Senator SHERRY (7:23 PM) —I move:

This is another impressive report by the Senate Select Committee on Superannuation and Financial Services. Before I go to some of the important elements of this report, listed in appendix 4 of the report is a list of the reports issued by this committee. In the years 1991 to 1998 there were 31 reports in respect of aspects of Australia's superannuation system. In the years 1999 to 2001 there were some 23 reports. It is a very hard working committee. It focuses on a very important aspect of Australia's retirement incomes; that is, superannuation. It also holds the record for the longest in the history of the Senate as a select committee. Despite the length of time it has been in existence, it has issued a number of very impressive reports.

The report I am speaking on tonight relates to the issue of early access to superannuation benefits. Many in the community are not aware that there are special provisions that allow persons with superannuation savings to have conditional access to those savings prior to what is known as preservation age—which is from age 55 to age 60, depending on when you were born. If you were born during the period 1960 through to 1964, the age of access preservation is increasing to 60. There are two broad provisions for accessing your superannuation early. One is known as the hardship provision.

The hardship provision is outlined in some detail on page 6 of the report. Under this provision, a person is required to have been in receipt of Commonwealth income support payments for a continuous period of at least 26 weeks and unable to meet reasonable and immediate family living expenses or having reached a preservation age—the age I referred to earlier—in receipt of Commonwealth income support payments for a cumulative period of at least 39 weeks and not gainfully employed. `Commonwealth income support payments' includes a service or social security pension or social security benefit other than Austudy or Youth Allowance and, as from 1 January 1998, drought relief payments and salary or wages under the Community Development Employment Project Scheme.

In addition to that there is a category that is known as compassionate grounds. This provision may be available on application to the regulator, the Australian Prudential Regulatory Authority, commonly known as APRA, where the money is to pay for prescribed expenses and he or she would not otherwise have the financial capacity to meet these expenses. Prescribed expenses are medical treatment or medical transport; palliative care in the case of the impending death of the person or the person's dependant; expenses associated with a dependant's funeral or burial; where the person is severely disabled, payments to modify the person's home or vehicle; payment on a loan to prevent foreclosure of a mortgage on the person's principal place of residence.

I must say the extent to which early superannuation moneys are being accessed under these two broad provisions was a shock to me and I think a shock to most members of the committee. It was very difficult to get the precise figures, but ultimately we were able to obtain those figures. Up until 1996-97 the old ISC, the Insurance and Superannuation Commission, administered early release applications. In 1996-97 some $254 million was released early. That had grown from a figure of just over $200 million in 1993-94. APRA, who were the successor of ISC, could not provide the committee with a breakdown of early payments in respect of hardship. I think that is something that should be remedied, because we do need accurate figures. We were able to rely on the advice from ASFA, the Australian Superannuation Funds Association, who estimated that in the year 2000-01 under the hardship provisions there was $350 million in early withdrawals from superannuation to approximately 83,000 applicants. In the area of compassionate grounds, for which you need APRA approval, there was some $27.3 million. That comes to a total of almost $380 million in 2000-01 in early release from superannuation. This is a staggering figure and a staggering number of applications. Interestingly, in the area of compassionate grounds mortgage assistance takes up some 60 per cent of the $27.3 million. If the bank or financial institution is threatening foreclosure, an individual is able to receive a payment from the superannuation fund of one year's principal and three months' interest.

These are truly staggering figures under these early access provisions, and they have been increasing dramatically over the last decade. Again, while it was hard to get some figures, it appears that applications for early release are overwhelmingly from low and middle-income earners. Obviously, with the provisions in respect of 26 weeks unemployment and the threat of foreclosure of mortgage, the majority of applicants are low and middle-income earners.

The committee was asked to examine an extension of the provisions. It was somewhat reluctant to do so, given the already extensive early withdrawal of superannuation benefits. Superannuation is its primary purpose. Its stated primary purpose is to provide additional retirement income, particularly given the problems faced in relation to the ageing population. However, the committee did make one specific recommendation in this area. We had evidence from the Motor Neurone Disease Association. I did not know anything about motor neurone disease, but apparently it is a disease from which death is inevitable. It is a matter of time rather than whether or not recovery is possible. We did recommend that, in circumstances where an individual, as certified by two medical practitioners, is facing death and there is no known cure for their disease, they should be able to access their superannuation moneys earlier.

There are a number of other recommendations. Importantly, the committee recommended that Centrelink would be the appropriate agency for coordinating the early release of payments. There was evidence that some people are able to abuse the early release system because, if they are a member of more than one fund—and that is quite common—they can go to one fund and claim up to $10,000 under the hardship provisions and then go to another fund and claim another $10,000 if they have the money in the fund, and they can do that in one year. It is critical that an agency is coordinating these early release provisions.

The early release provisions also are a substantial problem for some superannuation funds, because the provisions in respect of hardship only apply where the fund has the early release provision written into its rules. The committee recommended that, if we are going to have early release, there should be a standard provision and a fund cannot deny the early release provision. What is happening is that, if the fund does not allow early release, some people shift their money out of that fund and into another superannuation fund so that they can gain access under the early release provisions. It is a very good report, and I recommend it to the Senate. I seek leave to continue my remarks later.

Leave granted.