(Fadden) (09:11): I thank the government for introducing the Public Sector Superannuation Salary Legislation Amendment Bill 2022, and I thank the Leader of the Greens for his concerns, some of which are quite legitimate. It is a very rare thing for a parliament to consider making a retrospective law, dating back to the 1980s, on something that is currently before the courts. It's very, very rare. I've been here for 15 years. This is only the second time I've seen it done. The other time was when I did it as the Assistant Treasurer five years ago. So I'm very cognisant of why assistant treasurers, who are responsible for super and tax, always get lumbered with the most contentious and difficult issues. It's why I appreciate the point the Leader of the Greens made because this is very, very unusual.

One of the reasons assistant treasurers find themselves in these positions—and the last time also dealt with superannuation—is that when laws were written back in the 1980s and 1990s many things were assumed. In the case I dealt with, the assumption was that everyone knew what a lump sum was in super. And it was not defined until people took it before a court to seek it to be defined.

We are facing a similar issue here, where, pre-FBT and in the absence of a definition—in this case, the condition of rent-free housing ostensibly for diplomats overseas, whilst not explicitly provided for, being a basis for salary for which super is on top of—public servants have sought to take it to court. That case—the Peace case, if you like—relates to potential windfall superannuation payments, as well as unexpected debts from unpaid member contributions, and is before the Federal Court. It has been taken there by three former diplomats who are claiming the value of their publicly funded rent-free housing should be included in their salary for superannuation purposes.

That is the basis of this discussion. It will potentially have an impact on the budget of somewhere between $8 billion and $11 billion. It is a serious issue, and it's why we should look at this seriously. I'd like to say from the outset that the opposition will be supporting the government, noting the irregularity and the rarity of this coming up. This issue has been considered by the government soberly and sensibly, and we thank them for that. The previous coalition government was keeping an eye on this, as a very high-risk public administration issue, prior to the election. So this is not something that is being rushed by either the coalition or the opposition when it was previously in government. This has been thought through. The bill is consistent with the former government's approach to addressing issues like this and how they're to be done.

For the benefit of the House, this issue about rent-free housing was generally not provided prior to the introduction of FBT in 1986 as it would have attracted income tax. From 1986 onwards it became commonplace that the tax burden shifted to the employer and that rent-free arrangements, unless explicitly stated, did not count as a salary for superannuation purposes. That was the generally considered view. Those views should be held to stand regardless if they were not included in instruments at the time or otherwise.

Since 1986 the Commonwealth has typically not treated rent-free housing as forming part of superannuation salary. Generally neither employers nor employees have made superannuation contributions that have taken into account the value of rent-free housing. That is how the system has run for 36 years.

I appreciate now that there is a court case and we're having to face a difficult issue whereby these issues weren't defined, but it doesn't mean that the definition wasn't implied and well understood for almost a third of a century. The applicants in the case before the Federal Court—Brendan Peace & Ors v Commonwealth of Australia and Anor, the 'Peace case'—are trying to demonstrate differing views on the operation and scope of paragraph 5(e) of the regs. They have argued for an interpretation which has not been consistent over the last third of a century. If accepted it would mean a large number of former and current Commonwealth employees, excluding the military, as the minister said, in their thousands would have the value of rent-free housing treated as salary for superannuation purposes.

I appreciate courts don't look kindly when the federal parliament intervenes mid-case retrospectively. Whilst I appreciate the court's sentiments it is this place's role to legislate, not the courts. It is the court's place to interpret legislation. If this place is not satisfied with what the other separated power, in that case the court, has done it is implied upon this place to seek to make it right. This is the basis of the discussion that we are having now. On that basis, noting it's a difficult issue, noting it is a very rare thing to do and noting it is done sensibly and soberly as it should be, the opposition will be supporting the government.