Additional Comments by Labor
Senators
Superannuation Budget Measures Bill 2004
Labor believes that the proposed reduction of the
superannuation surcharge tax, which applies to high income earners with an
annual income in the year commencing 1 July 2004 of more $99,700, is an
exclusive tax cut for less than 5% of the population. Labor notes that there is no government
proposal for a reduction in the contributions tax which would benefit low and
middle income earners. Labor will not
support this exclusive tax cut.
The extension of the low income earners
co-contributions scheme is claimed to be of benefit to low and middle income
earners. Labor asks how many genuine low
income earners can find up to $1000 after tax from their disposable income to
allow them to contribute to this scheme.
Unfortunately Treasury could not provide any details
on either the additional take-up rate or the likely income background of those
who will participate, in the scheme.
Labor believes that there may be a significant number of higher income
earning spouses making contributions for their low to middle income partners
and children.
The measure is poorly targeted and unfair particularly
given the majority of low and middle income earners do not have the
discretionary income to significantly contribute.
Superannuation Laws Amendments (2004 Measures
No 1) Bill 2004
This Bill extends the low-income earners
co-contribution scheme by removing the current test for participation in the
scheme, that an employee must earn more than $450 per month, and replaces it
with a test that requires only 10% of income to be earned as an employee. The test effectively extends the ability to
participate in the contribution scheme to those earning less than $450 per
month.
Treasury were unable to provide any estimates of
likely take-up rates or predictions of the likely income background of the
individuals who are most likely to make contributions when the new test is
operative.
The obvious question that Labor asks is how many low
income earners earning less than $450 a months can afford to contribute up to
$1000 from after tax income to superannuation.
It is highly likely that the new test will allow high
income earners to make contributions on behalf of their spouses and children
who do a minimal amount of work in order to qualify for this scheme.
As Labor has repeatedly pointed out, this measure is
poorly targeted and unfair given the majority of low and middle income earners
do not have the discretionary income available to participate in the scheme.
Superannuation Laws Amendment (2004 Measures
No 2) Bill
The Superannuation guarantee notional earnings base is
to be standardised by phasing out certain exemptions that have been in place
since 1991. These exemptions have
allowed some employers to effectively pay less than the compulsory 9% superannuation
(SG) unfairly discriminating against those employees affected by these
exemptions.
At the same time that the employees subject to these
exemptions have been disadvantaged, their employers have in fact enjoyed a cost
advantage compared to other employers who do not benefit from the
exemption.
The Government proposal to phase out the exemption
over six years with the exemption completely removed in 2010 is
inadequate. The employees affected have
already been disadvantaged for 13 years.
Labor believes the exemption should end on 1 July 2005
with provision for individual employees to argue an "incapacity to
pay" case before the relevant Federal or State Industrial Commission.
SENATOR URSULA
STEPHENS
Deputy Chair