Footnotes

Chapter 1 - Introduction

[1]        This section is adapted from the committee's October 2012 report: Inquiry into the Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Bill 2012. Further detail about the Stronger Super reforms can be found on pages 1–8 of that report.

[2]        Australian Government, Terms of reference – Super System Review, www.supersystemreview.gov.au/content/terms_of_reference.aspx (accessed 27 February 2012).

[3]        The Stronger Super reform package is part of the government's broader reform of Australia's superannuation system. Other reforms include the Future of Financial Advice (FOFA) reform package which applies to financial advice generally, including advice relating to superannuation products; and the government's Stronger & Fairer Superannuation reforms, including a gradual increase in the superannuation guarantee charge from nine per cent to 12 per cent. See the Hon. Chris Bowen MP, Minister for Financial Services, Superannuation and Corporate Law, 'Government releases Cooper review into superannuation', Media release, no. 84, 5 July 2010.

[4]        http://strongersuper.treasury.gov.au/content/Content.aspx?doc=home.htm (accessed 24 September 2012).

[5]        http://strongersuper.treasury.gov.au/content/Content.aspx?doc=reforms.htm (accessed 24 September 2012).

[6]        Stronger Super Information Pack, 21 September 2011, http://strongersuper.treasury.gov.au/
content/publications/information_pack/downloads/information_pack.pdf (accessed 24 September 2012).

[7]        The Hon. Bill Shorten MP, Minister for Financial Services and Superannuation, second reading speech on the Superannuation Legislation Amendment (MySuper Core Provisions) Bill 2012, House of Representatives Hansard, 3 November 2011, pp.12683–84.

[8]        Dr David Gruen, 'MySuper—Thinking seriously about the default option', Paper presented to the special session on Superannuation at the Australian Conference of Economists, 28 September 2010. www.treasury.gov.au/PublicationsAndMedia/Speeches/2010/MySuper-Thinking-seriously-about-the-default-option (accessed 26 September 2012).

Chapter 2 - Amendments related to director liability and dispute resolution mechanisms

[1]        Explanatory memorandum, paragraph 5.5.

[2]        Schedule 1, items 65 and 66.

[3]        Schedule 1, item 66, proposed subsection 4C.

[4]        Schedule 1, item 65, proposed subsection 4B.

[5]        Chartered Secretaries Australia, submission to Treasury on the exposure draft of the bill, 2 November 2012, www.csaust.com/media/447643/final_submission_exposure_draft_mysuper
_further_measures.pdf (accessed 5 December 2012), pp. 3–4.

[6]        Mr Richard Watts, External Relations Manager and Legal Counsel, Industry Super Network, Proof Committee Hansard, 22 January 2013, p. 22.

[7]        Ms Pamela McAlister, Deputy Chair, Superannuation Committee, Legal Practice Section, Law Council of Australia, Proof Committee Hansard, 22 January 2013, p. 15.

[8]        Australian Institute of Superannuation Trustees, Submission 8, p. 6.

[9]        See schedule 1, items 68 and 69.

[10]      Industry Super Network, Submission 5, p. 2.

[11]      Explanatory memorandum, Superannuation Legislation Amendment (Trustee Obligations and Prudential Standards) Bill 2012, paragraph 1.82.

[12]      Explanatory memorandum, paragraph 5.5.

[13]      Explanatory memorandum, paragraph 5.24.

[14]      The defences available under subsections 55(5) and 55(6) are available whether the action is brought under subsection 55(3), section 29VP or otherwise.

[15]      Law Council of Australia, Submission 2, pp. 8–9.

[16]      Ms Pamela McAlister, Deputy Chair, Superannuation Committee, Legal Practice Section, Law Council of Australia, Proof Committee Hansard, 22 January 2013, p. 16.

[17]      Corporate Super Association, Submission 1, p. 3.

[18]      Australian Institute of Superannuation Trustees, Submission 8, p. 6.

[19]      Industry Super Network, Submission 5, p. 3.

[20]      Ms Pamela McAlister, Deputy Chair, Superannuation Committee, Legal Practice Section, Law Council of Australia, Proof Committee Hansard, 22 January 2013, p. 17.

[21]      Law Council of Australia, Submission 2, p. 8.

[22]      Ms Pamela McAlister, Deputy Chair, Superannuation Committee, Legal Practice Section, Law Council of Australia, Proof Committee Hansard, 22 January 2013, p. 15.

[23]      Law Council of Australia, Submission 2, p. 8.

[24]      Mr Andrew Bragg, Senior Policy Manager, Financial Services Council, Proof Committee Hansard, 22 January 2013, p. 4.

[25]      Mr Andrew Bragg, Senior Policy Manager, Financial Services Council, Proof Committee Hansard, 22 January 2013, pp. 4–5.

