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Tuesday, 25 March 1997
Page: 2356

Senator SHERRY (Deputy Leader of the Opposition in the Senate)(1.47 p.m.) —by leave—I move:

(2)   Clause 14, page 5 (line 22), at the end of subclause (1), add ", fees, charges, surcharges or taxes".

(3)   Clause 14, page 5 (lines 25 and 26), omit "or any reduction in the value of assets in which the policy is invested", substitute ", any reduction in the value of assets in which the policy is invested or any fees, charges, surcharges or taxes".

(7)   Clause 42, page 30 (line 21), after paragraph (b), insert:


(c)   reduce the contributions or accumulated carriages of an RSA by the debiting of any fees, charges, surcharges or taxes.

We regard our amendments Nos 2, 3 and 7 as absolutely critical. Amendment No. 2 will impose a requirement, in the case of capital guarantee, not to allow fees, charges, surcharges or taxes to reduce the amount in the RSA product. We believe that is fundamentally important. A capital guarantee means that the level of contributions cannot be reduced by any amount—that is to say, the amount is in fact guaranteed, and we see that in reading the definition of `capital guarantee' in this legislation. It is guaranteed against negative interest and also guaranteed against losses.

We believe it would be entirely unacceptable for contributions—and it is admitted that for many people contributions are likely to be relatively small amounts—to be dwindled away by excessive fees and charges. It would also be unacceptable for the amount to be dwindled away by taxes and surcharges—we call them taxes on superannuation; I know the government calls them surcharges, but we have put `surcharge' in there just to make sure—

Senator Kemp —I notice you have conceded the surcharge, Senator. I might even use that in question time today.

Senator SHERRY —If we were dealing with tomorrow's legislation today, we would know whether it was a tax or a surcharge, wouldn't we, because we would know which amendments were carried. I am anticipating both outcomes, not just one.

We are told that member protection exists, but again it is in the regulations. We do not find that a satisfactory approach; it should be in the main body of the legislation. This is a product that is designed to protect small accounts and low income earners. The credit unions have already said that they do not believe that their members will levy fees and charges on the accounts because of the fact that these accounts are designed to protect low income workers.

In respect of amendment No. 3, the arguments that I have already advanced largely canvass the same issue: member protection and protection of small amounts. I should point out that under the SIS regulations at the moment amounts of under $1,000 will be subject to the same rules as apply to SIS. However, it will be in the regulations. We have not had the opportunity to see the regulations. I know Senator Colston was reassured on a previous occasion but we are not reassured, because we do not have the regulations; we have not been able to see them. And it is best to protect members in the bills anyway.

Both the Australian Bankers Association and the Australian Taxation Office went on record before the Senate Select Committee on Superannuation, which conducted public hearings on these bills, as saying that it is possible that the balance of the account could be less than the total amount of the contributions should fees and charges be applied. We would find that a totally unacceptable position.

The same arguments that I put in respect of amendments 2 and 3 apply to amendment No. 7.