Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Hansard source

The coalition will support the Tax Laws Amendment (2011 Measures No. 2) Bill 2011. This bill makes the following changes to taxation laws: it adds two organisations to the list of deductible gift recipients, namely, the Charles Perkins Trust for Children and Students and also the Roberta Sykes Indigenous Education Foundation. It also allows regulations to impose rules on self-managed super funds regarding personal use—collectables, paintings and so on. It will allow the use of tax file numbers as identifiers to locate super accounts and facilitate consolidation of accounts, while making changes to the way Australian taxes, fees and charges are made exempt from the GST.

I will just make a few comments in relation to some aspects of this bill, specifically in relation to changes to personal-use asset rules for self-managed superannuation funds. This provision allows the government through regulation to impose rules on self-managed super funds invest­ments in personal-use assets such as collectables and artworks. The sole-purpose test of the SI(S) Act requires that assets of a superannuation fund be held for the sole purpose of generating retirement income. The super system review, also known as the Cooper review, recommended that self-managed super funds should be prohibited from investing in personal-use assets and those held should be disposed of within five years. The review found that personal-use assets lent themselves to personal enjoyment and therefore failed the sole-purpose test.

The government announced on 3 July 2010 that it did not support the review's position but that it would tighten the requirements around investment in personal-use assets. These amendments allow the government by regulation to impose rules relating to investment of personal-use assets by self-managed super funds. Those rules can cover: artwork, jewellery, antiques, artefacts, coins or medallions, postage stamps or first-day covers, rare folios, manuscripts or books, memorabilia, wine, cars, recreational boats, memberships of sporting or social clubs, or assets of a particular kind if assets of that kind are ordinarily used or kept mainly for personal use or enjoyment, not including land. The coalition are of the view that the approach proposed by the government reflects a sensible balance. We are also aware that it is supported by the self-managed super fund industry body, SPAA.

In relation to the proposal to use tax file numbers as identifiers to locate super accounts and facilitate consolidation of accounts, this is of course part of the so-called 'super stream' proposals that came out of the Cooper review. The coalition very strongly supports the super stream related recommendations in that they will, through increased efficiencies, deliver real increases in value to superannuants and retirees across Australia. This provision allows superannuation fund trustees and retirement savings account holders to use tax file numbers to locate accounts and facilitates consolidation of multiple accounts. There are current restrictions on the way super­annuation funds can use tax file numbers. In particular they are not permitted to use tax file numbers to locate accounts for the purpose of consolidation. It does not replace account or membership numbers but removes the requirement that super funds use other methods of searching for multiple funds before using tax file numbers. An individual can still choose not to give their tax file number and there are no changes to the consequences for failing to do so. It is important in order to maximise individual retirement savings that smaller amounts are consolidated as early as possible. I pause here to say that, while we congratulate the government on having acted on this recommendation, the coalition are very disappointed that Minister Shorten has continued in his persistent failure to act on the Labor Party pre-election commitment to require the Productivity Commission to design a more open, transparent and competitive process for the selection of default superannuation funds under the modern award system. We have had a case study publicised in the media in recent days which clearly demonstrates the inevitable consequences of the type of closed shop anticompetitive process that was instituted by this government. Before the election, the government recognised that and said they would fix it. But the current minister—I would argue because he has a serious conflict of interest—is highly reluctant to act on that. The direct consequence of the minister's failure to act in relation to the selection of default superannuation funds under the modern award process by Fair Work Australia sees hundreds of thousands of Australians channelled into under­performing super funds, which means that the retirement savings of those Australians will be smaller than they otherwise would be. That is a direct result of the minister's failure to act.

Under pressure, the minister said he might start to look at this in 2012. The coalition says that is just not good enough. If a process is manifestly closed shop, anticompetitive, not open, not transparent and not competitive—and we know that it is not because the government recognised that before the election—if there is a process which is so broken that it leads to outcomes like the ones that were publicised in the media last week, it should be fixed immediately. There is no excuse for the minister not to act, other than that he wants to protect the closed shop arrangements for as long as he can get away with it so that more and more Australians are channelled into underperforming funds.

This comes on top of the minister's reluctance to act on a whole series of other Cooper review recommendations designed to improve the transparency and corporate governance arrangements in the superann­uation industry. Those recommendations include having independent directors on superannuation boards and requiring directors who want to sit on multiple superannuation boards to make a declaration to APRA, the regulator, that there is no foreseeable conflict of interest. These are the sorts of recommendations that go directly to the confidence that working families and retirees across Australia can have in the superannuation system. Only if we get the corporate governance and transparency arrangements right, only if we continue to ensure that our superannuation industry is as efficient, competitive and transparent as possible, will we have the assurance that the returns for families and retirees across Australia will be maximised.

I call again on Minister Shorten to reflect on his duty as a minister to act not in the vested interest of the union movement or other sections of the superannuation industry but in the public interest, in the best interest of working families and retirees across Australia. I urge the minister to have another look at the urgency of sorting out some of these issues, which are getting worse under his watch.

In this context, I also point to the current developments in Victoria, where merger talks between two superannuation funds are close to collapsing—they might well collapse in the next few days—on the basis that union representatives for one of the super funds have not been able to get a guarantee that there will be a continuation of union nominated positions in the merged entity and also because they are not happy to go along with the proposal for democratic elections of super fund boards in the future. Super fund trustees are required to act in the best interests of members in making judgments on whether or not a merger should go ahead. If, as has been reported, the merger in Victoria is going to collapse on the basis that some current super fund trustees have not been able to obtain a guarantee that there will be union nominated positions in the merged entity, that is not a decision, on the face of it, made in the best interests of members. It looks to me like a decision made on the basis of the self-interest of the current super fund trustees and the bodies they might think they are representing.

The provision in the legislation in relation to tax file numbers being able to be used as identifiers to locate super accounts and facilitate consolidation of accounts is a good step as part of a broader superannuation reform agenda, but there is a lot of unfinished business in this legislation if we are committed to ensuring that our super­annuation industry is as efficient, transparent and competitive as possible. I have touched on a few of the issues. There are quite a few more. I suspect that in the weeks and months ahead there will be serious debate and serious focus on the minister's and the government's failure to act on some of these issues despite clear and emphatic pre-election commitments.

This bill also deals with exempting Australian taxes, fees and charges from the GST. That is a rather straightforward proposition which we support. The bill makes various other amendments to tax laws which do not require any further discussion at this point in time. With those few words, I again confirm that the coalition will be supporting this bill.