House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Minister for Finance and Administration, Senator the Hon Nick Minchin)

Schedule 5 - Amendment of the Governor-General Act 1974

28. This schedule amends the Governor-General Act as a consequence of the closure of the Productivity Benefit Act from 1 July 2006 (see Schedule 3) to ensure a minimum level of superannuation for or in respect of a Governor-General.

Item 1

29. Item 1 inserts section 4AA in the Governor-General Act which replaces provisions contained in the Superannuation (Productivity Benefit) (Qualified Employees and Alternative Arrangements) Declaration No.1 from 1 July 2006 for a Governor-General who is not a qualified employee under the Productivity Benefit Act. Section 3AA of the Productivity Benefit Act as inserted by Item 3 of Schedule 3 ensures that no one can become a qualified employee on 1 July 2006 or after that date. That declaration ensures that where a Governor-General or a surviving spouse of a Governor-General dies the amount of the total superannuation benefit paid in respect of the person's service as Governor-General is at least equal to the minimum amount required by the SG Act to avoid an individual Superannuation Guarantee shortfall.

30. Subsection 4AA(1) provides that section 4AA applies if a Governor-General or a former Governor-General dies on or after 1 July 2006 without leaving a spouse, or if a former Governor-General has died leaving a spouse or spouses, and the spouse or the last surviving spouse dies on or after 1 July 2006 and the Governor-General was not a qualified employee under the Productivity Benefit Act.

31. The amount of benefit payable under section 4AA to the personal representative of the deceased person to whom the section applies, as worked out under subsections 4AA(2) and 4AA(3), is equal to:

•

the sum of all amounts that would have been required to be contributed on a monthly basis to a complying superannuation fund to avoid an individual Superannuation Guarantee shortfall under the SG Act if no other benefits were payable to or in respect of the Governor-General under the Governor General Act; plus

•

the amount of interest in accordance with a method determined by the Minister to have accrued on those contributions; less

•

the amount of any other benefits paid to the former Governor-General or their spouse under section 4 of the Act in respect of service as Governor-General.

2. Subsection 4AA(4) provides that where a benefit is payable under subsection 4AA(2) to the personal representative of a person and no personal representative of the person can be found, the amount is to be paid to any individual or individuals whom the Minister determines.

3. Subsection 4AA(5) appropriates money for the benefit payable under this section.

4. Subsections 4AA(6) to (10) make provision for setting the interest to be applied to contributions under paragraph 4AA(2)(a). The method for setting the interest must be set out in a determination by the Minister (subsection 4AA(6)). The method may provide for the interest rate to vary over time (subsection 4AA(7)) and may apply to a period prior to the making of the determination but may not be revoked (subsection 4AA(9)). This is consistent with section 33(3) of the Acts Interpretation Act 1901 which allows for the revocation of an instrument unless a contrary intention such as in subsection 4AA(9) is included in the relevant Act. Subsection 4AA(9) is not intended to apply to any other instruments under the Governor-General Act (subsection 4AA(10)).

5. Subsection 4AA(11) provides that the determination under subsection 4AA(6) is a legislative instrument for the purposes of the Legislative Instruments Act 2003 and is subject to disallowance by the Parliament under section 42 of the Legislative Instruments Act 2003. Subsection 4AA(12) specifically provides for the determination to be subject to disallowance and, as such, item 39 of the table under section 44 of the Legislative Instruments Act 2003 which exempts superannuation legislative instruments (except regulations) from the disallowance process does not apply.

6. Subsection 4AA(13) contains definitions of the terms "complying superannuation fund or scheme" and "individual Superannuation Guarantee shortfall" which have the same meaning as in the SG Act.