Paul Fletcher (Bradfield, Liberal Party) Share this | Hansard source

by leave—I too am pleased to speak to the 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. I am pleased to note that there is no dissenting report from this inquiry. The coalition is broadly supportive of any approach that reduces the administrative costs on employers and superannuation funds. Coming as I do from a background in the telecommunications industry, an industry which is characterised by extensive transmission of data between different players using information technology—including, for example, the mobile number portability arrangements under which end users can have their number moved from one telecommunications carrier to another within a matter of hours using extensive and efficient transmission of data—I was somewhat surprised to discover that in the superannuation sector there is still very heavy use of paper based transactions. The inefficiencies which result from that are clear to any Australian who has ever sought to move their superannuation balance from one provider to another. Therefore, the fundamental rationale underpinning this bill is one that the coalition supports.

However, it is not correct to say the coalition has no concerns about the way the legislation has been framed, and I want, in the brief time available to me, to highlight a couple of points that were made in the committee report, noting again that it is a joint report and the concerns were therefore, to that extent, shared by all members of the committee.

The first thing I want to highlight is that the bill is riddled with strict liability provisions. Unsurprisingly, a number of submitters to the committee raised concerns about the compliance regime. The Financial Services Council, for example, submitted that the proposed compliance measures for SuperStream are 'overly severe' and suggested that the penalty regime be reconsidered.

A particular concern which emerged during the committee's deliberations was the potential for the impact upon employers, and particularly small employers, given the nature of these strict liability provisions. Consider, for example, the position of a small business owner who is diligently seeking to discharge her obligations to pay superannuation for a handful of employees. She pays the amount required and pays it on time. However, the effect of the strict liability provisions in this bill is that, if this small business owner fails to include all of the items of data that are required under the standards, it is open to the regulator to prosecute her. Because the provisions are strict liability, it is not a defence for her to say that she thought that she was doing the right thing and that it was an inadvertent mistake born of the complexity of the reporting requirements. The Australian Taxation Office confirmed during the committee proceedings that this was certainly possible under the legislation as drafted.

It was somewhat pleasing to note the advice of the Australian Taxation Office that it has some administrative flexibility to waive or limit penalties where employers attempt to comply with the data standards but commit inadvertent technical breaches. However, the coalition will be keeping a close eye on the conduct of the Australian Taxation Office as regulator to ensure that its actual behaviour is as understanding as the assurances that it gave to the committee.

The other matter that I would like to address is one that was also addressed by the member for Robertson: the size of the levy which is being imposed upon industry participants to pay for the IT, information technology, changes that are required to give effect to these arrangements. The coalition is concerned about the size of this levy. The parties who appeared before the committee raised substantial concerns about how much money is being levied. The Australian Institute of Superannuation Trustees indicated at the hearing that the levy will mean a lot of short-term pain for a long-term gain.

To date there has not been enough information provided by either Treasury or the Australian Taxation Office about how the money will be spent and why the amount is so large. The peak body of the superannuation funds, the Association of Superannuation Funds of Australia, indicated that the amount that they, in their own experience, have spent developing complex IT systems is of much smaller magnitude than the sums which the Australian Taxation Office has indicated that it needs to develop its new IT systems. Given that developing IT systems and operating them is a core business function for superannuation funds, that advice from the superannuation funds and their peak body appearing before the committee is advice which, in my view, should be taken very seriously. The Australian Taxation Office needs to do a better job of justifying why it requires so much money to fund these information technology systems. That is a matter the coalition will continue to monitor closely.

Let me conclude by repeating that the coalition is broadly supportive of any approach that reduces the administrative costs inherent in the superannuation system. We do, however, have concerns about aspects of the implementation of these new arrangements as I have just described.

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