Senate debates

Tuesday, 5 February 2013

Adjournment

Superannuation

9:15 pm

Photo of Mathias CormannMathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | | Hansard source

Mr President, I seek leave to speak for up to 20 minutes.

Leave granted.

People across Australia saving for their retirement will have a clear choice at the next election: on the one hand the coalition led by Tony Abbott, which offers stability and certainty in superannuation arrangements, or, on the other, a continuation of the high-taxing, chopping and changing Labor ways in superannuation, a continuation of the current government's constant undermining of people's confidence in the superannuation system. Australians can support a coalition government after 14 September that will provide certainty and stability in superannuation so that people can plan their retirement with confidence, or support a continuation of the high-taxing track record of the current government.

Our leader, Tony Abbott, has made a firm commitment on behalf of the coalition that under an Abbott-led government there will be no more unexpected detrimental changes to our superannuation system. This will help ensure that people across Australia saving for their retirement can plan their retirement with confidence. Over the past five years Labor has constantly and continuously targeted people saving for their retirement with significant tax increases. Labor has a terrible track record of targeting Australians doing the right thing by saving to achieve a self-funded retirement, with more than $8 billion in increased taxes on super savings so far and with the clear threat of more to come.

Over the past five years Labor has made Australians working hard and saving, so that they get themselves into a position where they can look after their own retirement needs and not be a burden on the public purse, pay the price for its wasteful spending. So far Labor has increased taxes on voluntary savings by reducing the concessional contribution caps from $50,000 and $100,000 under the Howard government, depending on your age, down to $25,000 across the board. Anyone who wants to save more than $25,000 per annum, which includes their compulsory super contribution, now has to pay more tax.

Labor have also dramatically reduced the government's super co-contribution for low-income earners and doubled the super contributions tax for high-income earners. They have fiddled with the definition of 'income' to ensure more income is captured in the super tax net. They have increased capital gains tax revenue from super. As if that is not enough, the Prime Minister and the Treasurer are arguing now that people saving to achieve a self-funded retirement should be taxed even more.

Superannuation is clearly a very important part of our retirement framework. The coalition support a three-pillar retirement system with the age pension as a safety net, the compulsory system of retirement saving through superannuation, and incentives for additional voluntary savings. We recognise the need to boost retirement savings as an important economic objective. Over the past few years the Labor-Greens government has focused on increasing compulsion, forcing businesses and employees to pay more into superannuation by government mandate while weakening the third pillar of our retirement system by reducing incentives to encourage voluntary savings. The coalition's focus in government would be on encouraging increased voluntary savings to complement compulsory superannuation if and when the budget can afford it.

We want to encourage as many Australians as possible to actively plan and save for their retirement, to take full advantage of the benefits the superannuation system has on offer and to work towards self-funded retirement. We will work with the superannuation industry and all relevant stakeholders to ensure our superannuation system is the most efficient, the most transparent and the most competitive possible. Only the most efficient, transparent and competitive superannuation system with appropriately high standards of corporate governance will deliver the best possible value to superannuation fund members across Australia, with their retirement incomes safe and maximised. Continuing to improve efficiency, transparency, competitiveness and corporate governance in the superannuation industry will help to increase Australians' level of confidence in the system and willingness to make additional voluntary superannuation contributions.

Labor in government has introduced an anti-competitive and non-transparent process for the selection of default superannuation funds under modern awards, channelling hundreds of thousands of Australians into union dominated industry super funds. Despite repeated promises to address this unacceptable situation, Labor has failed to do what needs to be done to ensure that all Australians, including those who find themselves in default super arrangements, can benefit from genuine competition. We have previously said that a coalition government will work to ensure that Australians in default superannuation funds can benefit from genuine choice and competition by ensuring any MySuper product can compete freely in the default superannuation market.

