Bob McMullan (Fraser, Australian Labor Party, Parliamentary Secretary for International Development Assistance) Share this | Hansard source

On behalf of the minister responsible for superannuation, I thank the members for Cowper, Robertson and Oxley, who contributed to this debate, for their support for the bill. The Superannuation Industry (Supervision) Amendment Bill 2010 introduces amendments to the Superannuation Industry (Supervision) Act 1993 to reduce the risks for superannuation funds investing in limited recourse borrowing arrangements. It contains amendments that reduce the risk to superannuation fund assets arrangements involving personal guarantees on lending or related borrowings, multiple assets or the replacement of the asset. The bill ensures that the term ‘asset’ should now be read in the singular so that it is not interpreted as permitting borrowing arrangements over multiple non-identical assets. This will ensure that funds are not exposed to the greater risk of borrowing arrangements over multiple differentiated assets.

The bill amends the act to clarify the circumstances under which refinancing and related expenses are permitted. Industry stakeholders were uncertain whether the existing borrowing exemption allowed refinancing on related expenses to be incorporated into borrowing arrangements. The bill amends the act to list the specific circumstances in which a replacement asset is permitted. This will prevent replacements that increase the risk to fund assets. The bill introduces amendments to ensure that the rights of the lender or any other person against a superannuation fund trustee are limited to the rights relating to the acquirable asset. This will protect fund assets from guarantees and other charges that may circumvent the limited recourse nature of the borrowing in the event of a default.

The amendments respond to issues with the regulatory framework surrounding superannuation investment in limited recourse borrowing arrangements such as instalment warrants, raised by the Australian Taxation Office, the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission. The amendments also reflect concerns raised in consultations with industry stakeholders. The bill demonstrates the government’s commitment to ensuring that the regulatory framework surrounding superannuation is robust and that superannuation funds are managed prudently in a way that maximises the income of Australians in retirement. On that basis, I commend the bill to the House.

Question agreed to.

Bill read a second time.

Ordered that the bill be reported to the House without amendment.

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