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Tuesday, 25 March 1997
Page: 2399

Senator ALLISON(5.12 p.m.) —I think the point is that the money which will flow in, in the form of superannuation contributions, is captive—it is compulsory. We are not just dealing here with a normal bank account. These are contributions that are made on behalf of the employee, so it is reasonable for the government to indeed be prescriptive in this matter. You raise the matter of there being no such requirements for the superannuation funds not to charge fees but, as we all understand, there are much higher returns that flow from superannuation funds. I think we have a responsibility, given that they are low return accounts, that they truly be low cost.

The government has the capacity to be prescriptive in this case. As I say, the flow of funds will be, to some degree, guaranteed. Withdrawals will be rare. They should be very easy accounts for the banks to manage. Because they are low return, they should be low cost. This is one way in which the government can put into place its policy and its stated intention that they be low cost.

Obviously, if the credit unions have offered that this, given the option, is how they would organise their RSAs, it must be possible for the other financial institutions to do so as well. It is a way in which the government can protect consumers against what could well be a low return, but even high cost, product. It is incumbent on the government to take this step. As I say, banks are not forced to go ahead with RSAs. If they find that they cannot afford to do it without charging fees, they are under no obligation to do so, but it is certainly in the interests of consumers for us to take this protective step.