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Tuesday, 30 November 1965

Mr CREAN (Melbourne Ports) .- I should like to say one or two words about this rather intricate matter. What I have to say flows to some extent from remarks that I made during my second reading speech on the Bill. It is a matter to which the Treasurer (Mr. Harold Holt) or the Government should give some consideration. In my view, superannuation funds have got to such a stage now that I doubt whether the Com missioner of Taxation in particular, or our income tax laws, would be the appropriate means of solving the difficulty. The question before us arises out of the fact that difficulties occur when one individual transfers his employment. When there are, I think, half a million people involved it is not unlikely that considerable numbers of people in various funds will transfer to other funds. I think Mr. Parsons of the Association of Superannuation and Provident Funds of Australia suggested that there were not fewer than 40,000 funds. In fact, he thought there would be as many as 70,000 funds, although he went on to say that 200 of the larger funds had by far the great majority of assets and numbers of people covered. With that proliferation of funds it is certainly likely that people in funds will be moving from one place of employment to another.

During my second reading speech 1 drew attention to the 19th annual report of the Insurance Commissioner for the year ended 31st December 1964. On page 8 of that report the first thing he noted was the frequent absence of any provision in the rules of one superannuation scheme for the acceptance of life insurance policies issued for the purposes of another superannuation scheme. Then he went on to refer to the probability that the rules of some schemes which include occupations subject to a high rate of labour turnover may not have sufficient regard for the circumstances of those occupations.

I suggest that the time has come when there should be drawn up something like a model set of rules, agreed-upon provisions governing these funds where a person moves to other employment, as inevitably will happen. I discussed this matter with the honorable member for Parramatta (Mr. Bowen) this afternoon. He said that he knew of one scheme where the labour turnover was as high as 600 persons in the course of 12 months. Presumably he meant that 600 people move out and something like that number come in. He was speaking of a scheme in which a labour aggregate of some 7,000 or 8,000 people was involved. Therefore, at least these things are significant enough to have the future attention of the Government.

In my second reading speech I referred to a suggestion made in the " Economist " of July of this year that there might even be appointed a person to be called a registrar of superannuation schemes who would be a sort of holder of the rights of people who left one fund to go to another. After all, the older a man is the greater is the purchase price when he wants to join a new scheme, and the greater also is his vested right when he leaves. Perhaps there ought to be some residual kind of trustee to handle this business of transfers. One of the difficulties of the Act is that apparently annually one is supposed to make some assessment, when people leave the fund, of the rights of the residual members of the fund to any sums that were left in respect of his contribution and the employer's part over and above what he took out. This is a rather messy business and beyond the compass of what might be called amateur trustees. In the Treasury where superannuation for hundreds of thousands of people is handled there is the advantage of actuaries and computers, but in some funds with only a few hundred members calculations still have to be made and the trustees have not the mathematical skill or technical assistance that the Treasury has.

The Treasurer might consider looking at this rather complex problem. It may be possible to provide a more simplified formula as to what should happen when this transfer process takes place. I offer no objection to the amendment. The Treasurer has indicated that he is willing to accept it, but I think the large numbers of transfers should be noted. It is because transfers take place that these rather complicated amendments are inserted in the Act.

Amendment agreed to.

Clause, as amended, agreed to.

Clause 6 agreed to.

Clause 7.

Section 23 of the Principal Act is amended -

(a)   by omitting from paragraph (s) the words "full-time duty" and inserting in their stead the words " continuous full time service"; and

(b)   by inserting after paragraph (s) the following paragraph - "(sa) in the case of a member of Naval Emergency Reserve Forces, the Regular Army Emergency Reserve or the Air Force Emergency Force, the pay and allowances paid to him as such a member (other than pay and allowances in respect of continuous full time service and any gratuity paid to him by reason of a calling out for continuous service of, or a part of, the Forces or Force of which he is a member;".

Section proposed to be amended -

23.   The following income shall be exempt from income tax -

(s)   in the case of a member of the Citizen Naval Forces, the Citizen Military Forces or the Citizen Air Force, the pay and allowances paid to him as such a member, other than pay and allowances in respect of full-time duty;

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