Andrew Murray (WA, Australian Democrats) Share this | Hansard source

The report of the inquiry into the superannuation industry by the Parliamentary Joint Committee on Corporations and Financial Services that has been delivered today has been a long time in gestation, but it is a singularly important report. Broadly speaking, it will effect, hopefully, savings amounting to well over $1 trillion Australian dollars, so this is not a minor matter. There are 31 recommendations in the report, and it is a sign of the committee’s common conclusions that Labor have only disagreed in part or in whole with five of those. Of course, their point of view has substance, although with respect to their disagreement over the issue of unit pricing I am afraid that I think on balance that the majority report is correct. However, I welcome both the very short Labor minority report and the report itself as seeking to significantly advance an improvement in this sector.

Particularly important, I think, from the perspective of advancing legislation is recommendation 2, which asks the government, through Treasury, to conduct a review of the laws and regulations governing superannuation to identify how they may be rationalised and simplified. There are very real problems in terms of overlap, inconsistencies, complexities et cetera, and the committee has recognised that a major rationalisation would be to the benefit of industry.

The other recommendation I draw attention to is recommendation 5, where the committee recommends that the government formulate and implement an effective disclosure policy for both product disclosure statements and annual reports to address any deficiencies in reporting related party transactions—that is a critical recommendation. Recommendation 8 recommends that Treasury examine and report to government on the issue of overlapping, inconsistent and conflicting requirements of superannuation funds from a number of regulators. That, too, is vital to ensure an efficient and effective industry. I am not one of those who are persuaded by the view that APRA and ASIC need to be united; I think they are separate institutions which function effectively but could function much more efficiently, but I do not have a closed mind to the improvement of regulations in this field.

The committee notes of course the important role the regulators play in superannuation, and five of the 31 recommendations are devoted to APRA and five are devoted to ASIC, so not all the recommendations are directed at the government. In my own case I have a particular interest in the issues of nomenclature, an issue raised by the chair in tabling his report. I think that, until such time as consumers of superannuation products can easily identify the sort of advice that they need simply through letting their fingers do the walking through yellow pages or observing a sign, we are not going to get the kinds of advice channels to fit the consumers that are necessary. Much more needs to be done in that field. Many people do not understand what you mean when you say ‘nomenclature’. If you go to buy a motor car you know what a dealer is, you know to expect that a Ford dealer is entirely different from a Toyota dealer, whereas a second-hand car dealer would, of course, offer you many varieties of car, so it is that kind of nomenclature which is easy for consumers to understand.

There is one area in which I felt the report could have been enhanced, and that is the superannuation guarantee contributions. I am of the view that, because those contributions are required by statute and are compulsory, the superannuation guarantee contributions should be quarantined from being used to pay for commissions to financial advisers. I was not able to persuade other members of the committee to that view, but I think you have to deal with superannuation contributions which are compulsory in a different way to those which are voluntary and I am very wary of financial advisers being able to be ‘free-riders’, as it were, on compulsory contributions.

Overall, in my view, the chair, other members of the committee and the secretariat have done a very useful and helpful job with respect to this report. By its nature, of course, it will not be able to be rapidly implemented or responded to, but I do hope it contributes very materially to the greater efficiency, productivity and effectiveness of our superannuation schemes.

I seek leave to continue my remarks later.

Leave granted; debate adjourned.