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

First of all, I would like to thank the members who have contributed to this debate. Currently, excess contributions above the concessional contributions caps are generally taxed at the top marginal rate of 46½ per cent regardless of an individual's income. This is unfair for lower- and middle-income earners. The changes contained in the legislation will enable excess concessional contributions to be included in an individual's taxable income and allow them to be taxed at the individual's marginal tax rate, plus an interest charge, regardless of their income or the cause of the breach. In addition, individuals will be able to withdraw excess concessional contributions from their super provider.

This is the latest in a long line of financial services amendments bills that this parliament has passed. I believe fixing up excess contributions is an appropriate outcome for this parliament and it is one which will stand the test of time. This Labor government has achieved a lot in superannuation in terms of legislative reform. We have tackled adequacy by lifting superannuation over the next seven years from nine per cent to 12 per cent. We have improved fairness for people who earn less than $37,000 a year. They do not pay a 15 per cent tax on their superannuation. We do not see the point in perpetuating the gender gap in savings between men and women for retirement. We believe that low-paid workers who go to work every day should have a chance to save money for their retirement. So adequacy has been tackled and fairness has been tackled.

We also believe that these concessional contribution issues that we are dealing with in this bill tackle the issue of fairness. We have seen downward pressure on superannuation fees and charges through the development of MySuper. And also through the SuperStream proposals we believe we are making the system of superannuation more efficient and effective in the back-office transactions, decreasing pressure on people's savings accounts. We have also tackled conflicts of interest and improved public confidence in the system through our Future of Financial Advice reforms and indeed through our MySuper changes and also through improvements to the governance arrangements, giving power to APRA to be able to look behind the arrangements of superannuation trustees such that people can have renewed confidence in the system. We repudiate the attack on industry funds perpetuated by those in the coalition. We believe that, for good governance, it should be about giving APRA the powers to intervene directly in specific matters rather than just going after a class of superannuation fund altogether.

When you look at the extensive list of legislation, I would like to acknowledge, in case I do not get this opportunity again before the end of the parliament, the hardworking people from Treasury, APRA, ASIC and indeed the Australian Taxation Office. I also acknowledge the work of all those in the industry who have provided so much advice and counsel and pragmatic, business focused advice. I believe what motivates the vast bulk of the debate in superannuation, as it should be, is the best interests of consumers.

Furthermore, when we look at the budget measure of the 15 per cent low-income superannuation charge being abolished, it was costed on the basis that individuals would receive a refundable tax offset, where applicable, for the 15 per cent tax already paid on contributions within the fund. The refundable offset may result in individuals paying a lower rate of tax on excess contributions than their contributions under the cap. This is not the intention of the reform. The offset is now non-refundable. The measure was costed on the basis that the interest charged would apply from 1 July of the year following the year in which the contribution was made. However, to deter individuals from deliberately breaching the caps—which, by the way, I do not think happens a great deal; it is for the sake of policy consistency—the new interest charge will be applied from 1 July of the year in which the contribution is made. There are also some other parameter variations related to other interactions with the personal income tax superannuation systems. I commend this bill to the House.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.

Ordered that this bill be reported to the House without amendment.

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