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Tuesday, 19 November 2002
Page: 6732

Senator BUCKLAND (3:28 PM) —When we are talking about superannuation and choice we really have to look at the evidence before the Senate committee that examined this very issue of choice. A leading business body said it could create excessive paperwork for employers. The Australian Chamber of Commerce and Industry's workplace relations spokesman said that the burden had some parallels to the GST business activity statement debacle and warned that business was hypersensitive to red tape. The spokesman from the Australian Chamber of Commerce and Industry said:

There would be obviously some resistance from employers to increased administrative obligations.

The Motor Trades Association, the National Farmers Federation, the Australian Industry Group and the Queensland Retail Traders and Shopkeepers Association have also expressed similar concerns. In addition, the groups with close experience in superannuation, such as Mercer Investment Consulting, the Corporate Superannuation Association and CPA Australia, have their doubts. CPA Australia stated:

The additional responsibilities will most certainly place a further compliance burden on employers. This is in addition to other burdens employers currently face, for example, compliance costs associated with the New Tax System and The New Tax Business System.

Mercer's submission said:

... the introduction of Choice as set out in the Bill will result in:

Significant compliance costs for employers;

Increased difficulties in meeting payment deadlines for SG contributions resulting in more late payment breaches.

... ... ...

... the advantages to the member of being able to exercise choice would need to be weighed against potential disadvantages which may include:

An increase in expenses due to higher distribution costs as well as the loss of employer subsidies that apply in many existing corporate funds;

A reduced willingness of employers to contribute more than the minimum contribution

... ... ...

The implementation of Choice in the proposed form will not only result in considerably greater costs than the estimates in the EM but in addition, many small business operators will be diverted from their business activity for many hours.

In a written response to questions asked during the Senate inquiry Treasury confirmed that not a single representative of small business has been consulted at any time over the last five years that the so-called choice proposal has been under consideration. However, Treasury and tax officers have consulted with the government's favourites such as the Australian Bankers Association, the Business Council of Australia, the Financial Planning Association and the Investment and Financial Services Association but not a single representative of small business. Labor has proposed to amend the bill to exempt small business from the choice regime. Labor has consulted with the Council of Small Business Organisations of Australia and they have fully supported this exemption to reduce red tape. It remains to be seen whether the government support the Labor amendments.

Senator Brandis asked, `Why shouldn't employees choose their own fund?' A number of difficulties have come to light during the inquiry. One of those difficulties is the complexity of comparing the multitude of funds that they would have to examine. Most of these funds have prospectuses of 60 pages or more, plus a multitude of pages for the actual application. It is hard to imagine that a worker, after a day of work, is going to go home with an armful of these applications and prospectuses, sit down calmly during the night, go through each one and make a choice. That is one reason why choice is not a good way to go. (Time expired)