Senate debates

Thursday, 30 November 2023



4:57 pm

Photo of Tammy TyrrellTammy Tyrrell (Tasmania, Jacqui Lambie Network) Share this | Hansard source

I move:


(a) the Senate recognise that the Albanese Government seeks to legislate that the objective of superannuation is to help people retire with dignity, alongside government support, in an equitable and sustainable way;

(b) the Senate expresses that:

(i) foregoing tax receipts to promote superannuation as an estate planning tool is inconsistent with this objective,

(ii) offering generous tax discounts to individuals with high superannuation balances to make additional contributions is inconsistent with this objective, and

(iii) allowing super funds to spend the proceeds of members' money without transparency or accountability to those members is inconsistent with this objective; and

(c) because superannuation's objective is 'to help people retire with an equitable and sustainable way', the cohort that Commonwealth superannuation expenditure should target is those who are most at risk of failing to accumulate sufficient savings, to allow them to retire with dignity.

Back in February this year the Prime Minister and the Treasurer held a conference announcing they would change the taxation of high-balance superannuation accounts. They said that Labor was planning to tax the earnings of superannuation accounts with balances above $3 million at 30 per cent instead of 15 per cent. They went to great lengths to say why this was necessary. This is how the Treasurer justified it:' We inherited $1 trillion of debt which was getting more and more expensive to service as interest rates went up. We had persistent and growing spending pressures in health, the NDIS, aged care and, of course, defence.' The Prime Minister said that they would strengthen the system by making it more sustainable. That was an interesting thing to say.

One thing the government and I agree on is that the tax deductions we give people regarding superannuation are expensive. When the bookshop gives an employee a discount of $10 off a $30 book, that discount costs the bookshop money. It's money they would have earned from an ordinary sale but did not. The books will show that they made a sale, but the tills will be short $10. It's as if you charged full price, sold the book and gave the customer a tenner for their troubles. That would show up in exactly the same way when you did your closing sums. Nobody would say that the 10 bucks you handed over was anything other than a cost to the business. Nobody can say the decision not to charge the full rate of tax on super is anything other than a cost to our tax receipts, either. I'm not saying that means these discounts are bad. There's a time and a place for them. Sometimes you want to put in place discounts to get people to do something they wouldn't have done without the discount. Certainly, these discounts are having an effect. People are stashing money into superannuation at a pretty extraordinary rate. In the financial year ending June 2023, Australians stashed away $42.7 billion above and beyond their employer contributions. That's money they put into their super on top of regular payments. That's extra. That's $42.7 billion; Australians paid $30 billion on electricity and gas over the same period. And why wouldn't they? You're allowed to do it. If you have some spare money lying around, you want to invest it. You can invest it in the stock market and pay the same full tax rate, or you can stuff it into super and only pay 15 per cent. Good luck to them. There's nothing wrong with taking advantage of the system as it stands.

I don't blame people who are lucky enough to be in a situation where they've got spare money to stuff into super in a cost-of-living crisis. Contrary to what some in this place might think, not every rich person got that way by doing something wrong. I just think, if you're lucky enough to be in that position, you don't need as much help as people who are doing tough. I don't think that's a controversial thing to say. A person with $1 million in their super account is better off than a person with $100,000. If you only have so much money to use to help people retire with dignity, I'd be thinking that the person who has managed to put together $1 million wouldn't be the person you'd throw most of the money at, yet that is exactly what the system is doing. What I question though is why we're using the tax system to benefit the retirement savings of very wealthy people when there are very poor people who could do with some help and who are going without.

Superannuation tax concessions, the discounts we give people for putting money into super, are estimated by Treasury to cost about $50 billion a year. That is how much our defence budget is. That's the money we could be collecting if we taxed it at the full rate, but we're not. It is the equivalent of our entire national defence budget, and, if we're coping a $50 billion budget hit, it's worth asking where that money is going; who is benefiting from that? According to Treasury's analysis, 40 per cent of the benefit—$20 billion—every year is going to the richest 10 per cent of Australians. The poorest 10 per cent got none of that benefit, not a single lonely dollar.

It's a situation that is getting worse every day, because the richest are the ones with the most money saved in super, and their super is taxed at a lower rate than ordinary income. The ones who make money out of super end up with more money than people who are making money working, after both have paid their tax bill. Your balance grows, and the more it grew in the previous years, the more it grows every year that follows. That's the beauty of compound interest. Money makes money. If you've got it, you'll keep getting it.

But, when the working poor are crying out for help to manage the cost of living, they are told there's no money in the kitty. 'We're skint,' we're told. Superannuation is supposed to be the system that helps people retire without relying on the age pension. It's supposed to help you live out your twilight years on your own terms. But, if you're one of 80,000 Australians with a balance of $2 million in your super, you are going to be fine in retirement. You'll be very comfortable, rest assured.

In fact, if you're a male retiring today with $2 million in your super, you can expect to live off $100,000 a year for the rest of your life tax free. If you live to your life expectancy, you'll still be left with $1.4 million in your super account when you die. If that's you and that's the situation you're in, you should be very pleased with yourself. Well done to you. You've done nothing wrong. You've invested well. You've put money away for a rainy day, and in retirement you receive the dividends for being a good saver.

