Mr Bourke —The evidence that has been given to the committee today has borne out my initial comment: that there is general support for the principle with which this bill is dealing. However, as I think somebody commented, the devil is in the detail, and there are a number of issues which the committee has dealt with in terms of that detail. But I think that the fundamental principle still remains intact. I have a list of issues here that I can comment on and Mr Patch from Treasury has some issues as well. I thought I might start with giving you a general guide through the legislative framework so that it is clear for the committee as to how all the different items of legislation interlock.

The bill before the committee primarily amends the Family Law Act and its application is broad in terms of the superannuation with which it deals. It goes beyond the regulated superannuation and also includes non-regulated superannuation, so that the proposals in the family law amendments cover all forms of superannuation. The bill covers the constitutionally protected schemes, the Commonwealth schemes and non-regulated schemes as well as the regulated schemes. The proposals in the family law bill are broad in their application. That has implications then for the other two items of legislation which are subordinate, that is, the amendments to the family law regulations and the amendments to the SIS regulations. The SIS regulations, for which Treasury are responsible, deal with a couple of situations where the Family Court makes an order to split a payment and what are the requirements on the trustees. Secondly, you will note that in the SIS regulations it does cover the creation of a new interest in accumulation funds. We have done that primarily for constitutional reasons, that is, because of the just terms requirement under 51(xxxi) of the Constitution. The creation of a new interest therefore applies only to accumulation funds, and that interest is fully vested.

There has been some discussion between members of the committee and various witnesses about the creation of interests in defined benefit funds. Under the proposals, there is no new interest per se which is created in a defined benefit fund—and I have had discussions with Noel Davis about this in one of the breaks. Again, that is primarily because of the just terms requirement. A defined benefit plan has a vested and a non-vested component and, if the Commonwealth made a law to divide that form of superannuation, we could never be sure that what we were dividing was that which was ultimately due and payable to the member and that we were not taking funds from accounts of other members; hence the just terms requirement. I should also note—and there was some discussion between you, Mr Chairman, and one of the witnesses about that particular provision in the Constitution—that it acts as a prohibition on the Commonwealth making a law for the acquisition of property other than on just terms. That applies not only to acquisitions of property by the Commonwealth—that was certainly its primary design—but it also applies when the Commonwealth makes a law for the acquisition of property between private party A and private party B. So it has application in this context. To make it clear, that provision does not necessarily require that the Commonwealth acquire the property. Of course, under a family law settlement, the Commonwealth does not acquire a property. It is the Commonwealth making a law to regulate the transfer of property between the two parties to the marriage.

The family law regulations is the third element of the legislative package which covers the payment of superannuation once the superannuation becomes payable. There was some discussion throughout the course of proceedings about the notion of a splittable payment. I think Mr Davis was musing about why it has been drafted on the basis that a splittable payment becomes payable. That is again because of its broad coverage and, because of defined benefits schemes, we can never be sure that the law is only operating on the funds payable to the member of a defined benefits scheme in circumstances once that benefit becomes payable. That of course then has implications for the clean break principle. There has been a degree of discussion about the clean break principle throughout the day. The clean break principle is in section 81 of the Family Law Act which says that the court should try to end financial arrangements between the parties as far as practicable.

In our effort to design a law which is consistent with that, we believe we have done so—certainly in relation to accumulation plans, because in those circumstances a new interest can be created. I am sure the committee is aware that 84 per cent of memberships are in accumulation plans and that we can end the financial relations between the parties in terms of their superannuation because of that. However, there is also a competing principle of equity between the parties, and then there is the overshadow of the just terms requirement. In relation to defined benefit plans, we are unable to do that unless and until the superannuation becomes payable. Hence, the family law amendments are designed around splittable payments, and it is what we could call a payment splitting regime. The additional modules which operate on top of that are the proposals for the creation of a new interest in an accumulation plan under the SIS regulations.

