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Wednesday, 13 June 1984
Page: 2891

Senator MESSNER(10.34) —I wish to refer to clause 15, the clause to which Senator Harradine addressed himself. I would like to draw the attention of the Committee to certain aspects of proposed new section 27A and in particular the definitions and requirements that are laid down in respect of the Commissioner of Taxation. It seems to me that under the heading of 'approved rules' we are setting down the means of controlling superannuation funds. However, unfortunately, we do not have by any means a complete set of rules that would have to be administered by the Commissioner of Taxation.

It seems that the Government, by back door means, is regulating superannuation funds through the taxation Act rather than by introducing a separate Act in order to govern the affairs of superannuation funds. I believe that a more complete approach could have been better adopted by the Government in order to deal with superannuation funds in that way. What it amounts to is that the Taxation Commissioner will now become the arbiter of the affairs of superannuation funds and will be responsible for their approval in very many ways.

Coming to the detail of one aspect of it, I note that, amongst the rules for a superannuation fund that would need to be approved by the Commissioner, there is one that requires an audit to be conducted. One of the ways in which the Commissioner is devolving his responsibilities under the Income Tax Assessment Bill (No. 3) is to appoint an auditor. I am pointing now to proposed new section 27A(j)(ii). There is a requirement by the auditor to present a certificate which will state that the rules of the fund that were approved rules were complied with. It seems to me that that is a very onerous provision to be set upon an auditor. As I understand it, an auditor is not a judge or a jury for that matter but rather a person who investigates the affairs of a company or any entity to which he is appointed auditor and has to form a judgment about the affairs of that organisation and whether or not it has been properly conducted. This Bill will be seeking to impose upon auditors a requirement that the details of the rules have been complied with. I think that, in the normal course, is an absolutely onerous provision which will make it extraordinarily difficult for auditors to satisfy that condition. Indeed, one can only imagine that this will cause an enormous amount of heartburn in various areas over the next several years when this clause comes into force.

I suppose we need to accept that that is the Government's role, that it is bent on imposing such onerous duties upon people. However, in this circumstance, I wonder what guidelines the Government will be prepared to issue as to the way in which auditors will conduct their examination of the rules and whether we will find it extraordinarily difficult for auditors to comply with them without that. I would like to know what the Government has in mind in that area.

One other aspect that worries me, very much, about this is that it seems that a superannuation fund should, under normal accounting standards, be required to state its contingent liability for future benefits to beneficiaries. If that is so and an auditor is required to certify as to that contingent liability which would be a requirement in respect of corporations registered under normal company law, I would like to know from the Government how it intends to set down guidelines as to how that might be calculated. It is obviously intended that actuaries will be employed in order to determine such a liability. However, I see nothing in the approved rules definition to require an actuary to be employed in that duty nor do I see any requirement for an actuarial certificate. I wonder whether the Government has even considered the great shortage of actuaries in this country who will now be required to enter into an entirely new duty to certify in this situation. I would like the Government's assurance that it has considered those aspects. Most of all I would like to hear how it is that guidelines will be established for auditors to operate effectively in this area.