sherry is more than aware of this and I look forward to his response in respect of that.
I move the amendment standing in my name on sheet 5832:
Omit all words after “That”, substitute “this bill be withdrawn and redrafted in a form that does not protect politicians from the taxation implications of the superannuation changes the Government is imposing on the broader community”.
The amendment is self-explanatory. It essentially says that this legislation not be further considered unless and until it is redrafted in respect of what I see as preferential treatment that politicians get in relation to these changes.
If I could just go back a step. What the government is intending to do, and I think Senator Coonan outlined this well, is that there will be a change in the concessional contributions cap from $50,000 to $25,000 for those under 50 and from $100,000 to $50,000 for those over 50. The explanatory memorandum sets that out. It allows for contributions for those aged over 50 at any time between the financial years 2007-08 and 2011-12. The $100,000 cap will continue for the current financial year but will go down to $50,000. There has been a debate about the rationale for that. It will be a revenue saving measure. I think the government was concerned that it was unfair that that level of concessional contribution was as high as it was, and I know the philosophical debate between the coalition and the government in respect of that.
My concern is that those who are in a defined benefit scheme will be exempt from that. The most obvious example of a defined benefit scheme relates to politicians elected to this parliament before 2004 and also for politicians elected I think prior to 2004 in virtually every other state and territory. I should disclose that, since I was elected to the South Australian parliament in 1997, I have been in a defined benefit scheme. I have previously indicated publicly that I seek to opt out of that scheme to go into a scheme that is in line with community standards. So far, the government of South Australia has been unwilling to let me do that, but I will persist in relation to that because I think it is fundamentally unfair that the politicians’ scheme is so out of kilter with what the rest of the community gets. I think one of the reasons politicians are not held in high regard amongst some sections of the community is that people feel that they get a special deal.
We can have a debate at another time about what is an adequate level of remuneration for politicians and the like. The fact is that the arrangements for politicians’ superannuation prior to 2004 are extraordinarily generous and out of step with what the rest of the community can expect to get from their superannuation. There is an exception, of course, in terms of senior public servants and older schemes and other defined benefit schemes. I am grateful to the minister and his office and the officers of the Treasury for the briefing I received yesterday that set out very clearly the government’s position and concerns in relation to this. I believe it ought to be possible to note what the notional benefit is. Whilst defined benefit funds are a completely different creature from an ordinary superannuation fund, it is quite reasonable there be a deeming method to work out the notional level of the contribution. Whilst there is a different taxation arrangement for these defined benefit schemes, those in a defined benefit scheme are still much better off than anyone else in the rest of the community who is not in a defined benefit scheme.
The intent of this amendment is to say that politicians ought not be exempt from the effect of these changes in relation to contributions. That is what this amendment is about, insofar as it can be deemed that the notional contribution is in excess of $25,000 for those aged under 50. Who would that be in this parliament? The member for Sturt, I imagine. It is not a criticism of the member for Sturt; he just happened to be a very young man when he entered into federal politics. He is under the old scheme and he is well under 50, so to what extent is there a notional benefit there that is in excess of what this legislation is seeking to do?
Whilst defined benefit funds are quite different in the way that they are structured, it seems to me quite inconsistent that you would have a situation where the government is seeking to trim back what the concessional benefit is in terms of the cap but those in a defined benefit are exempt from that. I believe that with some political will it could be redrafted. The reason I have done it in this form is that I have been advised that I could not move an amendment on this because it would be seeking to impose a tax. The ball is really in the government’s court, but I hope the government can at least acknowledge that politicians in the pre-2004 scheme are a special case. They get benefits way above the rest of the community. Insofar as the government is seeking to tighten that up for the rest of the community, that should also apply to members in a defined benefit scheme—that is, members of parliament in the pre-2004 scheme.
To me it is about equity, it is about fairness and it is about some consistency with the intent of the government’s legislation in relation to the concessional contributions cap. I will not hold my breath on that amendment passing, but I think it is important that we have that debate and that the government explains why it is that there is no concomitant effort for there to be a tightening up of the defined benefit schemes when the rest of the community is facing a tightening up of their scheme in terms of the concessional contributions cap.