I will turn to the issue of commencement, which was raised in your discussions with the actuaries, Senator. The commencement provision is clause 2 of the bill, and it says that the act commences on the day on which it receives Royal Assent. It then says that schedule 1, which is all the operative amendments, will commence on the first anniversary of the date of royal assent. That is designed for a number of reasons. It is primarily because we would anticipate there will be requirements for discussions and education and also requirements on trustees for modifications of their IT systems. The 12-month period is designed for that. Once we go through this process, and if the bill is passed by parliament, then the operative clauses would commence 12 months from royal assent, to allow all of the necessary administrative machinery to be put in place.

I have a number of other issues which I will raise sequentially. There was some discussion this morning about possible loss of the family home. That was in discussion with the representatives from the Australian Institute of Family Studies. That is an issue which we have grappled with ourselves, and I think it is fair to say that these amendments will change the negotiation behaviour in family law settlements. You have heard today that a number of settlements in family law are done by consent. In fact, the recent survey conducted by the Australian Law Reform Commission showed that 92 per cent of cases were settled by consent. Three per cent of the remaining eight per cent were undefended hearings, and the other five per cent were defended hearings. So, in effect, about 95 per cent of cases are not judicially arbitrated. However, while they are made by consent, the consent order is under section 79, and the court does have a general supervision of all its orders, including consent orders. The court has representatives before the committee tomorrow, and I am sure they will be able to confirm that for you.

In terms of the effect on negotiation behaviour, you also heard Professor Dewar say that the bill now does provide a general discretion for the court, so that in circumstances where there are current housing needs, the provisions allow for those housing needs to be dealt with by means of a trade-off with the superannuation. It does create a tension between long-term needs and present-day needs. That is a tension which arises today and it is a tension which will continue. What I think is before the committee is, in effect, two legal regimes: the family law regime attempting to do justice and equity between the parties, and a superannuation regime which is designed primarily for retirement. When those two systems interact in the way that we see them here, you will see those tensions arising, and we have dealt with them in particular ways and drafted the provisions in the bill having regard to those tensions.

We believe that the balance on that particular issue is right although, in terms of whether ultimately it is borne out, again we will certainly be talking with the Institute of Family Studies to ensure that is monitored properly. One cannot always accurately assess those sorts of issues, but it is an issue that we were aware of.

Can I turn now to the issue of preservation. The legislative regime as drafted provides for benefits to be taken from unrestricted non-preserved, restricted non-preserved and then preserved, in that order. What has not emerged in the discussions is that there is also a very powerful family law reason for the benefits to be placed in that order, which is because, when both parties come out of the other side of the family law settlement, if they come out in that order they will both then have preserved benefits. Could I postulate an example where the only asset before the court was, say, superannuation—and I remind you that Grania Sheehan from the institute said that in the low asset range superannuation is relatively much more valuable for those parties. If that is one of the items of great value, it would not be good family law policy for the member spouse to walk away with unrestricted non-preserved benefit and for the non-member spouse, who often would have care of the children, to walk away with preserved benefits. So there are powerful family law reasons for the order of taking to be in the order in which they are drafted.

I have two final points before I hand over to my colleague from Treasury. One is the issue of valuation and its mandatory nature. I think those arguments were rehearsed fairly well before the committee. You can see the tension that is created by that. There will be people who will not be aware of how valuable superannuation is; again, it is primarily the defined benefit superannuation. I think the mandatory nature evaluation for accumulation plans is not a practical problem, primarily because it is so easy to value an accumulation plan. I remind the committee that 84 per cent of memberships are accumulation and also, as I understand it, the trend in the industry is that increasingly they will be the fund of choice, so increasingly we will see these amendments being a much better fit.

CHAIR —You know something we do not know—that they will be the fund of choice; the default fund, in other words.

Mr Bourke —I make that comment on the basis of discussions we have had throughout our consultation process—that defined benefit plans are increasingly being closed down and accumulation plans being opened in their favour. I may be wrong on that, but it is information that has been provided to me in our consultation process. The point I was making was that these amendments will then become, increasingly, a better fit.

Senator CONROY —But in dollar terms, there is still a huge percentage in defined benefit funds, so even though it is a relatively small number there is more likely to be a voracious argument about a huge pool than about a couple of thousand.

Mr Bourke —I am sure there will be. But in general terms the figures that I have seen from APRA are that about 50 per cent of the wealth in superannuation is in the 16 per cent of defined benefit plans. You are right on that score, certainly.

