Parliament Updates

Zali Steggall MP says superannuation can have long term impacts on women and their retirement savings

27 August, 2020


I rise to support the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020. It gives effect to the 2019-20 budget measures designed to give greater flexibility to Australians over 65 with their superannuation. Concurrently, if you're over 65 years of age, there are caps on the maximum concessional before-income-tax and non-concessional after-income-tax contributions you can make into your super each year. To give effect to more flexibility in the super system, this bill amends the Income Tax Assessment Act 1997 to enable individuals aged 65 and 66 to make up to three non-concessional superannuation contributions under the bring forward rule. The current non-concessional superannuation contributions cap is $100,000.

The associated regulations will increase the cut-off age for spouse contributions from 70 to 75 and they will also increase the age, from 65 to 67, at which the work test starts to apply for voluntary concessional and non-concessional superannuation contributions. The Treasury has done a good job on consultation with the bill and the explanatory memorandum provided to stakeholders. It has been open to the public for comment for some time. I support these measures.

Making additional super contributions is a sensible idea and can lead to a more comfortable retirement. By lifting the age for super contributions for non-concessional and spousal contributions as well as a work test, individuals will have more opportunities to do this. Whilst this bill assists those wanting to put money into their super, there are further considerations for the direction of super, especially in the current economic context, that I would urge the government to consider.

It's been 30 years since the introduction of super. Australians now have some $2.7 trillion tucked away for their retirement. Super is one of the three pillars of retirement income. It works in concert with voluntary savings and property holdings, and it's integral to taking the pressure off the aged pension and the public purse. I've had constituents writing in frequently about the recent, and maybe not always so recent, assaults on the system by coalition members of this parliament, and aligned think tanks, that want to make super voluntary. To quote former Liberal leader John Hewson:

How can it be justified that a decision on compulsory super which is a fundamental element of a long-term national retirement incomes strategy should be made on "current circumstances"?

I would urge caution and restraint.

We only need to look at other OECD countries to see that many people have little saved for retirement and the uncertainty and anxiety that that results in is not a good outcome. According to the Australian Institute of Health and Welfare, in 2017, 15 per cent of Australians, or some 3.8 million, were aged 65 and over. We know that this proportion is growing steadily as life expectancy rises. Over the coming years, young people will shoulder even more of the tax burden to support this ageing population. The Grattan Institute projects that the number of 15 to 64 year olds, for every person aged 65 and over, will be 3.2 by the year 2054-55, falling from 7.4 in the mid-1970s. Without compulsory super, this trend would lead to poor quality of life for a whole generation of young Australians that will be called on to shoulder even more of the aged-pension costs as our population ages. This is already happening with private health. We must do more to support our youth, which means rejecting calls to interfere with the integrity of the system.

We can't talk about superannuation in Australia without talking about where it is not good enough. In relation to women, it is not a good enough policy. It needs to be improved. It's well overdue for this to be the focus of the government.

The statistics are dire. Women currently retire with 47 per cent less superannuation, on average, than men. Once women reach retirement age, approximately 70 per cent of them have less than $150,000 in super. It's not good enough for a country like Australia. Forty per cent of older single retired women live in poverty and experience economic insecurity in retirement. Women over 55 are the fastest-growing demographic of the population for homelessness. The issue starts early in women's working lives. Women take, on average, five years out of the workforce to care for children or family members. According to the Workplace Gender Equality Agency, it's during these years, when many women are balancing paid work with unpaid caring responsibilities at home, that the gender pay and super gap begins to widen considerably.

There are solutions. This problem is persistent and baked into many of our social and economic policies, and it is time in 2020 that the government address these issues. Just like the long-lasting problems, the solutions have been discussed at length and they are there for an ambitious government to take on. By amending the Paid Parental Leave scheme, we can increase female workforce participation and decrease the wage and super gap. Australians are currently able to access up to 20 weeks of parental leave. This is well below the recommended amount, as suggested by the World Health Organization, of 26 weeks and it's well below the OECD average of 55 weeks. We should move to parity with our international peers.

Parental leave itself must be more equitable. One of the big problems is, of course, that 99.74 per cent of parental leave is taken by women. I would be curious to do an analysis of all the male members of this parliament to see how many took parental leave. We need policies that support men who want to take time out to take care of their children.

We have other levers at our disposal. The childcare subsidy works directly to increase female participation in the workforce, reducing the gap, and it is the main way the government can assist families with childcare costs. Many women are finding that the loss of benefits, like family benefit and the Medicare levy, as more hours are worked is a disincentive to further work. Increasing the childcare subsidy would overcome these disincentives and increase workforce participation.

The benefit to the wider economy would be substantial. The Grattan Institute projected that it would boost GDP by $11 billion annually and result in $150,000 in higher lifetime earnings for the typical Australian mother. This should be the priority of the coalition government. According to the Australia Institute, if we took it one step further and emulated the Icelandic free child care and world-leading parental leave scheme of three months for either parent, shared equally and equitably, then Australia's GDP would be $140 billion more, or some 7.5 per cent higher.

I get a lot of feedback on this issue from my constituents in Warringah, and we're coming up with solutions. A local business called Super-Rewards is fusing ecommerce and tech to try and solve the women's super gap. Founded by two women, both mums who are tired of policy inaction, it will allow retailers to top up your super when women shop online. Participants are effectively making voluntary micro-contributions that are a substitute for all the unpaid and part-time work that does not qualify. It's compatible with any super fund, including self-managed super funds, and they already have over 120 retailers on the platform. By combining government policy and private sector ingenuity, we can make sure that women all over Australia have a safe and comfortable retirement.

There is one more issue that I need to raise today in relation to the super system—specifically, compliance. The government earlier this year raised and extended an amnesty to businesses who had not paid, or incorrectly paid, super to their employees. Employers have had a six-month window until 7 September 2020 to disclose, lodge and pay any unpaid super guarantee amount for their employees.

So employers can claim deductions and not incur administration charges or penalties during this amnesty, but, paradoxically, the amnesty may lead to many businesses being forced to pay significant fees on superannuation which they have not paid, as late penalties are crystallised on the completion of the superannuation statement form. If you do pay the super but do not complete the SGC form, you incur nominal interest until it is completed. In many cases, businesses have paid super but not been aware of the requirement to complete the form, leading to penalties in the tens of thousands of dollars accruing over time. There is no discretion given to the Australian Taxation Office in these situations to waive these costs.

I've written to the Treasurer on this but, regrettably, have not received any advice as to whether it can be rectified. I would urge the Treasurer to look at this question, as it is unfairly penalising businesses for an administrative oversight, not a failure to pay appropriate superannuation to their employees. I believe that the penalty is disproportionate to the harm caused as, in most cases, the employee has received the correct amount of super. I worry that it is unfairly penalising businesses around Australia for that administrative error. Calculating nominal interest charged from the date of noncompliance to the lodging of the SGC form, not the actual superannuation payment date, results in huge costs for businesses that receive poor advice.

Finally, I welcome the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020 and the changes it makes to the flexibility of the super system. The changes will provide further incentives to stash more savings away for a comfortable retirement. The super system, in this way, is an essential pillar to our retirement income and policy foundations. Yet we must not overlook that it does leave some, especially women, disadvantaged. I urge the government to go further than this bill and look at policies and private solutions to fix a still deeply unequal system.