[26]      Mr Richard Watts, External Relations Manager and Legal Counsel, Industry Super Network, Proof Committee Hansard, 22 January 2013, p. 22.

[27]      Ms Pamela McAlister, Deputy Chair, Superannuation Committee, Legal Practice Section, Law Council of Australia, Proof Committee Hansard, 22 January 2013, p. 15.

[28]      Ms Pamela McAlister, Deputy Chair, Superannuation Committee, Legal Practice Section, Law Council of Australia, Proof Committee Hansard, 22 January 2013, p. 17.

[29]      Mr Jonathan Rollings, Principal Adviser, Financial System Division, Treasury, Proof Committee Hansard, 22 January 2013, pp. 36–37.

[30]      Superannuation (Resolution of Complaints) Act 1993, s. 11.

[31]      Super System Review, Final report, part 2: recommendation packages, 2010, p. 147 [recommendation 5.7].

[32]      Explanatory memorandum, paragraph 3.18.

[33]      Australian Institute of Superannuation Trustees, Submission 8, p. 5; Industry Super Network, Submission 5, p. 1.

[34]      Superannuation Complaints Tribunal, Submission 4, p. 2.

[35]      The Cooper Review noted that, in the superannuation context, this aspect of trust law had 'attracted adverse comment by the courts on a number of occasions ... The courts have been persuaded by the fact that participation in a superannuation fund is mandatory for almost everyone in the workforce, that preservation rules mean members cannot easily withdraw their money until retirement and that superannuation contributions are properly regarded as part of the member's remuneration'. See Super System Review, Final report, part 2: recommendation packages, 2010, p. 56.

[36]      Explanatory memorandum, p. 16.

[37]      Super System Review, Final report, part 2: recommendation packages, 2010, p. 57 [recommendation 2.9].

[38]      Schedule 1, item 74.

[39]      Schedule 1, item 74, proposed paragraph 101(1)(e).

[40]      Industry Super Network, Submission 5, p. 1.

[41]      Superannuation Complaints Tribunal, Submission 4, p. 2.

[42]      Mr Richard Watts, External Relations Manager and Legal Counsel, Industry Super Network, Proof Committee Hansard, 22 January 2013, p. 25.

[43]      Law Council of Australia, Submission 2, p. 7.

[44]      Corporate Super Association, Submission 1, p. 2.

[45]      Ms Pamela McAlister, Deputy Chair, Superannuation Committee, Legal Practice Section, Law Council of Australia, Proof Committee Hansard, 22 January 2013, p. 16.

[46]      Australian Institute of Superannuation Trustees, answer to question on notice, 22 January 2013 (received 24 January 2013), p. 4.

[47]      Australian Institute of Superannuation Trustees, Submission 8, p. 5.

[48]      Explanatory memorandum, paragraph 3.13. Section 1017DA of the Corporations Act allows the regulations to specify additional information that trustees of superannuation entities are required to provide. As noted by the AIST, the Corporations Regulations 2001 (subdivision 5.11) already specifies additional information that trustees are required to provide, such as information about the SCT.

Chapter 3 - Infringement notices

[1]        Attorney-General's Department, Guide to framing Commonwealth offences, infringement notices and enforcement powers, September 2011, p. 50.

[2]        Explanatory memorandum, p. 10.

[3]        If the bill is passed, the contravention notice regime will be incorporated into the infringement notice regime.

[4]        Explanatory memorandum, paragraph 2.5.

[5]        Explanatory memorandum, paragraph 2.8.

[6]        Schedule 1, item 112, proposed subsection 224(4). The bill and explanatory memorandum note that multiple offences of this kind may arise as a result of the application of section 4K of the Crimes Act 1914.

[7]        Schedule 1, item 112, proposed subsection 224A(2).

[8]        Attorney-General's Department, Guide to framing Commonwealth offences, infringement notices and enforcement powers, September 2011, p. 59.

[9]        With the exception of offences against subsection 242M(1), which is discussed at the end of this chapter titled 'Drafting issues'.

[10]      Schedule 1, item 70, proposed subsections 56(2) and 57(2) and item 71, proposed paragraphs 56(2)(b) and 57(2)(b).

[11]      Explanatory memorandum, paragraph 2.27.

[12]      Schedule 1, item 112, proposed subsection 223C(1).

[13]      Schedule 1, item 112, proposed subsection 223C(2). This appears to comply with the Guide to framing Commonwealth offences, which observes that an infringement notice provision drafted to allow 'a person' or 'an APS employee' to issue a notice is 'likely to be inappropriate'. It suggests that '[a] common approach is to require that the person issuing the notice possess special attributes, qualifications or qualities ... Further, if the power to issue a notice can be delegated, the delegation should be restricted to persons of suitable seniority and expertise'. Attorney-General's Department, Guide to framing Commonwealth offences, infringement notices and enforcement powers, September 2011, p. 60.

