Senate

Supplementary Explanatory Memorandum

(Circulated by authority of the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP)

Glossary

This Supplementary Explanatory Memorandum uses the following abbreviations and acronyms.

General outline and financial impact

Faith-based products - Parliamentary Amendments

Outline

The Parliamentary amendments to the Bill remove the framework for a supplementary annual performance test for faith-based superannuation products from the Bill. This will enable the Government to consider the treatment of faith-based superannuation products as part of the broader review of the Your Future, Your Super reforms.

Date of effect

None.

Financial impact

Nil.

Human rights implications

The Parliamentary amendments do not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 2.

Compliance cost impact

Nil.

Chapter 1: Faith-based products - Parliamentary Amendments

Outline of chapter

1.1 The Parliamentary amendments to the Bill remove the amendments to the SIS Act which would provide a supplementary annual performance test for faith-based superannuation products.

Context of amendments

1.2 Consistent with recommendation 4 of the Productivity Commission's report, Superannuation: Assessing Efficiency and Competitiveness, Schedule 2 to the Treasury Laws Amendment (Your Future, Your Super) Act 2021 and supporting regulations established an annual superannuation performance test to hold superannuation trustees to account for product underperformance. The performance test measures investment performance (including investment fees and taxes) and administration fees for individual products.

1.3 Schedule 5 to the Bill introduces a supplementary annual performance test for faith-based superannuation products to allow investment in accordance with faith-based principles to be taken into account when assessing the performance of a product against benchmarks.

1.4 Following the Bill being referred to the Senate Economics Legislation Committee on 28 September 2022, these changes would benefit from being considered in the context of the broader Your Future Your Super review. Accordingly, the amendments will remove schedule 5 from the Bill, and the Government will consider this measure as part of the broader review.

Detailed explanation of amendments

1.5 Amendment 1 removes table item 5 from clause 2 of the Bill so that the table no longer includes commencement information for the faith-based products measure. [Amendment 1]

1.6 Amendment 2 removes Schedule 5 to the Bill. Schedule 5 to the Bill amends the SIS Act to provide a supplementary annual performance test for faith-based superannuation products. [Amendment 2]

Chapter 2: Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Treasury Laws Amendment (2022 Measures No. 3) Bill 2022

Overview

2.1 The Parliamentary amendments are compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

2.2 The amendments remove the framework for a supplementary annual performance test for faith-based superannuation products from the Bill.

Human rights implications

2.3 The Parliamentary amendments do not engage any of the applicable rights or freedoms.

Conclusion

2.4 The Parliamentary amendments are compatible with human rights as it does not raise any human rights issues.