Finally, on fees and costs, again I think the arguments have been rehearsed fairly well before the committee. The way it has come out at this point is on the basis that we have been aware to try and limit the costs, although there are powerful arguments the other way. But at this point, in terms of the costs, we have been keen, and certainly the government's policy position has always been, to try and limit the impact of the division in terms of its administrative costs. We have relied also on fund trustees to derive that amount: some people today have said that it was a figure plucked out of the air. It was in fact a figure that we had proposed as a reasonable figure in the preparation of the bill, and I am sure that the trustees have reflected on that since that time and may have better information, and we are always open to listening to better information.

Mr Patch —I want to run through a small number of matters very briefly. Our approach to development of the SIS regulations has been to take the Family Law Act amendments and its regulations with its very broad coverage and then to ask whether there is anything extra we can do in the SIS regulations to facilitate government policy for regulated super funds. So the SIS regs open up a couple of features that will not be opened generally to non-regulated SIS funds because we have that additional regulatory capacity in the SIS regs. There is extra capacity in the SIS regulated funds to establish separate interests for the member and the non-member spouse if that is an option that they wish to pursue while sorting out their marital property issues.

The next issue is the question of the 12-month period referred to by the Law Council representatives. The 12-month period stems from a concern about the capacity to use this measure to achieve favourable tax outcomes. The government's policy is that once the parties are split they will have their separate taxation treatment, so they will have access to RBLs or to ETP thresholds, so the concessional treatment of the one amount of money increases. To provide a measure of surety, where the tax opportunities are attractive the legislation will require the parties to declare that they have been separated for 12 months, which is the period that they would have to be separated to obtain a divorce, so essentially saying that if you have got significant superannuation and you have therefore an opportunity for a tax advantage here then you would have to be eligible for a divorce to get the tax advantage. I should also mention that it is our expectation that the 12-month wait will affect a very small number of people immediately. It is more likely to be of use in the longer term. In the short-term it will affect a very small number of people with large superannuation pay-outs.

I move on to CGT rollover relief. I think the accounting people mentioned that. That is something we are giving very close consideration to. The issue arises particularly in relation to a self-managed super fund or indeed any fund with, say, fewer than five members where the assets are lumpy and to establish the new fund for the non-member spouse they want to move an asset from one fund to another fund. We are looking very closely at giving some sort of rollover relief to allow an asset to be moved from, say, the member's fund to the new fund for the non-member spouse.

CHAIR —Interest transferred?

Mr Patch —Just a straight transfer of the asset, yes, not with any realisation of the asset, which would be different.

The next issue is the question of consultations. Two or three people have mentioned that they have not be involved in our consultations, and I thought I should take the committee through our process to explain how that has arisen. We have been cognisant of the fact that it is a very complex set of regulations we have had to prepare, so our strategy was to engage a small number of people who are experts in the area to help us prepare draft regulations with the idea of putting the draft regulations out for public comment, at which time the broader community would be invited to provide comment. As it has turned out, the committee is having its hearings at the time that we have put out the regulations for broader public comment, so there has been a bringing together of those two processes and maybe this process is now happening a bit earlier than it would ordinarily happen, because ordinarily I would expect the committee to look at regulations once the government had signed off on them. At this stage the regulations are very much in their draft phase, and we are certainly looking forward to the committee's comments and looking to take account of all the comments made, to put them in a state where the government would be prepared to sign off on them.

The last issue I would like to talk about is the concern about the formula that is being applied to increase the non-member spouse's benefit in the defined benefit fund. A defined benefit fund's valuation is reached and there is a certain dollar amount that has been assigned to the non-member spouse but the amount will not actually pass to the non-member spouse for maybe 20 years hence. There is a question of how we try to preserve the value of the amount that the non-member spouse is going to get in that 20 years, so the percentage that you apply is governed by the concept that you are looking at behind this.

