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Wednesday, 24 March 2004
Page: 21867


Senator TROETH (Parliamentary Secretary to the Minister for Agriculture, Fisheries and Forestry) (5:57 PM) —Before I turn to my substantive remarks on this disallowance motion, I will move a government amendment to the motion moved by Senator Conroy. I move:

Omit “, [6], [8] and [9]”.

The government's reason for doing so is that, should the regulations be disallowed, in particular items 6, 8 and 9, industry will be uncertain as to the disclosure requirements that will apply to them until new regulations have been made for reporting periods after 1 July 2004. There is generally a long lead time required to implement changes to periodic statements, which are typically provided on an annual basis. That is the reason for the amendment. However, the government also believe that there is no basis on which the disallowance motion should be accepted. We remain fully committed to honouring the commitment given to the Senate by Senator Ian Campbell on 5 December 2003 on issues that we understand form the reasoning for the disallowance—that is, implementation of regulations to support the disclosure of information in dollar terms under the Financial Services Reform Act 2001.

The government is developing regulations to underlie the legislative amendment it accepted during debate on the Financial Services Reform Amendment Act 2003 requiring disclosure of information in dollar terms. It released draft regulations for public comment on 7 January 2004. The government has been awaiting a report from the Parliamentary Joint Committee on Corporations and Financial Services following its inquiry into those draft regulations. That was tabled 10 minutes ago and has not been printed.

While the government fully accepts the need to tighten the current exemption, it has received legal advice that the use of this form of words would have the effect of requiring dollar disclosure even when this would impose massive and disproportionate costs on industry. The government therefore considers that the objective of tightening the regulations should be achieved through a different form of words. The disallowance motion affects regulations that deal with unrelated but nevertheless important matters. Of the nine items within the schedule, five deal with other financial services reform matters relating to further disclosures of information. These include measures to, firstly, enhance disclosure of superannuation benefits and any associated fees in periodic statements to members, items 5 to 8; secondly, close a loophole affecting the disclosure of so-called common fund fees—that is, those fees and charges not paid directly by a product holder for financial investment products, item 9; and, thirdly, require disclosure of means to access additional information sources to the information provided in periodic accounts for superannuation fund members, items 5 to 8.

Removing items 5 and 7 from the disallowance motion is an ill-considered amendment that effectively does not avoid disallowing important but unrelated regulations. Disallowing the regulations would still result in, firstly, the loss of enhancements to the disclosure of superannuation withdrawal benefits and fees associated with other significant benefits in periodic statements to members, items 6 and 8; secondly, the closing of the loophole affecting the disclosure of so-called common fund fees—that is, those fees and charges not paid directly by a product holder for financial investment products, item 9; and, thirdly, requiring disclosure of means to access additional information sources to the information provided. This motion affects other regulations, and it constitutes an inappropriate and completely unnecessary use of parliamentary time and disallowance procedures. The government has given a specific public commitment to address outstanding issues relating to the regulations, and it is already acting to give effect to that commitment. This commitment is in no doubt. The remaining regulations are worthwhile and necessary measures that add to the government's aim to improve the transparency of financial products and to aid consumer comprehension. The regulations should be welcomed and supported by the Senate, not disallowed.