Bert Van Manen (Forde, Liberal Party) Share this | Hansard source

The Superannuation Legislation Amendment (Early Release of Superannuation) Bill 2011 will transfer the responsibility for administration of the early release of superannuation on compassionate grounds from APRA and the ATO to the Chief Executive of Medicare. This is a bill that the coalition does not oppose and, given that the bill also effectively transfers the relevant component of fees currently collected by APRA from APRA regulated funds to cover the cost of administering the early release of superannuation to Medicare, there should be no budget or financial impact on Medicare.

As noted, the bill transfers the responsibility for administration of the early release of superannuation. The administration of the early release of superannuation may not have sat well with APRA's role as the prudential regulator. Certainly, as the member for Paterson very rightly pointed out earlier, the time taken to process applications and get payments made—I know, from my previous experience as a financial adviser—has taken significant periods and has created additional financial burdens for the people involved. In view of that, it is probably quite appropriate that this function is administered by an agency that has other elements of income support and an efficient customer support infrastructure.

The circumstances under which superannuation can be released prior to age 55 is clearly defined in the SIS Act and allows, in specific circumstances as defined, people to apply to their superannuation funds or retirement savings account provider for the early release of their superannuation benefits. Early release of superannuation benefits may be applicable for people facing financial hardship, permanent incapacity, terminal illness, where the preserved balance is $200 or less and in cases of permanent departure from Australia. The provision where the balance is $200 or less was used a number of times in my practice, because it is one less thing that people had to worry about and it saves a lot of administration costs for superannuation funds for those small account balances, which frequently get lost or misplaced.

Superannuation benefits may also be released early on compassionate grounds by application to APRA for superannuation and retirement savings accounts or by application to the Commissioner of Taxation for self-managed super funds. This bill will not change that. The changes proposed by the bill relate only to the administrative arrangements. Some of the things that superannuation can be released for under compassionate grounds include payment for medical treatment and transport for a person or a dependant; enabling a person to make a payment on a loan in the event of possible foreclosure of a mortgage on a person's principal place of residence, or exercise by the mortgagee of an express or statutory power of sale; or to modify a person's principal place of residence or vehicle to accommodate the special needs of the person or a dependent arising from severe disability. It can also be released to pay for expenses associated with palliative care in the case of impending death and to pay for expenses associated with dependants with palliative care needs in the case of impending death, funeral or burial.

The member for Paterson very rightly pointed out some of the issues with these regulations. It is important to note that, while individuals may apply to APRA for the early release of superannuation benefits on the compassionate grounds that I have just listed, a superannuation fund trustee or retirement savings account provider ultimately decides what benefits they will or will not release, subject to the governing rules of the fund. As the member for Paterson also pointed out, in the global financial crisis there were a number of people, even those who had passed age 55, who had extreme difficulty in having funds released from their superannuation accounts because funds were frozen.

In assessing applications for the early release of superannuation, APRA is required to adhere to specific assessment criteria, and it is important that that process is properly followed. That is where we find that a lot of the time is taken up in getting the process completed. The applicant does have the ability to appeal a decision and, if they are not satisfied, they may request an internal review by an independent APRA delegate or an external review of the process by the Commonwealth Ombudsman. But, at the end of the day, if the superannuation fund trustee or the retirement savings account provider decides that the funds are frozen, people seeking access to those funds will still not be able to get those funds.

A concern with respect to the proposals in this bill is that there does not appear to have been any great public announcement prior to the introduction of the bill. Certainly, the financial planners that I still deal with and speak to inform me that they did not have any idea that this had been proposed or was on the drawing board. That is a major issue of concern: the lack of information in an industry that would be primarily responsible for dealing with clients in this situation.

As the member for Oxley pointed out, it appears that Medicare Australia has been managing these claims since February 2011 under delegation from APRA. I have not been able to find where the details of this delegation have been made public, including the amount of funding transferred to Medicare Australia to enable it to perform this task. Given that this is a government that apparently prides itself on openness and accountability, that is a serious issue of concern. There is no information in APRA's annual reports, or in other public resources, on the value of the revenue raised by the levy that APRA currently charges on superannuation funds under its regulation, so we cannot verify that the amount of money being transferred to Medicare to provide these additional services is in reality sufficient for what they require. It is important, given the increasing range of non-health related programs that Medicare Australia is now administering, that it is adequately resourced financially to meet this increasing workload. An example of other increased services provided by Medicare Australia is its assumption of responsibility, since July 2010, as the small business clearinghouse for superannuation—again, a service that the majority of small businesses that I have spoken to did not even know about. It is shown in the figures that less than one per cent of small business have taken up the service.

Given the stringent guidelines surrounding the early release of superannuation benefits, it is important that Medicare Australia is properly resourced and staff are properly trained, as many people who are seeking early release of superannuation funds are facing stressful circumstances and require compassion and understanding when dealing with this difficult issue.

As I noted at the outset, the coalition does not oppose the bill, but we trust that this transfer of responsibilities is implemented smoothly and in an efficient manner to minimise any impact on people who may be seeking to access their superannuation benefits. Given the track record of this government over the past four years, we have some serious concerns, and the issues that the member for Paterson raised earlier in terms of responses from the relevant minister also raise concerns.

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