One conceptual framework to apply to it is to say, in effect, that the non-member spouse is saying, `I am going to lend you this money for 20 years and in 20 years time you will pay that money back to me out of the payments that you are otherwise going to receive from your super fund.' So, if I were lending money to my former spouse and, since the money is to be paid out of a future superannuation payment, what sort of interest rate would I like to apply to that loan? It has been suggested by some that the interest rate to be applied should be average weekly earnings, so essentially the non-member spouse would have a loan and the interest rate would be based on average weekly earnings. I think that would be an unusual thing to do. I am not aware of any other sorts of financial arrangements that work on an average weekly earnings type of concept.

The Treasury bond rate was selected because it is a readily ascertainable rate. It is the rate that applies for long-term borrowings by the Commonwealth. If anything, I think that it is probably a little bit too low, because the Treasury bond rate is based on the fact that the Commonwealth is a guaranteed payer, so there is no element of risk associated with the Commonwealth paying out, whereas there is probably an element of risk associated with superannuation funds. I would like to say that I think it is a very small risk, but it is undoubtedly there, and parliament has heard in other hearings of where perhaps that risk has materialised.

Senator CONROY —We will see it on the front page tomorrow, Mr Patch—`Treasury says super funds risky'.

Mr Patch —I think that would be a misquote. The Treasury bond rate is certainly the starting point for the selection of an interest rate to apply to what, in one conceptual way of looking at it, is a loan that the non-member spouse is making to the member spouse against that future payment that the non-member spouse receives when the superannuation finally matures. That is the framework.

Someone said earlier that the use of average weekly earnings would better maintain relativities between the member and the non-member spouse. I am not in a position to comment as to whether it would or would not, but I think the question you have to ask is: what are we are trying to achieve? We do not really want to maintain relativities between the member spouse and the member over the next 20 years so they roughly get the same amount in 20 years time. The notion is that the non-member spouse agrees to take, say, $10,000 now and the non-member spouse should get $10,000 plus interest in 20 years time. It seems to us that the Treasury bond rate was a reasonable sort of starting point for the interest rate to apply. I would like to finish there, thank you.

CHAIR —Mr Davis of Clayton Utz referred to some comments by Mr Justice Gibbs in a landmark decision. The observation that was made by Mr Davis was that the SIS law really should be amended—to use my words but to convey his impressions—to make it more constitutional than just being a reliance on the Marriage Act or other acts. I would like your comments on that.

Mr Bourke —The case that Mr Davis referred to, Ascot Investments and Harper, is a case from about 1981 where His Honour Mr Justice Gibbs made those remarks. That has been an overriding principle in family law since that time. Mr Davis then sets out two possible ways of dealing with that to make it more constitutionally secure. One is to rely on the heads of power underpinning the SIS regime—the corporations power and the pensions power—to require trustees to observe court orders. What that would do is then create two classes of superannuation funds. There would be the regulated class, which had to observe court orders, and the other class, which is outside the regulated net, to which the provisions would not apply.

He then set out an alternative which is to amend the SIS law, to require trustees to create an interest—I would have to check the precise wording of his proposal, but it was something along the lines of amending the SIS law to require trustees to observe the requests. On our view, that is in the SIS law as we have drafted it and it applies only, of course, to accumulation plans; it does not apply to defined benefit plans because of the just terms requirement. The way it operates is that, if the court makes an order to split a superannuation payment in its accumulation plan, that can then be taken to the trustee of the accumulation plan and a new interest created. The trustee must create that interest and there are options about how the trustee then deals with that interest—can roll the member out or can retain the member. So in some ways we have actually gone part of the way to the second option that Mr Davis was setting out in his paper. Our view is that we could not do the first one because that would create two classes of superannuation. We would not then be covering all superannuation.

CHAIR —What, to have it as a provision or a linkage through the SI(S) Act? Why would that create two classes?

Mr Bourke —Because we would not be covering the non-regulated SIS funds.

Senator CONROY —Surely, though, the objective is to get the maximum protection for the maximum number. Surely that should be the first objective and, if there are some that are viewed as having less or at a greater risk of constitutional problems down the track, that is a smaller risk to bear than having the overwhelming majority with a lesser risk. Isn't the obligation to try to reduce the risk for as much as possible, accepting that the smaller pool may have a slightly greater risk?

