Senator HERRON (Aboriginal and Torres Strait Islander Affairs) —I present the following government response to a committee report: Government response to the 21st report of the Sente Select Committee on Superannuation—Investment in Australia's Superannuation Savings. I seek leave to incorporate the document in Hansard .

Leave granted.

The document read as follows—

Recommendation 3.1

The Committee recommends that the government review the intent and operation of the infrastructure borrowings concessions and clarify the position.

On 30 June 1997, legislation was enacted to discontinue future access to the infrastructure borrowings (IBs) tax concession scheme, and to prevent any variation of conditions underlying existing certificates that increase tax benefits. This legislation was introduced because of problems with the IBs scheme, in particular that applications increasingly sought to exploit the concession for tax minimisation purposes.

In the 1997-98 Budget, the Treasurer announced a new infrastructure borrowings tax offset scheme, which clarified the Government's approach to supporting private sector infrastructure investment. The scheme is open to new private road and rail infrastructure projects and related facilities, and project proponents which had applications pending for the previous IBs tax concession scheme. The offset will be set at the current company tax rate for all taxpayers (therefore low marginal tax rate payers such as superannuation funds will be able to obtain a benefit which exceeds the tax payable at the marginal rate) and will be available for up to five years from the time of first borrowing for a qualifying project. The cost of the new scheme is capped at $75 million for a full year.

Legislation for the new scheme, contained in Division 396 of the Income Tax Assessment Act 1997 , was passed by Parliament in April 1998. Subsequently, the Government has called for applications under the new scheme and will assess projects against a set of assessment criteria so funds are put to the most effective use.

Recommendation 4.1

The Committee recommends the government investigate the establishment of an independent and investor based credit-rating system for SMEs as a joint initiative of government and the relevant business groups.

The Government does not consider the implementation of such a credit rating agency by Government would be appropriate. However, in its response to the Final Report of the Financial System Inquiry, the Government recognised that a lack of benchmarking and performance management information about SMEs adds to the cost of SME fundraising. The Government indicated that, in principle, it is of the view that data-collection agencies such as the proposed Australian Securities and Investments Commission and the Australian Bureau of Statistics should consider the requirements of credit-rating agencies and fund managers when reviewing SME data collection.

The Government is confident that the continued growth of superannuation funds will lead to higher levels of investment in SMEs through diversified investment strategies. In addition, the measures announced in the Government's response to the Final Report of the Financial System Inquiry will further improve the availability of capital to SMEs.

Recommendation 6.1

The Committee recommends that the government review and monitor its superannuation policies and legislation to ensure the maximising of retirement incomes is not being unduly affected by short term investment considerations.

The Council of Australian Government's program of review of legislation and the operation of Regulatory Impact Statements to test regulation against specific criteria provide scope for the Government to ensure new and existing legislation meets broader policy objectives.

In addition, the Insurance and Superannuation Commission has continuously reviewed superannuation legislation under its administration against Government policies, financial market developments, administrative experience and representations from industry and interested parties, and this will continue to be done.

It is yet to be decided which body will undertake the legislative review role under the new arrangements coming out of the Financial System Inquiry.

Recommendation 7.1

The Committee recommends that a review of superannuation investment polices and practices be undertaken by this Committee in three years time.

The Government concurs with this recommendation.