We have said before that a coalition government will improve superannuation governance by implementing a series of corporate governance reforms recommended by the Cooper review but not progressed by Labor. In particular we have said that a coalition government would ensure that there is a more appropriate provision for independent directors on superannuation fund boards. We have said that we would ensure that directors who want to sit on multiple superannuation boards must demonstrate to APRA that they do not have any foreseeable conflicts of interest. Disclosure of conflicts of interest should be and must be mandatory, and directors of superannuation funds must disclose their remuneration in line with the provisions that apply for publicly listed companies and other APRA regulated sectors. We will work to improve the transparency of information available to consumers so that they can properly compare super funds. We will properly address the issue of excess contributions to make sure that Australians are not unfairly penalised for genuine unintended errors when making superannuation contributions. If and when the budget and government debt are back under control we will revisit concessional superannuation contribution caps.

We will cut red tape and streamline employer superannuation reporting by implementing a superannuation clearing house through the Australian Taxation Office. We will review the regulatory barriers currently restricting the availability of relevant and appropriate income stream products for Australian retirees. And we will review the current mandated minimum payment levels for account based pensions to assess the adequacy and appropriateness in light of current financial market conditions. That is a very comprehensive set of initiatives that we have previously announced. Of course the most important commitment that we have made so far is the commitment that was announced by our leader the other day, which is that a future coalition government will not make any unexpected detrimental changes to superannuation arrangements.

Yet the current Labor government—because they are desperate for more cash—are planning for more new taxes on Australia's super savers. Yet again there is talk about Labor increasing taxes on superannuation. Yet again this Labor government is short of cash. Yet again they are desperate for more. Yet again they have decided that hard-working families saving to achieve a self-funded retirement are an easy tax target. And yet again they are poised to create uncertainty for super savers by breaking a previous solemn promise. This time they plan to break their solemn 2010 promise that Labor—and I quote the Treasurer—would never remove tax-free superannuation payments for the over-60s, a commitment as emphatic as their other famous broken promise that there will be no carbon tax under a government led by Julia Gillard. In fact, this super promise was so explicit that the Henry tax review was formally prevented from considering a proposal to tax those payments.

The reason Labor want to break yet another superannuation related promise is that they are short of cash. Over the past five years Labor have spent too much. Over the past four budgets they have spent $172 billion more than they raised in revenue, and they have already made a further $120 billion in unfunded promises so far. If despite previous promises to the contrary Labor decide to proceed with yet another tax increase targeting Australian super savers to plug the Treasurer's various budget black holes, this must be put to the Australian people at the election before it is legislated by the parliament. Super savers across Australia deserve the opportunity to pass judgement on yet another Labor Party tax increase targeting superannuation, before it is enshrined in legislation.

Australians doing the right thing by saving for their retirement deserve certainty and stability in the rules and tax arrangements governing superannuation. Labor spin doctors are already working flat out behind the scenes to pre-emptively demonise those Australians the Gillard government is about to hit with massive additional taxes. It is exactly the same modus operandi as on previous tax-grabbing occasions. For example, when the Treasurer increased the luxury car tax, he suggested that he was only targeting the very rich: Australia's Maserati and Ferrari drivers, he said. However, since then, the increased revenue from the luxury car tax has overwhelmingly come from families buying a new family station wagon, or the like.

This time Labor's class warfare targets are those Australians saving to get themselves into a position where they can look after their own retirement needs and not be a burden on the public purse. Those super savers are doing the right thing, yet Labor's propaganda unit, in preparing the ground for increased super taxes, is branding them as rich, quasi-tax dodgers supposedly taking advantage of inappropriate and costly perks to avoid paying their fair share of tax. The reality, as always with Labor, is very different.

Firstly, any increased taxes on super will not predominantly hurt the rich and the wealthy. Superannuation is not the main retirement savings vehicle for the rich and very wealthy. It is, however, the main savings vehicle for Australia's hard-working aspirational middle class trying to save enough for their retirement. Any increased taxes on super will be fairly and squarely targeted at them. Constantly changing the goalposts for people who have done the right thing by planning and sacrificing to save for their retirement will further undermine their confidence in the system. Younger people in particular will be more reluctant to lock up more of their money in super if they cannot have confidence in the stability of the rules.

Secondly, the lower 15 per cent rate of tax for income directed into superannuation is not a perk. It is a deliberate incentive to encourage people to save more voluntarily for their retirement during their working life.