Mr Bourke —We looked at that issue in the preparation, Senator, and where we came to was that our view of the marriage power is that it is wide enough to do what we are doing at the moment; that is, to give the Family Court the power to make orders in relation to all superannuation. We based that on a long-held proposition that the Commonwealth has powers to make laws in relation to circumstances which arise out of the marriage. If you have a look at the definition of `matrimonial cause' in section 4 of the Family Law Act, you will see that phrase `arising out of the marriage'. The marriage power, on our advice, goes far enough to cover all superannuation in all its forms and enables the court to make its orders to cover the lot. As I said, we have actually added that module on under the SIS, which is, I think, Mr Davis's second option.

Senator CONROY —Do you believe that the Marriage Act, which is a federal act, has the power basically to direct amendment of trust deeds which are state based?

Mr Bourke —Our advice is yes, Senator. The marriage power is a plenary power and if a couple are divorced or separated, regardless of their circumstances, the Commonwealth has the power to regulate that.

Senator CONROY —And trust law is state law.

Mr Bourke —Trust law is common law and there is a provision in the bill which says that this has effect notwithstanding that, and our Constitution—

Senator CONROY —Why is it that you are looking at passing a law that tells you to ignore anything you like? That is not really what we are trying to get to here. I vote for lots of silly things, but that doesn't mean you can disregard things that are there, just because you say, `You have got to disregard them.'

Mr Bourke —No, as I said, the marriage power is wide enough to do what the family law legislation amendments are doing.

Senator CONROY —Then you are not really creating two classes, if you take up Mr Davis's first option, because as far as you would be concerned they are all covered anyway.

Mr Bourke —As I read Mr Davis's first option, it is to amend the Family Law Act to cover the regulated funds. It says nothing about the non-regulated funds.

CHAIR —As I understood IT, it was to amend the SI(S) Act to pick up the family law provisions. Is that right?

Mr Patch —I need to comment very briefly on that suggestion.

CHAIR —I say that because the consequences of a challenge are going to be so damaging, so why don't we try to dot all our i's and cross all our t's, given that regulated funds are the great bulk of the funds. Then if, for example, the marriage act does fall over in some area, it is going to cause the least amount of harm.

Mr Bourke —All I can do with that is to take it on notice. As I said, we have examined this extensively, we have had extensive constitutional advice, and we believe that the way it is drafted is constitutionally secure. Mr Davis said that he had not aired those views before, and rather than trying to deal with it now—

CHAIR —We thank you for coming early and discussing it while things are fresh in our minds. The Law Council also put some amendments to 90MP, the breakdown declaration. They suggested a separation declaration. Have you got comments on that, or would you like to take it on notice?

Mr Bourke —Mr Patch dealt with some of the issues in relation to that, but in terms of the title we think that there is probably some force in the argument they are putting.

CHAIR —Okay, and therefore you would also cover the deletions of subclauses (3), (4) and (5)?

Mr Bourke —That is the further issue that Mr Patch just dealt with in his remarks, so we did not endorse that—only the change of title from `breakdown' to `separation'.

CHAIR —And that word `must' and the terms of the flexibility—

Mr Bourke —Is that in section 90MT, Senator?

CHAIR —Yes.

Mr Bourke —I dealt with that in my remarks, that there are powerful arguments both ways and that those had been, I believe, rehearsed before the committee. There are some circumstances where parties may not be aware of the valuation, and this would actually unearth it. On the other hand—

CHAIR —So we will have to make up our own mind on that one.

Mr Bourke —You will, Senator.

CHAIR —I acknowledge that schedule 1 is the great bulk of what is here. According to the commencement provision, schedule 1 commences on the first anniversary of the day on which the act receives royal assent. However, I am sure the committee would like some assurance that full, wholesome and complete negotiations in relation to the raising of amendments can take place. While we recognise that, there have been some pretty powerful arguments put forward about the need for continuing negotiations, in terms of getting the regulations right and maybe even one or two places altering the bill itself.

Mr Bourke —The approach that we have taken throughout this whole project has been to be as open as we can be in terms of our consultation. I note that there are some who believe they may have been excluded from that—

CHAIR —The retiree people—

Mr Bourke —I actually gave a seminar to one of those groups, I think it was earlier this year.

