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Monday, 25 June 2012
Page: 4435


Senator CORMANN (Western Australia) (21:40): As part of our commitment to help work towards the most efficient, the most transparent and the most competitive superannuation system possible, the coalition supports the Superannuation Legislation Amendment (Stronger Super) Bill 2012 and the Superannuation Supervisory Levy Imposition Amendment Bill 2012. The coalition of course recognises that only the most efficient, the most transparent and the most competitive superannuation system, with the highest corporate governance and transparency standards possible, will serve members to maximise the value of their investments so that they can maximise their chances of achieving self-funded retirement.

Schedule 1 of the Superannuation Legislation Amendment (Stronger Super) Bill 2012 introduces a framework to support the implementation of superannuation data and payment regulations and standards that will apply to specified superannuation transactions undertaken by superannuation entities, retirement savings account providers and employers. Schedule 2 amends the Australian Prudential Regulation Authority Act 1998 to enable costs associated with the implementation of the Super-Stream measures to be included in the determination, specifying the amount of the levy that is payable to the Commonwealth. The cognate bill, the Superannuation Supervisory Levy Imposition Amendment Bill 2012, amends the Superannuation Supervisory Levy Imposition Act 1998 to enable the Treasurer to make more than one determination on the imposition of levies for a financial year. As I have mentioned, the coalition supports this bill because we support any measure to improve the efficiency, transparency and competitiveness of the administration of the superannuation system by making the system easier to use for employers, ensuring fewer lost accounts, providing a more timely flow of money to super fund member accounts and delivering savings to employers and to fund members.

As part of the government's Super-Stream proposals, these bills provide for the implementation of data and payment regulations and standards that will allow participants in the super system to communicate by using standardised business terms in a consistent and reliable format. The electronic transmission, using agreed transport and security protocols, will allow for a more automated and timely processing of transactions with fewer errors. If properly implemented, these changes will deliver significant efficiency savings to the super industry and employers. These savings have been estimated by the Financial Services Council to be in the order of about $20 billion over the next 10 years. Much of the detail on the new data standards will be in regulations that industry participants consider to be appropriate. However, a careful consideration of the regulatory impact on all stakeholders, including small business employers, will be necessary.

Of some significant concern is the cost of implementation of the proposed measures, which the government has claimed will be $467 million from 2012-13 to 2017-18, including costs of $121 million in 2012-13. These costs are proposed to be recovered by a direct levy on all APRA-regulated super funds, which means that in effect the costs will be borne by super fund members across Australia in higher administration fees. The government is yet to provide a full breakdown of estimated expenditure. There are also additional costs that will be imposed on super funds and employers to convert to the new system and apply the new standards. These costs do not appear to have been fully considered by the government or in the regulatory impact statement. However, the Financial Services Council estimates that those costs to industry would be in the order of about $1 billion, which is supposed to include the cost recovery measures in this bill. It is for these reasons that these bills were referred to the Parliamentary Joint Committee on Corporations and Financial Services for inquiry. The PJC inquiry highlighted some significant concerns within the superannuation industry about the transparency and accountability of how government agencies, particularly the ATO, will spend the $467 million in funding that will be provided to them through additional industry levies. These levies will ultimately be paid by super fund members through higher fees. To address these concerns the parliamentary joint committee—in a bipartisan recommendation, I stress—recommended that the ATO be required to provide a regular, detailed breakdown of its costs and expenditure of the additional levies to the SuperStream Advisory Council, based on reporting guidelines developed in consultation between that council and the ATO.

Another concern raised by the industry during the inquiry was the strict-liability nature of offences under this legislation which would apply to employers who are trying to comply with the data standards but who commit technical breaches. The ATO have assured the Parliamentary Joint Committee on Corporations and Financial Services that they did have some administrative flexibility in these circumstances to waive or limit penalties where employers are acting in good faith. I can only hope that the Australian Taxation Office will use that administrative flexibility that they pointed out during the inquiry wisely. I hope that in such circumstances people will not be inappropriately hit around the head by the indiscriminate use of strict-liability penalty provisions. In its report the PJC urged the ATO, in fact, to use its discretion to waive or limit penalties in all of the appropriate circumstances.

This is, of course, one part of the superannuation reform agenda which the coalition have supported. We think it makes sense to make use of the improved opportunities that come with technological progress to maximise efficiencies and achieve cost savings which ultimately can only be good for super fund members. Ultimately, superannuation, of course, is a means to an end; it is not an end in itself—and the means is to provide a vehicle for Australians to save towards what hopefully, for as many Australians as possible, will be the ultimate achievement of a self-funded retirement.

But there are a whole range of other areas in the superannuation field where, sadly, the government has not been appropriately enthusiastic about progressing necessary and important reform—for example, in the area of improving corporate governance standards. I might just pause here to note that former Senator Nick Sherry, who took a particular interest in this whole area, commissioned the Cooper review into superannuation systems. The Cooper review made some very sensible recommendations on how corporate governance and transparency standards in superannuation could and should be improved. But the current Minister for Financial Services and Superannuation, Minister Shorten, has been rather unenthusiastic about embracing some of these sensible recommendations. Why is it that Minister Shorten has been so unenthusiastic about taking action to ensure that there is appropriate provision of independent directors on superannuation boards? Why is it that Minister Shorten has been so unenthusiastic about requiring those directors who want to sit on multiple superannuation boards to have to declare any foreseeable conflicts of interest? Why is it that Minister Shorten has been so unenthusiastic about embracing the Labor Party's own pre-election commitment to ensure that the process to select defined funds under modern awards and other industrial instruments is appropriately open, transparent and competitive? I think all of us in this chamber know the answer to those questions. The answer is that we have a Minister for Financial Services and Superannuation who is fundamentally conflicted. For someone who supposedly has set out to remove conflicts from the financial services industry, he has taken a very one-sided view when it comes to regulating the financial services and superannuation industries. Invariably, that view is informed by his experiences and his relationships in the context of one particular segment of the financial services and superannuation market. I call on the minister—

Debate adjourned.