Second Reading Speech
Senator Ian Campbell (Parliamentary Secretary to the Treasurer)I move:
I move:
That these bills be now read a second time.
I seek leave to have the second reading speeches incorporated in Hansard.
Leave granted.
The speeches read as follows -
Superannuation Industry (Supervision) Amendment Bill 2002
On 28 October 2002, the Government announced a package of reforms to update and modernise the prudential supervisory framework for superannuation.
The Superannuation Industry (Supervision) Amendment Bill 2002 will make minor amendments to the Superannuation Industry (Supervision) Act 1993, consequential to the changes introduced in the Superannuation (Financial Assistance Funding) Levy Amendment Bill 2002.
The Government is proposing to make regulations pursuant to the Superannuation (Financial Assistance Funding) Levy Act 1993 to recoup financial assistance provided prior to the end of the financial year. I call on all Members to ensure that the levy can take into account these changes and reduce the administrative and cost burden, which would eventuate under the current provisions.
Superannuation (Financial Assistance Funding) Levy Amendment Bill 2002
On 28 October 2002, the Government announced a package of reforms to update and modernise the prudential supervisory framework for superannuation.
Today, I introduce the first pieces of legislation to give effect to these reforms.
The amendments in the Superannuation (Financial Assistance Levy) Amendment Bill 2002 are the first in a package of reforms that will enhance the safety of superannuation in this country. This Bill will introduce amendments that will improve the workability of the levy collection process that plays such a central role to providing of financial assistance to superannuation funds that have suffered loss due to fraudulent conduct or theft.
In particular these reforms will significantly decrease the levy burden on large funds, whilst only placing a small increase on small funds.
Since June 2002, the Government has made nearly 380 determinations under the financial assistance provisions of Part 23 of the Superannuation Industry (Supervision) Act 1993, to grant financial assistance to funds that have suffered loss. As a result, the Government has paid out over $20 million. The Government has maintained at all times, whilst granting financial assistance, that financial assistance provided would be recouped by the Commonwealth through a levy on the industry made in accordance with the Superannuation (Financial Assistance Funding) Levy Act 1993 (the Levy Act).
As a result of this experience, the Government has identified a number of inefficiencies in the current framework for the collection of levies to fund the financial assistance.
Firstly, the Levy Act currently requires that separate levies must be collected for each grant of financial assistance - that is a separate levy for nearly 380 grants. This is clearly inefficient for both the party responsible for collection of the levies, the Australian Prudential Regulation Authority (APRA), and for the trustees of funds who must make arrangements to pay 380 separate levies.
Secondly, the current levy amount imposed on a fund is a proportion of a fund's assets, in line with the determined applicable levy rate. However, the Levy Act does not allow for the specification of either a ceiling or floor on the total imposed on superannuation funds.
The recent circumstances have identified that large-scale collection of levies to recoup financial assistance is impractical. 380 separate levies would place a large compliance burden on all superannuation funds. The lack of ability to set a floor or ceiling for each levy would exacerbate the problem, as it would generate a large number of very small levy amounts (less than 20 cents in aggregate) from some funds and very large amounts (over $400,000 in aggregate) from other funds.
All but one of the grants of financial assistance have been to funds that held less than approximately $1.5 million in assets. Approximately 81 per cent of regulated funds have assets of $1.5 million or less. Ability to set a floor and a ceiling on levy amounts imposed would more equitably share the burden of financial assistance, particularly given that currently the levy burden would fall most heavily on larger public offer funds, even though recent events have suggested funds with less than $1.5 million present a greater regulatory burden for APRA.
To address these inefficiencies, this Bill introduces a provision to amend the Levy Act to allow for the specifying of a minimum and maximum levy payable in respect of any levies imposed.
This will not only ensure that a reasonable limit is imposed on the maximum levy amount payable, but additionally ensures that all superannuation funds, with the exception of self managed superannuation funds, contribute appropriately to the funding of financial assistance. It is imperative that all regulated superannuation funds contribute to financial assistance.
It also introduces a provision to enable aggregate amounts of financial assistance to be collected in one levy, rather than individually. Imposing only one levy to collect the aggregate of all financial assistance granted in a particular financial year will ensure that the levy process is simplistic and would reduce compliance costs for all superannuation funds, rather than subjecting superannuation funds to levies to deal with 380 individual levies.
The Government is proposing to make regulations pursuant to the Superannuation (Financial Assistance Funding) Levy Act 1993 to recoup financial assistance prior to the end of the financial year. I call on all Members to ensure that the levy can take into account these changes and reduce the administrative and cost burden, which would eventuate under the current provisions.
Ordered that further consideration of these bills be adjourned to the first day of the next period of sittings, in accordance with standing order 111