CHAIR —Was that the people who presented to us?

Mr Bourke —Yes, it was. It was the Regular Defence Force Welfare Association.

CHAIR —The Australian Council of Public Sector Retiree Organisations?

Mr Bourke —The Defence Force Welfare Association.

CHAIR —Was the person involved Wing Commander (Retired) John Hyndes? Unfortunately, he was not able to be with us today.

Mr Bourke —I would have to check my records to see.

CHAIR —We feel that some of their issues do need fleshing out.

Mr Bourke —The point I was about to make is that we have been as consultative as time has allowed in this process, and that is on the basis that the fundamental policy is, I think, fairly well agreed; it is how to actually do it.

CHAIR —The devil is in the detail—we have all said that.

Mr Bourke —Yes. And we will continue that process following these hearings and the committee's report. If the committee makes recommendations in relation to amendments to the bill, we will look at those and be further refining the regulations as we go through that process. So we see that where we would end up is a settled bill together with regulations which would be in place before that 12-month period commences. So we still envisage that open consultative process that we have adopted up to now.

CHAIR —Some witnesses have raised the problem of a definition of who or what is a fund member or a non-member spouse, particularly in circumstances where the entitlement is within the original member, particularly in a defined benefit scheme, particularly with flagged and non-flagged approaches there. There does appear to be a need for some sort of focus on this issue; otherwise trustees may well find themselves in a grey area. You might like to take that on notice.

Mr Bourke —I will certainly take it on notice, but a comment on that is that in circumstances where the non-member spouse has a base amount which is adjusted and growing within the scheme, which when a splittable payment becomes payable is then first call on the splittable payment, the duty owed by the trustee to the non-member is set out in the terms of the statute and those requirements do appear at different points. I think what people are having difficulty with at this point is that they are coming to a complex legislative scheme afresh and slowly working their way through it. As I mentioned earlier, the family law policy on this is fairly straightforward but, when you apply that family law policy to a complex industry, and, as I said, we have been broad in our application, you will get a degree of complexity. I think what people are finding, and certainly what I found today listening to the witnesses, is that there is a degree of complexity that people are still grappling with. The duty owed by the trustee to the non-member spouse in the legislation is clear at a number of points, but I think people are having difficulty at this point unearthing that.

Senator HOGG —I am still a little unclear on that issue. Could you tighten it up for me as to what are the responsibilities?

Mr Bourke —Certainly. If you have a look at, for example, regulation 119—

CHAIR —This is still family law?

Mr Bourke —Yes. There you will see reference to 90MZB of the primary legislation, and that sets out a number of requirements where the information must be provided by the trustee. Regulation 120, following that, sets out a number of items of information which must be provided to the trustee. That, for example, is one area where the trustee's obligations are set out under the statute.

CHAIR —Who pays for that?

Mr Bourke —It depends on the information. There was some discussion about the splittable payment itself. That is something that is payable by both parties. The fees payable then are set out in regulation 115: payment split, the payment flag, the flag lifting, the termination of the operation of the payment flag and then the information in paragraph (e) of regulation 115.

Senator HOGG —So the fee specified in 115 is not a maximum fee, but a flat rate fee, is it?

Mr Bourke —Yes.

Mr Patch —I need to also mention to the committee that that fee is the fee for the initial setting up of the account. For SIS funds it would be possible for the trustees to deduct additional amounts from the member's account to fund the arrangements put in place.

CHAIR —Doesn't that have to be a separate bill? There is a problem in terms of deductibility straight off the account.

Mr Patch —They currently have a capacity to deduct their reasonable fees and charges from the trust to fund their expenses incurred in running the trust, and they would be able to include in that amount the expenses they have incurred in administration.

CHAIR —As a straight deduction on the member's account?

Mr Patch —They will be able to charge a higher amount in relation to members' accounts where they have been subject to a payment splitting arrangement.

CHAIR —You said it is $100 except in the case of a payment split. But 115A says in respect of a payment split a fee of $100.

