Deborah O'Neill (Robertson, Australian Labor Party) Share this | Hansard source

On behalf of the Parliamentary Joint Committee on Corporations and Financial Services, I present the committee's advisory report on the Superannuation Legislation Amendment (Stronger Super) Bill 2012 and the Superannuation Supervisory Levy Imposition Amendment Bill 2012.

In accordance with standing order 39(f) the report was made a parliamentary paper.

by leave—I am pleased to speak to the Parliamentary Joint Committee on Corporations and Financial Services June 2012 report on its inquiry into the Superannuation Legislation Amendment (Stronger Super) Bill 2012 and the Superannuation Supervisory Levy Imposition Amendment Bill 2012. These amendments are part of the SuperStream package of measures designed to enhance the back office of superannuation. The superannuation industry is currently dominated by a large number of paper transactions that are very inefficient for both processing costs and the time taken for transactions to occur and superannuation to be deposited in members' accounts. Members of superannuation funds and employers will both benefit from these changes, and it is estimated that the SuperStream measures are expected to save $1 billion in processing costs per year, which is quite a significant improvement. When averaged over the 33 million superannuation accounts, this translates to a saving in the order of $30 per account. Research undertaken by the Financial Services Council estimated that the reforms would deliver savings of up to $20 billion by 2020.

The cost for implementing the SuperStream reform is $470 million over seven years. This will be paid by a SuperStream levy on Australian Prudential Regulation Authority regulated funds. Echoing the words of the Minister for Financial Services and Superannuation, if you averaged the full levy increase of $121 million to apply in 2012-13 across the approximate 33 million accounts existing today, the cost is roughly in the order of $4 per account. Just to put on the record why it is that we are in this position, I want to record today what it is that the Financial Services Council described as the journey to the point we have reached. They stated:

Over the past decade, the industry has endeavoured to agree on a set of data standards for managing transaction between entities; however, we lack the capacity to compel external stakeholders and sometimes our own stakeholders to comply with industry developed standards. The introduction of these compulsory standards is therefore a welcome development as it will standardise processes for employers and funds in dealing with one another.

These comments about the need for leadership in this area and acknowledgement of the leadership shown by this Labor Gillard government are very much worth putting on the record here today. Further, I would like to record into Hansard the comments of Mr Murray who is the principal adviser on superannuation in Treasury and Mr Olesen, the deputy commissioner of superannuation at the Australian Taxation Office, who made the following comments. Mr Murray stated:

The background to these measures is that the superannuation industry has been trying for a considerable number of years to establish its own common standards and address these issues. Unfortunately, for various reasons, the industry has been unable to come to any agreement. The outcome of that has been a considerable number of different processes among the funds, there are considerable deadweight costs in the industry and they have these provisions for different requirements. The government has therefore been required to come in and become the decision-maker, to take control and push these reforms through, because unfortunately, to date, industry has not been able to come to an agreement itself.

Mr Olesen said:

I think the industry have tried at various times to develop some common data standards to use, but ultimately they have not been successful—hence, the government has taken these reforms.

I certainly stand here as a very proud member of the reforms that this government has undertaken in a range of fields but none are more important to so many Australians than this field of superannuation and financial services.

In terms of governance, the committee acknowledges that industry is seeking assurances that a sound governance framework is established to support SuperStream measures. To help usher in the changes contained in these bills the government has announced the establishment of the SuperStream Advisory Council, and two weeks ago we called for nominations from industry participants to be part of that council. This is another indication of how well this government is working with key stakeholders to make sure that we come up with policies and governance structures that advance the interests of all Australians and that we do it together. It stands in stark contrast to the carping negativity—the aggressive negativity—of those opposite.

To support that process further, a consultation paper has also been released. This paper has been met with approval by industry participants and underlines the government's commitment to working with the sector in implementing these important changes. The committee is assured that the governance framework provided through the SuperStream Advisory Council will provide an appropriate forum for industry members to speak to government on these reforms.

With regard to the levy, the committee heard from some industry participants who expressed concern not about the scale of the levy but about how the levy would be spent. These concerns, in the committee's view, are very reasonable. The committee recommends measures that the Treasury has advanced. These measures are to encourage dialogue with industry on the costs of the SuperStream levy through the release of its discussion paper. We certainly as a committee encourage the industry to use this avenue to further discuss the detail of the high-level deliverables on SuperStream that were released by Treasury during the course of this inquiry.

The committee also notes that the levy is subject to annual review and should be adjusted when appropriate. However, to address industry concerns further, the committee also considers it highly appropriate that the Australian Taxation Office provide a regular detailed breakdown of costs and expenditure of the additional levies to the SuperStream Advisory Council. These would be based on reporting guidelines obviously developed in consultation between the council and the ATO.

I would like to underline the benefits that these changes will bring. In evidence to this committee, the Australian Institute of Superannuation Trustees focused on very significant productivity gains that this legislation will bring for industry and employers both large and small. Anything that supports productivity is something that this government is committed to assisting. The institute suggested that they expect savings of approximately 20 per cent in administration costs in the long term for the superannuation industry. That is quite a significant saving.

The committee is encouraged by the efforts already undertaken by the industry to adopt the SuperStream measures and to improve efficiencies in the administration of superannuation for the benefit of all employers and superannuation members—my fellow Australians. The committee also commends the extensive consultation and collaboration between industry and government officials that has taken place.

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