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Tuesday, 25 March 1997
Page: 2412

Senator KEMP (Assistant Treasurer)(6.31 p.m.) —Just to recap, there is no obligation, as I have pointed out to you, on superannuation funds. They are under no legislative obligation to transfer benefits out of funds at the request of a member—no obligation at all. This is actually a tougher rule in relation to RSAs. It is not a soft rule. It is a tougher rule.

Senator Sherry —A different product.

Senator KEMP —We are not arguing that they are different products. If they were all the same products, we would not be in here, I guess. It is a different product. We are trying to establish a regulatory regime which is appropriate and which does not unnecessarily impinge on competitive neutrality. I have put to the Senate that this directly reflects an election commitment in relation to the 12 months notice. It provides, we believe, that the notice period arises because of the fixed term rate of RSAs, and there may well be three-, six- or 12-month RSAs. The 12- month period is the maximum period. It is not the minimum period.

We believe that the arrangement allows for the development of different products. Longer term products offer higher rates. Senator Allison has been concerned about the low return on RSAs. Her amendment actually will add pressures on that front, for the reasons I have given. Higher rates may well be offered on longer term products. Your amendment goes against what you were saying to us earlier, Senator. For those reasons, we will not be supporting the amendment. Competition, market forces and consumer demands will result in varying notice periods and, of course, many may be less than 12 months.