Mr Patch —What I hope I said—

Senator HOGG —I did not understand you to say what Senator Watson says.

Mr Patch —Trustees in the ordinary way they run their business have a capacity to charge fees and charges for the service they provide. In setting the amount of those fees and charges, they will be able to take into account their costs incurred in managing a payment split. The amendments to the SIS regs will allow them to deduct a greater amount from accounts that are subject to a payment split than the other accounts to take account of additional expenses they will have to incur in managing those accounts. I think the $100 is probably going to be of most relevance to funds that are not SIS regulated where the trustee will not have the capacity.

Senator HOGG —How was the fee of $100 arrived at? I think that was raised earlier today.

Mr Bourke —I covered that in my remarks.

Senator HOGG —My apologies; I had to go out.

Mr Bourke —It was arrived at in our consultations with the industry and was a proposal that we put to industry. At the time it seemed like a reasonable proposal, although I would think that trustees have had some time to reflect on that and so now we are hearing about a different picture. As I indicated at the close of my remarks, we are always happy to listen to better information.

Senator HOGG —Has any modelling been done on this?

Mr Bourke —No, we have not done any modelling on it, Senator.

Senator HOGG —Could it be described as a best guess?

Mr Bourke —Probably an educated consultative guess.

CHAIR —Thank you.

Mr Patch —I wish to respond to an observation that was made earlier, if I may. At one stage someone made the comment that some of the problems with the constitutionality could be overcome by amending the SI(S) Act. I have to say that my learning is in superannuation; I am not really a constitutional lawyer. My understanding is that when super funds elect to be a super fund, they do not elect to agree to anything that is in superannuation legislation from time to time. What they elect to agree to is the operating standards that are prescribed under the superannuation legislation. So we would have to look at whether or not it was possible to do that within what we are allowed to do within the operating standards. It says, `We make operating standards with respect to (a), (b), (c) and (d), and it may be that the suggestion is just not one of the things that the legislation contemplates we could make an operating standard about and therefore could not be taken up.'

CHAIR —We would like you to look at it.

Mr Patch —We will certainly be looking at it.

Senator HOGG —Before we conclude, we have had the departmental officers here for a substantial period this afternoon. Given that there may well be some new issues tomorrow—I imagine we have covered a substantial amount of the material—can the officers indicate how long they may need to address the committee? Do you intend, from 1.30 tomorrow afternoon, expanding on anything that you have said to us today or just responding to issues that will have been raised tomorrow? That would be helpful to know.

Mr Bourke —In many ways, we are in your hands. We are able to provide whatever assistance we can. The discussion this afternoon has certainly assisted in truncating our time tomorrow afternoon, but if, for example, something we have said or something which emerges tomorrow is unclear and you wish further elaboration, we are always happy to do that.

Senator HOGG —I accept that. I am trying to look at time management tomorrow.

Mr Patch —It is our expectation that we would not be making any opening remarks tomorrow.

Senator HOGG —Or be going into any substantive material other than things on which the committee might want to seek clarification or issues that have been raised by witnesses who appear tomorrow. Short of that, we should not be looking to a lengthy session.

CHAIR —I would not want to endorse that too fully because we do have some witnesses tomorrow who may be raising issues or reinforcing issues which have been raised today. It is important that the committee has a very thorough appreciation of the challenges before us. I appreciate the manner in which you have responded and the time that has been taken.

Senator HOGG —So do I.

CHAIR —We had not envisaged going quite so long. Undoubtedly, what has been said today will shorten the time. I did not want to give the impression that tomorrow is going to be a very brief session because I think we have to give expression to some of the matters. You are going to take some of the issues on notice. Also, in the intervening period there may be some issues on which you might want a slightly different approach. We do have William Mercer and others appearing before the committee.

Mr Bourke —Senator, I have been on this project for a number of years. I am happy to talk about it for lengthy periods of time, as others will attest.

CHAIR —Good.

Mr Bourke —It is an important family law reform, which I would hope the committee has a good appreciation of at the end of its hearing.

CHAIR —We certainly have already. Thank you very much. We look forward to seeing you both tomorrow. That concludes today's hearings. I thank all witnesses who have given evidence.