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Wednesday, 26 May 2010
Page: 4216

Mr HARTSUYKER (4:40 PM) —I welcome the opportunity to respond to the minister on the question of whether the government are proposing a stronger and fairer superannuation system. Given that the government have linked the system to the great big new tax on mining and are requiring businesses to find $20 billion a year to pay for the increases to the superannuation guarantee levy, the system is not stronger or fairer.

But let me start on what the opposition and the government agree on. We agree that all Australians must start saving more for their retirement so as to increase their standard of living in retirement and to take the pressure from the age pension. The minister is correct to state that the ratio of working age Australians to those aged over 65 will decrease from five to one today to just 2.7 to one in the future. This is a challenge for a government. But this government and the minister must also recognise that it is not only a challenge for government but a challenge for future retirees. Workers must start planning their individual needs in retirement and how much retirement savings they believe they need.

The government’s main answer to this challenge is to increase the superannuation guarantee by three per cent, which will be phased in by the year 2020. The government are also proposing to raise the superannuation guarantee age limit from 70 to 75, and to provide a $500 annual contribution for individuals on incomes up to $37,000. The government have also back-flipped on their 2009-10 budget plan to cut the concessional contribution for over 50s to $25,000 per year. The cap will be left at $50,000 a year, but those under the age of 50 will still have their ability to voluntarily contribute to their superannuation balance capped at $25,000 as a result of the Labor’s budget last year.

How ironic that a government addicted to spending is forcing Australians to save. The government does not trust Australians to save for their own retirement and Australians, rightfully, do not trust this government to save for the nation’s future. The measures do little to engage with workers and encourage workers to engage in planning for their own retirement. This government does not trust workers to think about their retirement futures. Labor will mandate that employers pay an additional three per cent to each employee’s superannuation account. Most employees will not even know the payments are being made, where they are going and who is ultimately going to control the money.

Many Australians are concerned about what is happening to their superannuation balances right here and now. Labor is linking the Resource Super Profits Tax—Labor’s great big new tax on mining—to the superannuation reforms and it is hitting the value of resource stocks. That has been very much the case since rumours were leaked of this new tax on 13 April 2010. Since that time, resources stocks have plunged in value by over $90 billion, with $23 billion being ripped from the superannuation accounts of workers and retirees.

Yesterday Minister Bowen claimed in question time that any suggestion that Labor’s great big new tax on mining was hurting share prices was nothing but a scare campaign. But today, there were comments made in the Australian newspaper by Citigroup economist Paul Brennan who said that his bank’s clients in Singapore and Britain had lightened their holdings of Australian shares and were ‘citing perceived political risk due to the resource super profits tax’. According to Mr Brennan, ‘A number of investors believed there was now greater political risk to investing in the Australian market.’

The minister may now wish to claim that investors in Singapore and Britain are engaged in a scare campaign against this government. The government needs to be held accountable for what is currently happening to superannuation account balances. Last week, my office took a call from a constituent who is 63 years old, has worked in the transport industry for some 40 years and is very concerned about his superannuation. Since the announcement of the tax, he has seen his superannuation fund drop in value by $8,949 to $156,133, a decline of 5.4 per cent. At 63 years old, he will not easily make up that loss. And he is not alone.

Yesterday, the member for Pearce asked the Prime Minister whether the government did any analysis on how the new mining tax would affect investments of self-funded retirees and impact on their standard of living. Well, the Prime Minister refused to answer the question and crudely referred to the increase in the superannuation guarantee as how the government would boost retirement incomes. Today the Prime Minister was asked a similar question:

Will the Prime Minister assure Mr Jones and 778,000 other self-funded retirees in Australia that the government has done an analysis on how the new mining tax will affect them?

Quite clearly, the government has not considered the impact of this great big new tax on self-funded retirees because the Prime Minister was lost for a relevant answer. The Prime Minister should know that the superannuation guarantee does not affect people who are currently retired. Certainly the Prime Minister’s answers yesterday and today are an insult to self-funded retirees. Comments made by the minister for superannuation on Sky News last Monday were an insult to future retirees. The minister dismissed concern that the mining tax would hurt superannuation savings and said that the losses would only be minor and that these things would happen when reforms are introduced. The minister is basing the impact of the government’s great big new tax on mining on research conducted by the Industry Super Network, who have more recently written:

It is difficult to quantify any particular direct impact on share prices attributable to the RSPT at this stage.

Whilst the industry funds might have difficulty quantifying the loss, every superannuant in this country can quantify the loss to them by looking at their superannuation account balance. They do not believe a minister and a government that are so intent on burying any negative information about government policies and instead use questionable data and comments from vested interests to sell their policies.

We saw how Labor operates this week when they were scrambling to justify the great big new tax. The government and the Prime Minister wanted to show that taxes paid by the mining industry were, on average, less than those paid by other sectors. The only problem was that the most up-to-date figures that mining companies provided to the ASX on taxation levels did not back up the government’s claim, nor did data from that great mining-friendly organisation, the Australian Taxation Office.

