Senator WATSON (5:41 PM) —I present the report of the Select Committee on Superannuation on draft Superannuation Industry (Supervision) Amendment Regulations 2003 and draft Retirement Savings Accounts Amendment Regulations 2003, together with the Hansard record of proceedings and submissions received by the committee.

Ordered that the report be printed.

Senator WATSON —I seek leave to move a motion in relation to the report.

Leave granted.

Senator WATSON —I move:

The report the committee handed down today is a unanimous report, although I note that Labor has made some additional comments. Importantly, the report expresses the committee's general support for the principle of portability, and the ability of superannuation fund members to consolidate their superannuation accounts. In particular, the committee supports giving individuals the ability to consolidate an inactive superannuation account into either an active account or another inactive account. Such a measure, accompanied by a targeted education campaign following the introduction of portability, would achieve a reduction in superannuation account numbers in Australia and that is indeed important.

It is also important to note that many Australians also have access to portability of their funds. Under the governing rules of a majority of Australian superannuation funds, a member can already elect to roll over or transfer his or her crystallised benefit to another nominated superannuation fund. In that sense, the regulations would only be extending the availability of portability in Australia. However, the report also recommends that the government should revise the gazetted regulations prior to 1 July 2004, when they are due to commence, to prohibit rollovers or transfers of superannuation accounts out of active superannuation accounts—that is, accounts that are still receiving employer sponsored superannuation payments.

The committee makes this recommendation out of concern that providing portability out of an active account would be tantamount to providing choice of superannuation, which, as senators will know, has previously come before this chamber. The committee believes that extending portability to active accounts is a matter better dealt with through choice of fund legislation rather than regulations on the grounds of efficiency and consumer protection. In addition, there is concern that portability out of an active account, without a full, targeted education campaign and a strong disclosure environment, could lead to a further proliferation of superannuation accounts due to the need to maintain multiple accounts. As we understand, this is not the purpose of the measure.

I note that this issue of portability out of an active account was the principal concern raised with the committee by the industry during the conduct of our inquiry—an extensive inquiry, may I remind the Senate. The committee consulted with a broad range of individuals and organisations, including peak industry bodies, superannuation funds and fund trustees, professional financial organisations, financial service providers, peak employee and employer groups and the relevant government agencies.

The committee makes a number of other recommendations in its report for reforms which could promote the implementation of the portability regulations. In particular, the committee advocates in its report the following measures: the revision of the financial disclosure requirements under the regulations; the development of a rollover transfer protocol to help facilitate portability; the exclusion of defined benefit schemes from the provisions of the regulations where the member's current entitlement is in accumulation or partly vested form, which is important; the provision of legal protection to trustees under the regulations, which is an important point raised by the Law Council of Australia; and the commencement of an education campaign on portability and choice of superannuation when the regulations come into effect, using the $28.7 million over four years allocated by the government in the 2002-03 budget. The committee also recommends the further refinement of product disclosure statements by the regulator, ASIC, and limiting future exit fees to reasonable administrative costs and redemption costs of a rollover or transfer.

I note that the committee has made a recommendation that the gazetted regulations be amended but that the Labor and Democrat senators have threatened to disallow the regulations if their concerns are not met. Rather than take this course, I urge the opposition parties and the government to cooperate through the gazettal of further Superannuation Industry (Supervision) Amendment Regulations 2003—I believe that would be No. 5 this year—to address the committee's concerns prior to the proposed implementation of portability on 1 July 2004. It can be done, it should be done and it needs to be done.

There is broad agreement in this chamber that the implementation of portability regulations is a desirable reform. I believe that, through the introduction of amending regulations, the concerns of opposing parties and the desire of the government to pass portability legislation can be met. In advocating the implementation of the portability regulations, I note that during the inquiry concerns were expressed that portability and choice are intertwined and cannot be introduced separately. But, provided portability out of an active account is prohibited, I do not share this concern. The Liberal members of the committee believe that the portability regulations can stand on their own in their revised form from 1 July 2004.

This is the last report of the Senate Select Committee on Superannuation. I intend later this evening to make a statement to the Senate on the winding-up of the committee—a committee that has produced 58 reports. I will not pre-empt just now the comments I will make later about the history of the committee and the people involved over the years. However, I thank the very many participants in the committee's portability inquiry. The quality of the submissions made to the inquiry was very high and they were of considerable interest to the committee. I take this opportunity to thank the witnesses who appeared before the committee in Sydney, Melbourne and Canberra. I also extend my gratitude to the other members of the committee. During the conduct of the inquiry the government gazetted its final portability regulations, which differed in a number of significant areas from the draft regulations referred to the committee for inquiry and report. There is no doubt that this made the job of the committee much harder, and I thank my fellow committee members for their hard work and their commitment to achieving a unanimous report that all members could accept. I also take this opportunity to thank the committee secretariat, Mr Stephen Frappell and Mrs Dianne Warhurst, for their continued support of the work of the committee and their hard work in achieving a great result.