18.3.13 Superannuation

Mr HAWKE (Mitchell) (11:14): You know when you hear the word 'historic' in relation to one of these motions that you are in trouble. The 'historic' keyword is code for bad policy today that one day the member for Greenway hopes will be regarded with a rosy haze in a similar way to the Whitlam government in relation to superannuation. I listened very carefully to her presentation on why the government should be lauded for its superannuation reforms, and I challenge the member for Greenway to walk down any street of her electorate and talk to a self-funded retiree about whether they think this government has been good for superannuation. Certainly the member for Greenway does need to read the government's own legislation, because it is a fact that since this government has been in office it has imposed more than $8 billion in increased taxes, targeting people saving for their retirement.

The challenge of a superannuation and retirement system is that you have to have a platform for people to make their own contributions to fund their own retirement. It is not a scare campaign or a fear campaign to say that compulsory superannuation will not sustain a person in retirement. It is a fact, and I challenge the member for Greenway to live off her compulsory superannuation if she thinks she could do so. Clearly, of course, in Australia we have to have a system that welcomes and encourages voluntary contributions to people's own superannuation. That is where this government with its policy uncertainty and chaos has produced a retrograde step for superannuation in Australia today. Over the past five years we have seen the cuts to super co-contribution benefits for low-income earners. That was more than $3.3 billion in total, but what it did was reduce the government's super co-contribution for lower-income earners from $1,500 under the Howard government to just $500—something that the member for Greenway did not mention and certainly not something that is lauded in this motion before us.

What is the best way to take advantage of human nature? It depends on your approach to government. Do you believe in the carrot or the stick approach to government? I have said this in this place before and I will say it again: carrot incentives are the best way to take advantage of human nature. A co-contribution scheme allows for people to make their own contributions and for the government to say, 'We're going to offer you an incentive to sacrifice that money that you can spend now on your current standard of living or on your current family needs and put it aside for the future by matching it.' In fact, in this case it was $1,500 cut to $500 by the government—a three-times reduction. This government is big on penalties and big on using the stick instead of the carrot.

Amid a series of options to increase taxes on super savings, the government even contemplated breaking another election promise—and the fact that it did not is remarkable. It was promised in 2010 that the government would never—never!—remove tax-free superannuation payments for the over-60s, but the desperate times of budget deficits and the chaos in economic policy have meant this government is desperate for money. It is looking at superannuation as some sort of automatic teller machine for the government—'We need money; we've got to go get it.' We saw that with the lost super and unclaimed money bill that came through this House recently, where the government was looking at lost super supposedly in active bank accounts as a source of revenue, because it was so desperate for cash. It is crazy for the member for Greenway to say that was some fear campaign whipped up by the opposition; the government put in a bill to sweep up people's private accounts if they were lying dormant, even if they were lying dormant for legitimate reasons. It introduced a bill to say all the lost super would be swept up by the government. Why? Was it a good public policy measure? Was it a historic reform? No, this was a government desperate to sweep up any cash out of the economy that it could to fund its flagrant expenditure.

The member for Greenway spoke about raising the compulsory contribution from nine to 12 per cent and how great this would be for low-income earners. Of course, the coalition supported that and will not rescind it in government, but I would make the point that the Henry review actually recommended against raising compulsory superannuation from nine to 12 per cent. The reason the Henry review recommended against raising the compulsory barrier was because it was not needed by those on higher incomes and would disadvantage low-income earners. The review also suggested that contributions be taxed as income at the recipient's current tax rate to create both better equity and net additional government tax income by reducing use of this form of tax avoidance and providing extra income for equity needs. That was the government's own Henry review that said that. So, again, I ask: is that a historic reform advantaging low-income earners? The member for Greenway's argument is not supported by the Henry tax review.

The member for Greenway also bemoaned a series of things. In particular, many of the things that she was saying were purely partisan and not in the interest of good superannuation policy, especially when she comes from a government that has increased taxes on voluntary savings by reducing concessional contribution caps from $50,000 and $100,000 down to $25,000. They are significant reductions; I think any member of this place would agree. Anyone who wants to save more than $25,000 a year, which includes their compulsory superannuation contribution, now has to pay more tax as only super contributions of up to $25,000 per annum attract the lower 15 per cent rate of tax. It goes back to the point I made earlier about $8 billion in increased taxes targeting people saving for their retirement.

Here we have a motion lauding the government's performance on superannuation when they are increasing the tax take out of this absolutely vital area of government policy where we do want to see more people contributing to their own retirement. We do want more self-funded retirees and less drag on the state. How is that going to happen when we have $8 billion of increased taxes targeting people saving for their retirement? It is hard to see.

We, the coalition, think that the concessional contribution caps are too low and most certainly should not be lowered any further, given at present anyone saving more than $25,000 a year has to pay the top marginal rate of tax of 46.5 per cent already. These are people putting aside money for their retirement to take the burden of the government in the future. Probably of the biggest drains on the Commonwealth in terms of welfare expenditure the single largest is pensions. So these people are doing the right thing by our society and the right thing by themselves in their retirement and we are taxing them at 46.5 per cent for just $25,000. I ask the member for Greenway to come back in here and say that she agrees with taxing at 46.5 per cent the contribution of $25,000 a year and that that is an historic reform that has been introduced into this place by her government.

Of course, this is on top of all of those lost and raided accounts that I have spoken about. Over the six months from 31 December 2012 to 30 June 2013, the government expects that the tax measure of 46.5 per cent will raise $760 million in additional revenue. This is something that is hard to understand.

This is a very partisan motion, lauding Labor for establishing the superannuation guarantee in the first place. However, the premises of most of the arguments of the member for Greenway really do not stack up when you look at them—the increase in compulsory superannuation is not supported by her own government's Henry taxation review, the things that this government has done in raising $8 billion in extra taxes off people saving for our own retirement and the removal of the system of incentives. The only system of government policy that has any chance of working is incentivising people to make their own voluntary contributions for their retirement. Every other measure—taxing them, penalising them and pushing them down for putting money aside for their own retirement—has no chance of delivering a viable amount of money for people to retire on. That is really why this motion has a very poor element to it.

The coalition have made it clear that in government we would not make any detrimental, unexpected changes to superannuation. That is exactly what the superannuation industry is calling for—no detrimental changes that are unexpected. The member for Greenway says that the policy chaos and all this uncertainty is just a furphy. The uncertainty that is created by constant change to the taxation of superannuation means that people vote with their feet. They will not make those contributions while they are being taxed so heavily and while the current policy environment is constantly changing. The uncertainty that this government produces in every sector has been replicated in superannuation and retirement savings, to the detriment of Australia's future.