Chris Pearce (Aston, Liberal Party, Shadow Minister for Financial Services, Superannuation and Corporate Law) Share this | Hansard source

I begin my remarks this afternoon by congratulating the new member for Lyne on his maiden speech in the federal parliament. I wish him well throughout his parliamentary career here. The Temporary Residents’ Superannuation Legislation Amendment Bill 2008 and the Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2008 strive to achieve two broad outcomes: less money lost in the superannuation system and a lowering of compliance and administration costs for superannuation providers. There will be two primary functions of these bills: firstly, transferring funds from the superannuation provider to the ATO and, secondly, providing the capacity for funds to be retrieved from the ATO through the existing departing Australia superannuation payment, otherwise known as the DASP.

I go firstly to the transferral of funds to the ATO. Once these bills become law, superannuation funds will be required to transfer the balances of former temporary residents’ accounts to the ATO within six months of such persons departing Australia. Under the proposed arrangements, the ATO will notify superannuation providers that a former temporary resident with a superannuation interest has departed Australia after six continuous months have elapsed. Superannuation funds will then pay the ATO the starting amount of the account balance minus payments already made to the former temporary resident. In the area of retrieval of funds from the ATO, once the account balances have been paid to the ATO, former temporary residents will be entitled to claim their superannuation from the ATO. Such persons will be able to retrieve their superannuation entitlements from the Australian Tax Office without a time limit being imposed. Amounts which have been paid to the ATO can be paid to former temporary residents subject to any withholding tax which may apply under the law. Once persons have been identified by the ATO, amounts can be paid to the person, their legal representative or a fund if the person is identified as an Australian or New Zealand citizen or is a holder of a permanent visa.

I will make a few remarks on the legislative context of these bills. These proposed laws are largely the previous coalition government’s policy, which was announced in the Mid-year economic and fiscal outlook 2007-08. We instituted this policy at the time because many former temporary residents do not take their superannuation with them as they do not lodge DASP applications. Therefore, unclaimed superannuation balances often become lost moneys in the system. Inactive accounts in the superannuation system currently represent approximately $12 billion in assets. By-products of inactive accounts are unnecessary compliance and, of course, operational costs associated with those accounts. Despite the claim that has been made by some on the opposite side—in particular, by the Minister for Superannuation and Corporate Law in his media release dated 8 August 2008—these bills do not represent significant changes to the measures that we announced in relation to these matters when we were in government. Under the measures announced by the previous coalition government, unclaimed balances of superannuation accounts belonging to former temporary residents would be paid to the ATO, with the capacity for the former temporary resident to claim back the lost balances. The bills currently before the House represent the same outcomes, which are lower compliance costs and less money lost in the system. So the minister’s claim that this is Labor policy is simply false.

Let me make some remarks regarding consultation. As is consistent with the Liberal Party philosophy of consulting widely with relevant interest groups, we have determined that there are some very significant concerns from industry on these matters. Industry have raised with me three prime concerns which they have with these new bills. They consider the timing and cost of implementation is the key problem facing superannuation companies. Industry have stated that three versions of reporting requirements will be required during the transition period and, further, that new administrative costs will be incurred by superannuation providers. Industry have argued that the new costs will be centred on registry and systems management issues. A further issue has been identified by industry—that is, that there are liquidity concerns for some funds which could be forced to liquidate assets in a short time frame because they have a large number of former temporary residents as members. If this were to occur, any such hasty sale of assets may adversely impact on the value of the remaining members’ accounts. Industry have also raised the problem of some former temporary residents who may have had their superannuation arrangements based on the current laws. Industry argues that such individuals would have been confident in the knowledge that their superannuation accounts would remain lodged with their superannuation provider indefinitely, but these would be subject to additional taxation under the proposed arrangements. The opposition notes these concerns raised by industry; they are significant concerns. We encourage the government to take these concerns into account when implementing these measures.

In summary, while I note that compliance cost concerns have been raised during our consultation period, these proposed laws should reduce the number of superannuation accounts containing unclaimed amounts, and all employee superannuation payments will now occur under the same DASP procedure. Both outcomes should result in a lowering of costs for government and for superannuation providers. Providing that there are, of course, no adverse findings from the inquiry into these matters by the Senate Standing Committee on Economics, the opposition supports the passage of these bills.

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