But I have some bad news for you, and you're not going to like it. The Australian taxpayer subsidising you to live off $100,000 a year for the rest of your life is not a good use of taxpayer money, and I'm sorry to say that. I know it's hard to hear, and I don't say it because you are bad or evil or unworthy. I say it because there are people who aren't as well off as you who need help, and giving them a leg up now can help take pressure off the age pension down the track. A tax break for you will not help us save money down the line. It just fattens up your retirement savings and lets your super fund charge a higher fee. But a tax break for people in their early working life who have a shot at retiring without requiring the age pension saves us money.

The crazy thing is that our system doesn't prioritise these people; it prioritises the richest 10 per cent. In other words, there are two ways your lifestyle is funded in retirement: super and the pension. The more money you have in your super account, the less you are able to get of the pension. Keep in mind that your money grows in super, so the money you put into today is worth more later. Giving you money, or handing back money out of the till, might make sense if the money we give back grows enough to reduce your pension payments later on. Giving $10,000 in tax breaks to super makes sense if it saves you $20,000 in pension payments down the line. Giving $10,000 tax breaks to super payments makes no sense if the person you're giving them to won't ever qualify for the age pension because they have too much money already. If you have $2 million in your superannuation, you will not need the age pension. Spending money on you does not make sense. It might be nice for you to get, but that's not enough of a reason to do it.

The Labor government has made a noose for its own neck by promising to not touch superannuation tax concessions. During the election the Prime Minister said: 'We have no intention of making any super changes. We're making all of our policies clear'. Now he's saying that just because he had no intention then doesn't mean he can't change his mind—and he's right. It doesn't mean he can't change his mind. But why say it? People vote on policies that they think are yours and they expect you to work on them. Then you just change your mind and say your policy is to do the opposite. Do they get to change their vote too? Anyway, that's not the point.

The point is that the government is acting on making the system more equitable and more fair, and I think that is commendable. But they're doing one thing affecting people with more than $3 million in their super not especially clearly and not especially well. In the meantime there is low-hanging fruit that should be grabbed to make the system work for more people. I say that because the prism through which we should look at super taxation isn't 'How good is this for me?' but 'How good is this for the country?' A good, solid, sustainable system is good for the country. An unsustainable system that rewards the people who need it the least is not good for the country. It might be good for those getting the benefits, but that doesn't mean it's good.

One policy that I think makes sense is to pay super on carer's payments. Informal care is massive. About 2.8 million people provide informal care across the country. About 300,000 people receive carer's payments, half of them are over 55 and three-quarters of them are women. For many of them providing care is full-time work. You might find yourself in a situation where you're providing care in the blink of an eye. If your child suddenly requires daily care, you can't work and provide care at the same time. If an elderly parent needs support, you can't help them every day if you're working every day.

People on carer's payments tend to have to take time out of the workforce to provide care. Some will never return to work. Some will go back and when they do their superannuation will have gone backward. They have a one or two-year break in their income, which means they've got one or two years with no contributions from their employers. If they go back to work part-time, the gap will continue to grow. It will never close. Women already retire with less than men. We know that's not fair. These gaps in super are making it worse.

Paying super on carer's payments would be an investment in future pension savings. It's basically the Australian government putting money into superannuation on your behalf. The money you make is money they save when you retire. Giving it to everyone, however nice it would be, does not make the same sense, because about half of the people on carers payments have been on them for more than 10 years. Giving them super payments would not make sense, to be perfectly honest, because while it would be nice to be able to afford to do it, we'd be paying them money to take pressure off the pension—and it will not realistically do that. They will still retire with a full age pension because their balance would not come close. They have been out of the workforce for too long and the gap has grown too big. But if we limited payments to only people under 40 and only for the first two years, that would cost about $60 million per year. Because that $60 million would grow in their super accounts, it would end up saving money. The budget would actually be healthier by making these payments, supporting people to retire in dignity, in a way that is equitable and helping the budget at the same time. You might say, 'That makes sense and it is worth doing but where will that $60 million come from?' I say, 'Where is the $43 billion we are spending on super concessions every year coming from? You tell me.' This is the kind of thing you can afford to do if you are prepared to shave one-tenth of one per cent from the existing superannuation tax concessions, if you take just one per cent of the tax deductions we give to mostly high-income earners and then give 90 per cent of it back to those high-income earners.

Consider the difference you can give to early career carers. You should not retire in poverty just because your mother gets a terminal illness and you need to take leave from work to help look after her. You should not have to choose between dignity in retirement and your parents' dignity in the final months of their lives. This is a way we can make sure that choice does not ever have to be made. Yes, it costs us something and, yes, it must come from somewhere. But superannuation is the sort of thing where these choices are already being made every single day, enough choices to fund a whole nation's defence, so I do not accept that we cannot choose to fund this. I do not accept that we can choose not to do it, because that does not look equitable or sustainable from where I am sitting.


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