Dennis Jensen (Tangney, Liberal Party) Share this | Hansard source

I rise today to speak on the Tax and Superannuation Laws Amendment (2013 Measures No. 1) Bill 2013 as a conduit for the voice of small business enterprise and industry in my electorate of Tangney in Western Australia. I have been contacted by authorised members of the Financial Planning Association of Australia and the SMSF Professionals' Association of Australia. These important stakeholders in our community and policy experts should and must have their concerns heard. My message here today is clear and simple: I want to see the removal of schedule 4 of the aforementioned bill.

The tax and superannuation laws amendment bill 2013 was introduced into the House of Representatives on 13 February 2013. Schedule 4 of the bill seeks to limit the ability of self-managed super funds to dispose of or acquire assets from a related company. The bill prohibits the sale of listed securities, such as shares, from a related party to an SMSF unless certain conditions are met. Schedule 4 of the bill intends to address concerns by the super system review relating to the acquisition and disposal of assets between related parties and self-managed super funds. This involves a situation where the buyer and seller of the asset are in effect the same person.

The most controversial aspect of schedule 4 will have the effect of prohibiting an SMSF from acquiring listed securities, such as shares listed on the ASX, from related members via an off-market transfer from 1 July 2013. Although schedule 4 does not impose a ban on off-market transfer, it facilitates regulations that will prevent SMSFs from acquiring listed securities from a related party via an off-market transfer.

This has significant implications for the SMSF sector. Transferring listed securities via an off-market transfer is a common and cost-effective way of allowing a superannuation fund to acquire publicly available investments to support the person's retirement savings. Forcing SMSF members to go on market in these situations will substantially increase the cost of this transaction, given the need for a stockbroker to execute both sides of the trade, with no true benefit to the SMSF involved in the transaction. I see this as placing SMSF members at a significant disadvantage compared to members of large superannuation funds, who will still be permitted to undertake off-market transfers without the cost of brokerage.

In addition to concerns over the off-market transfers of publicly listed securities, there are other aspects of schedule 4 which remain a concern. These include the requirement to obtain a qualified independent valuation for an unlisted asset which is being acquired from a related party or disposed of to a related party. This will create difficulties, and will likely have undesirable consequences for SMSFs. There may be scenarios where an SMSF will be forced to remain in place after most of the fund assets have been disposed of. This would occur where the SMSF trustees are not able to find a qualified independent valuer to value one or more of the fund assets. SMSFs with a collectable investment are an example. Even in situations where a qualified independent valuer can be found, the requirement to obtain a qualified independent valuation may result in little benefit or provide no transparency, and may result in unnecessary transaction costs being incurred by the SMSF.

Units held by an SMSF in a widely held unit trust are an example, where in the vast majority of cases there is an easily obtainable market price. As the SMSF trustee already has access to a qualified valuation of the units, it would seem necessary for the SMSF trustees in this scenario to obtain a further qualified independent valuation when selling units to a related party.

I believe the amendments in schedule 4 will result in higher and unnecessary transaction costs for many common SMSF transactions, and have other undesirable consequences as outlined. This bill is so very typical of the current Gillard government. It is another unnecessary piece of legislation that gets in the way of business. Not only that: this bill would disadvantage responsible SMSF participants.

The coalition is, at heart, about creating wealth and adding value to the economy. This measure as it stands does neither and is emblematic of all that is wrong with the Gillard government. Our country is failing to excel in the competitive index because of measures like this, where useless third parties are mandated to a deal. This is simply creating a job that never needed to be done. But, then again, Labor is hardly renowned for its perspicacity and predictive performance; more for the overbearing confidence—nay, arrogance—of this government. Why else would the government table this attack and attempt to end SMSFs as we know them?

The SMSF sector remained the largest sector of the Australian super industry, with 99 per cent of the number of funds and 31 per cent of the $1.4 trillion total super assets as at 30 June 2012. At 30 June 2012, there were around 478,000 SMSFs holding $439 billion in assets. There were also approximately 913,550 members in the SMSF sector, almost eight per cent of roughly 11.6 million members in Australian super funds.

The data confirms that the SMSF sector responds to changing economic circumstances. This was evident by changes in the level of growth in SMSFs, contributions made to the sector and shifts in asset types held. SMSFs are both flexible and resilient in their ability to concentrate or diversify asset portfolios. Why make it more difficult and expensive?

The trend continued for members of new SMSFs to be from younger age groups than those from the total SMSF population. The majority of SMSFs, 64 per cent, are solely in the accumulation phase; however, there is a clear shift for more recently established SMSFs to start pension payments earlier. SMSFs directly invested 78 per cent of their assets, mainly in cash and term deposits and Australian listed shares—a total of over 60 per cent. While smaller SMSFs tended to favour cash and term deposits, larger SMSFs had a greater tendency to invest in listed shares.

The estimated SMSF average operating expenses in dollar terms increased in 2010-11, particularly for SMSFs solely in the accumulation phase. This is the phase where most SMSF holders are, so it is just to add more expense upon their shoulders. This is the reality of the situation we are dealing with.

How can we trust Labor with such an important industry? Classic Labor myopia and vainglorious endeavour jeopardise our SMSF sector and super industry today and tomorrow. It is incumbent upon the House to reflect on the import of the sector and the potential irreversible damage of unintended consequences. I think credence must be paid to the old adage: 'If you don't know what you're doing, don't do it.'

The message is clear: Liberals are on the side of SMSF holders and will not build barriers of red tape. With Liberals in government, the SMSF holders in my electorate will have certainty that government is on their side and that, once more, hope, reward and opportunity will return to our land.

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