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Thursday, 2 September 1999
Page: 9797

Mr IAN MACFARLANE (1:47 PM) —It is not very often that I can stand in this House and follow a speaker from the other side who has not mentioned the word `fear'. It seems to me that the Labor Party, whenever it wants to muddy the water, talks about fear being created—in this case, in the mind of small business.

Let me tell you what creates the most fear in the mind of small business: the prospect of Labor getting re-elected. Small business remembers, and will remember for decades, the devastation that a Labor government brought on small business with interest rates, with the killing of consumer demand, with an uncertain economic situation and, of course, with the `recession we had to have'. So I will just brush to one side these comments from the member for Wills with regard to small business.

Mr Fitzgibbon —You should read this week's Yellow Pages survey.

Mr IAN MACFARLANE —Madam Deputy Speaker, I shall ignore those comments. As we know, members opposite only ever quote inaccurately and to their suiting. What will help small business is a careful and structured economic policy, backed up by amendments to legislation that are positive to the nature of business. The member for Wills has just criticised us for taking from 12 May last year to bring this legislation into the House. Obviously he is not aware—and probably he did not want to make himself aware—that the government has used this time with great effect to ensure that adequate consultation has been had and, as we have seen from a series of well-defined changes, the legislation is right before being presented here.

Those consultations have included a wide range of people in the financial community; in fact, they have included some of the accountancy firms in my own electorate of Groom. Those consultations have brought about changes which will ensure that the aim of these amendments is reached. That aim is to introduce a bill to reduce the risks to superannuation fund savings and to ensure that superannuation is used in its intended form—that is, for retirement. It is about safeguarding and preserving that retirement asset.

So what we see here is not, as the member for Wills asserts, legislation that causes confusion. It is, in fact, legislation that further allows businesses to operate and invest money in superannuation for their members, with the certainty that that money will be there when they retire. That is what superannuation is about. If businesses want to invest money in `at risk' capital, then the opportunity is there for them to do so—but not to invest superannuation capital, which is there for the member's retirement.

The member for Wills asserts that no need has been established for changing the legislation. Yet the way the legislation existed prior to these amendments allowed for superannuation funds to use related trusts which are not regulated by the Superannuation Industry (Supervision) Act 1993 and, therefore, are not subject to the investment rules which we have put in place to try to ensure that these funds are safeguarded. This original 1993 legislation, which was introduced by our colleagues opposite—some of whom are no longer with us—prohibited superannuation funds from borrowing. Again, the aim of this was to limit the risk to savings. Yet this objective is not achieved if these superannuation funds are simply transferred into a related trust that borrows. So I completely refute any suggestion that this bill does not need amending.

The aim of all superannuation is to ensure that the benefit is there in the retirement period. At the same time, we wanted to ensure that, during the transition period that will ensue as a result of this bill, small business is not disadvantaged. Again, I note that the member for Wills quite happily overlooked the many transitional arrangements that have been put in place. They include: the grandfathering of all investments and loans made before 7.30 p.m. on 12 May 1998; the grandfathering of assets that were subject to a lease before 7.30 p.m. on 12 May 1998; the grandfathering of all investments and loans made after 7.30 p.m. on 12 May 1998; et cetera.

Whilst we were criticised for the delay in bringing this bill before the House, it gave us time to further add to those grandfathering and transitional arrangements. As was announced earlier this year, small superannuation funds will now be able to make additional investments into related trusts and companies until the end of 30 June 2009. This gives small business ample time to make the adjustments that they need to make, and again refutes the assertion by the member for Wills that businesses will be forced to unwind investments and that they will be dragged into a situation where they are not sure what sort of structure they can use for these investments. The transitional arrangements are quite clear; in fact, they give a great deal of certainty and comfort to business. Certainly, the ones that I have spoken to feel that we have been more than generous with regard to transitional arrangements.

I heard an assertion that the changes that were being planned, along with other areas which the government has moved on in the area of superannuation, have caused uncertainty in business with regard to self-managed funds. That simply does not stand up to scrutiny. If we look at the statistics, we will see that in Australia at the moment we have $387 billion invested in superannuation. But, more to the point, excluded funds have continued to grow. In March 1999, there were 182,000 excluded funds, compared to 170,000 in June 1998. Let us examine that point: we originally announced these changes prior to that date, yet the number of these funds has grown by 12,000. More importantly, invest ment in these funds has increased from $42 billion to $50 billion over that same period.

That does not tell me—and, I am sure, the many people who are trying to make a value judgment on this debate—that the businesses and individuals are not supporting do-it-yourself funds. It tells me that they are continuing to invest heavily in these funds. It tells me that self-managed superannuation funds are continuing to enjoy the support of small business and small business people.

These small business men and women also tell me that the government's decision to allow funds with fewer than five members to invest 100 per cent of their superannuation in real estate assets related to the business is a great step and will allow them to ensure that they put away money and preserve it for their retirement, while at the same time their business—a business which, in many cases, employs a great number of people—is able to gain access to that money.

Most importantly, for someone who comes from a regional area, the money that is being invested in superannuation funds remains in the town or city from which that money originally came. That is a great concern in regional Australia in terms of superannuation funds: whilst we do applaud the principles of superannuation, and this government continues to work very hard to ensure that we do everything we can to encourage people to invest in superannuation, it does in a lot of cases take money away from regional areas. We want to see that money reinvested in the towns and cities in which the people live and work.

The simple fact is that, out there in the business world, there is a growing awareness of superannuation. I have cited figures regarding the growth in the number of self-managed funds, but of course there is overall growth in superannuation funds. We as a government have a responsibility to ensure that those funds are managed properly. We will continue, within the responsible confines of government, to make amendments and to fine tune superannuation legislation wherever we see the opportunity to do so, whilst at the same time preserving the integrity of the funds. These amendments have been intro duced in order to do just that, as well as allow small business to make the most of the opportunities that are available.

I am disappointed to hear some of the arguments that have been put forward by members opposite. Changes to superannuation fund arrangements, particularly in this area of self-managed superannuation funds, have been greeted only with applause from people in my electorate of Groom. We will not be deterred by the sorts of oblique and made-up criticisms that emanate from the benches opposite. We will continue to be guided by the people in business who actually know about business, not by the people who have spent most of their lives never having to put at risk their own capital. Small business men tell us that these changes are beneficial. They tell us that they are the sorts of things that come through consultation and will enable those businesses to make sound investments both now and for their retirement.

I reject fully the criticism that has been levelled against these changes. In doing so, I do not deny that there may be, in the future, further changes for the better—further positive changes that will ensure that superannuation funds continue to operate in the best possible manner. I commend the bill to the House.

Mr SPEAKER —Order! It being 2 p.m., the debate is adjourned in accordance with standing order 101A. The debate may be resumed at a later hour and the member will have leave to continue speaking when the debate is resumed.