In its desperation, the government used a paper written by a graduate student from the University of North Carolina in the United States of America to claim that the industry was only paying an effective tax rate of between 13 and 17 per cent. Since then it has been revealed that the paper—which has not been finished—used as few as four mining companies to reach its figures, it did not take royalties into account and it lumped Australian companies in with companies from New Zealand. These were figures relied upon by the Treasurer of this country. The author of the paper, Mr Kevin Markle, told the Australian newspaper that his paper ‘has nothing to do with what it is being used for in this debate’. The paper was about comparing tax domicile, not comparable industry tax rates. When this was revealed the government searched far and wide and found a Treasury minute backing up the 17 per cent claim. The only problem is that the Treasury minute refers to the decade ending in 2004. Why would we use figures that are six years out of date? That is what this government is all about. It is more concerned with spin than truth. It does not want voters to learn that the tax rate for the mining industry is 41.34 per cent when we take into account royalties. It does not want us to know that it is the highest taxed industry in this country.

When the opposition has the nerve to point out the government’s errors we are accused by the Prime Minister of favouring the views of the Minerals Council of Australia. The government has been struggling hour after hour, day after day to justify that position on this great big new tax. Meanwhile, business is being squeezed by this government. Small businesses are finding it difficult to find finance and banking competition has been dramatically reduced. The government continues to spend madly, borrowing $100 million every day and competing with small businesses in lending markets as it raises government debt to its peak of $94 billion in 2012-13. All this is so that schools can be given massively overpriced halls and the government can clean up its blow-outs in the pink batts program. We see debacle after debacle in relation to the Building the Education Revolution. Borrowing and spending are putting pressure on interest rates, making it more difficult for small business to compete in the market. And now small businesses will have to find an additional three per cent on their payroll to pay the government’s increase to the superannuation guarantee levy.

But the government tries to give the impression that the great big new tax on mining will in fact pay for the increase to the superannuation guarantee. That is the spin they are trying to put on it. We have heard what they said but we knew what they meant. The minister knows that these statements are willingly misleading. While the increase to the superannuation guarantee levy will have an impact on taxation revenue, and there will certainly be increased funds paid into superannuation funds, it will be paid for by businesses large and small across Australia.

Over $20 billion each year will need to be found by businesses to pay the increase to the superannuation guarantee. This will come out of their capacity to produce and continue as a viable business. The government promised before and after the election that it would not raise the superannuation guarantee level beyond nine per cent for the impact it would have on small business. It assured business that it would not raise the guarantee. Here is what the then shadow minister for superannuation, Senator Sherry, said before the 2007 election:

We won’t be increasing the nine per cent superannuation guarantee for a number of reasons. I’ve said time and time again at many conferences to many people in the financial services sector, privately and publicly, that nine per cent is enough from the employer, it would be unfair to increase that nine per cent any further and we won’t be doing it.

And here is what the then minister for superannuation, Senator Sherry, said in February after the election:

The 9 per cent superannuation guarantee contribution that employers pay for their employees—again, we’ve committed that we could not increase that and increase the payment burden on employers.

The Labor Party have very well and truly broken their promise not to increase the burden on employers and now they are attacking others with this position. Meanwhile business is having to find $20 billion to pay for this government policy. Here is what Mr Peter Anderson of the Australian Chamber of Commerce and Industry has said about the increase to the levy:

This means an additional cost to Australian employers of between $20 billion and $23 billion per year once the full effect of that measure is put in place by the year 2020. That is a very substantial new hit on Australian businesses. It is not funded by the proposed Resource Super Profits Tax —it is funded by Australia’s employers and small business. It involves no redistribution from the resource industry to other industries or to employees.

The government has not been able to answer how small business is going to cope with this increase. I do not think it really cares. The minister refers to cuts in the company tax rate that will assist small businesses to pay this levy, and the Prime Minister has made similar claims, but this ignores the fact that only one-third of small businesses are incorporated. These businesses do not benefit from the cuts to the corporate tax rate. These businesses will have to find an additional three per cent on top of payroll. The government needs to answer how these businesses will do so in a very competitive business environment.

I also note that the government has ignored the Henry review’s advice on superannuation. Ken Henry specifically ruled out increasing the superannuation guarantee levy and detailed other proposals that would increase savings rates which the government has ignored. The government has refused to release the modelling of Henry’s advice to the detriment of this debate and it is undermining its position.

So, although the government and the coalition agree that retirement savings must be increased, the opposition do not believe the government has the right to do so. The government should not be imposing a greater burden on small business. The government should not be putting small business under further strain. We really should be encouraging employees to invest for their future. We should be encouraging greater financial literacy. This government is all about slugging business. The coalition is all about personal choices and ensuring that businesses large and small prosper without the imposition of a great big new tax.