Thirdly, only super contributions of up to $25,000 attract the lower 15 per cent rate of tax. Already under this government, any super savings above $25,000 a year—including compulsory super—is taxed at the top marginal tax rate of 46.5 per cent. This is irrespective of the lower tax rate an individual taxpayer may pay on income taken, pre-retirement, as take-home pay. It is simply not true that every Australian who puts $25,000 or more into super in a particular year is rich. We know that many Australians play catch-up with super by contributing additional larger amounts on top of their compulsory super after years of being unable to do so at all, such as when caring for their children or paying off their mortgage. In fact, so called non-concessional super contributions come from previously taxed take-home pay—previously taxed income—with anyone contributing more than the allowable $150,000 per year, or $450,000 over the three years, at risk of an overall tax hit of up to 93 per cent.

Fourthly, to qualify for the lower rate of tax, super savers are required to lock their money away, letting it earn investment income so that it is available in retirement. For this to work, there has to be a firm understanding between the saver and the government that Canberra will not play with people's locked away savings every time the federal budget is under threat. Why would anyone agree to lock any of their income away in superannuation, as opposed to taking it home now, if they are taxed on it at the top marginal rate anyway and will not have access to it for 20, 30 or 40 years?

Finally, why would the government think it is right to impose a further tax on taking money out of superannuation in retirement? Money invested anywhere else, say in a bank account, is not taxed when you make a withdrawal. Why would super be any different, particularly given that super is already taxed on the way in and on the money earned while locked up in the system? Labor's plan to increase taxes on superannuation will seriously undermine confidence in the system and severely weaken our retirement framework.

The Gillard government again have not thought this through. Blinded by their desperate need for cash, they have been cutting corners and those mooted super tax increases come, as I have mentioned, on top of more than $8 billion in previous tax increases on superannuation under this government already, including at the expense of low-income earners. Let me stress that again: including at the expense of low-income earners, despite promises in the lead-up to the 2007 election that there would be no changes to superannuation arrangements. After promising in 2007 that Labor would not make any change to superannuation, not one jot, not one tittle, they proceeded over the last five years to cut the government's super co-contribution for low-income earners by $1,000, even though they said before the election they would not. That is exactly what will happen again.

Let us be very clear: while Labor's rhetoric before the coming election will focus on increased super taxes on the rich, after the election any re-elected Labor government would do what they have done before and again target both low- and middle-income earners with additional taxes on superannuation. They will vehemently deny it before the election but after the election a re-elected Labor government would scrap the low-income earners super tax offset, for example. It is one of the measures supposedly funded by the mining tax, which has not raised any meaningful revenue. Labor cannot afford it and nobody can trust any promise to the contrary from Mr Swan or Mr Shorten. In 2007 Mr Swan promised no changes to superannuation and, as I have mentioned, since then he has repeatedly reduced the government's super co-contributions for low-income earners saving for their retirement by $1,000, down from the $1,500 under the Howard government. In 2010 Mr Swan promised that Labor would never remove tax-free superannuation payments for the over-60s, and now that is exactly what they are about to do. Then we had the no carbon tax promise in 2010, and we know what happened to that. How can anyone believe any promise that this Labor Party makes this side of the election when again and again they promise one thing before the election and do the exact opposite after the election.

There is a better way. The coalition believes that Australian families doing the right thing by saving for their retirement deserve certainty and stability in superannuation so they can plan their future retirement with confidence. That is why we have made a commitment that an Abbott-led coalition government would not make any unexpected detrimental changes to superannuation. So I say it again. On 14 September Australian super savers will have a clear choice and Australian super savers deserve the opportunity to pass judgement on 14 September on any proposal by this Labor government to increase taxes on their super savings yet again. They should be given the opportunity to pass judgement on any further proposal to increase taxes on super savings yet again before any such proposal is enshrined in legislation.

So I call on the government, given that they are planning to break a previous solemn and firm commitment not to increase taxes on superannuation, to give people the opportunity to pass judgement at the election. If Labor thinks it is such a good idea to increase taxes on Australians' super savings, put it to a vote. Let people pass judgement before we vote on it in this chamber. People across Australia have reason to be really sick and tired of the constant chopping and changing, the constant increases in taxes that have been imposed on their super savings over the last five years. With those few words I do hope that people across Australia will reflect very carefully about the choice that they will have in front of them on 14 September.

Senate adjourned at 21:24