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Thursday, 26 November 1998
Page: 731


Mr HOCKEY (Financial Services and Regulation) (10:00 AM) —I move:

That the bill be now read a second time.

This bill delivers on the government's ongoing commitment to ensure that superannuation fund members have access to an effective dispute resolution mechanism for superannuation complaints. Superannuation is a vital component of the retirement savings plans of most Australians. A key element of our existing superannuation system is the availability of a simple and efficient dispute resolution mechanism for superannuation fund members.

The Superannuation Complaints Tribunal was set up to provide superannuation fund members with access to such a dispute resolution mechanism, as a low-cost alternative to the courts. However, in February this year the Federal Court decisions of Wilkinson v. Clerical Administrative and Related Employees Superannuation Pty Ltd and Brekler v. Leshem held that the exercise by the tribunal of some of its powers is an invalid exercise of the judicial power of the Commonwealth. As a result, the ability of the tribunal to operate as an effective dispute resolution mechanism has been significantly impaired.

This has resulted in a growing backlog of complaints awaiting resolution. As members would understand, each unresolved complaint represents at least one person, if not a whole family, who is living with uncertainty and anxiety. As at 23 November, nearly 300 disputes were unresolved by the tribunal. Of this backlog of disputes, the largest proportion—over 60 per cent—are disputes in relation to total and permanent disability claims. The superannuation fund members involved in these claims are invariably people who are no longer able to work, who have few resources and whose main concern is finding enough money to live on. Typically, pursuing a claim through the court system is not an option for these people because of the expense involved.

The backlog of disputes also contains a large proportion—over 25 per cent—of claims concerning the payment of death benefits to the dependants of superannuation fund members. It is essential that an effective dispute resolution mechanism is provided for these superannuation fund members and their dependants.

To overcome the inoperability of the tribunal, the government is currently appealing the Federal Court decisions to the High Court. However, a final decision is not expected for at least several months. The government is also examining long-term options for addressing the complaints review gap left by the Federal Court decisions. In the meantime and as an interim measure, the government intends to implement the July 1998 recommendation of the Senate Select Committee on Superannuation by allowing the tribunal to arbitrate disputes.

This bill will allow the tribunal to arbitrate complaints with the consent of the parties. Where a complaint is made to the tribunal and conciliation has been unsuccessful in resolving the complaint, the tribunal will be required to notify the parties of their ability to resolve the complaint by arbitration. The parties will also be given a form of an arbitration agreement approved by the tribunal. If the parties to a complaint enter into an arbitration agreement, the tribunal will be able to arbitrate the complaint.

This bill will require an arbitration to be conducted as the tribunal thinks fit and in accordance with the law relating to commercial arbitration of the state or territory as nominated in the arbitration agreement. That law will in most cases probably be the law of the jurisdiction in which the fund member resides. The tribunal will be required to prepare a memorandum explaining how it proposes to arbitrate complaints and make the memorandum available to superannuation fund members.

The tribunal will be able to arbitrate complaints made before or after the commencement of this bill. This will allow the tribunal to use the option of arbitration to address the current backlog of complaints which has developed since the Federal Court decisions. The government will continue to work, in consultation with industry bodies—and taking account of the outcome of the appeal to the High Court—on developing a longer term process for ensuring that there is a low-cost alternative to the court system for superannuation fund members and their families.

I want to stress that the government has responded quickly to the implications of the decisions of the full Federal Court and it has done so in a consultative manner. The full Federal Court decisions were handed down in February of this year. Subsequently, on 7 April this year the Senate referred the issue of options for dispute resolution taking account of those decisions for inquiry and report by the Senate Select Committee on Superannuation. That committee's inquiry included a consultative round table with industry representatives and other interested groups to discuss possible responses to the decisions.

The committee's report was tabled on 12 July 1998, recommending in part that the government investigate the feasibility of putting an interim solution in place. The government speedily responded on 16 July 1998 with the announcement by the Assistant Treasurer that the tribunal would be given arbitration powers. Draft legislation was subsequently prepared for introduction in the spring sittings. The introduction of this bill has been delayed by the intervening election.

Let me conclude by recording the government's appreciation of the cooperation of all parties in agreeing to facilitate consideration and early passage of this bill. I commend the bill to the House and present the explanatory memorandum.

Debate (on motion by Mr Swan) adjourned.