[14]      Ms Pauline Vamos, Chief Executive Officer, Association of Superannuation Funds of Australia, Proof Committee Hansard, 22 January 2013, p. 7.

[15]      Mr Richard Watts, External Relations Manager and Legal Counsel, Industry Super Network, Proof Committee Hansard, 22 January 2013, p. 21.

[16]      Mr David Haynes, Project Director, Australian Institute of Superannuation Trustees, Proof Committee Hansard, 22 January 2012, p. 27.

[17]      Schedule 1, item 112, proposed paragraph 224(1)(e).

[18]      Corporate Super Association, Submission 1, p. 2.

[19]      Law Council of Australia, Submission 2, p. 5.

[20]      Ms Pamela McAlister, Deputy Chair, Superannuation Committee, Legal Practice Section, Law Council of Australia, Proof Committee Hansard, 22 January 2013, p. 15.

[21]      Law Council of Australia, Submission 2, p. 5.

[22]      See Mr Richard Watts, External Relations Manager and Legal Counsel, Industry Super Network, Proof Committee Hansard, 22 January 2013, p. 21.

[23]      Mr Jonathan Rollings, Principal Adviser, Financial System Division, Treasury, Proof Committee Hansard, 22 January 2013, p. 32.

[24]      Mr Jonathan Rollings, Principal Adviser, Financial System Division, Treasury, Proof Committee Hansard, 22 January 2013, p. 32.

[25]      Ms Pamela McAlister, Deputy Chair, Superannuation Committee, Legal Practice Section, Law Council of Australia, Proof Committee Hansard, 22 January 2013, p. 15.

[26]      Ms Pamela McAlister, Deputy Chair, Superannuation Committee, Legal Practice Section, Law Council of Australia, Proof Committee Hansard, 22 January 2013, p. 15.

[27]      Mr Jonathan Rollings, Principal Adviser, Financial System Division, Treasury, Proof Committee Hansard, 22 January 2013, p. 33.

[28]      Corporate Super Association, Submission 1, p. 2.

[29]      Law Council of Australia, Submission 2, p. 5.

[30]      Attorney-General's Department, Guide to framing Commonwealth offences, infringement notices and enforcement powers, September 2011, pp. 57, 58.

[31]      Superannuation Industry (Supervision) Act 1993, s. 196(3).

[32]      National Consumer Credit Protection Act 2009, s. 331(2).

[33]      Ms Pauline Vamos, Chief Executive Officer, Association of Superannuation Funds of Australia, Proof Committee Hansard, 22 January 2013, p. 7.

[34]      Schedule 1, item 112, proposed subsection 223A(2).

[35]      Australian Chamber of Commerce and Industry, Submission 3, p. 5.

[36]      Australian Chamber of Commerce and Industry, Submission 3, p. 5.

[37]      To the contrary, ACCI acknowledged that applying infringement notices to contraventions from 1 July 2013 'is appropriate' given that the MySuper obligations commence from that date. Australian Chamber of Commerce and Industry, Submission 3, p. 2.

[38]      The SuperStream measures are designed to enhance the 'back office' of superannuation and result in the processing of everyday transactions being easier, cheaper and faster. See http://strongersuper.treasury.gov.au/.

[39]      Australian Chamber of Commerce and Industry, Submission 3, pp. 2–3.

[40]      Mr Jonathan Rollings, Principal Adviser, Financial System Division, Treasury, Proof Committee Hansard, 22 January 2013, p. 32.

[41]      Australian Chamber of Commerce and Industry, Submission 3, p. 3.

[42]      Ms Pauline Vamos, Chief Executive Officer, Association of Superannuation Funds of Australia, Proof Committee Hansard, 22 January 2013, p. 8.

[43]      Australian Law Reform Commission, Principled Regulation: Federal Civil and Administrative Penalties in Australia, report no. 95, March 2003, p. 34 [recommendation 12-8].

[44]      Schedule 1, item 112, proposed subparagraph 223A(1)(i).

[45]      This was also identified by the Law Council: Submission 2, p. 6.

Chapter 4 - Service providers, the remaining provisions of the bill and the committee's conclusions

[1]        The Cooper Review panel added that its research 'suggests that this practice is not common in modern deeds, but is still present in some older deeds': Super System Review, Final report: Part two—recommendation packages, June 2010, p. 60.

[2]        As not-for-profit funds did not use related insurance providers.

[3]        Kevin Liu and Bruce R Arnold, 'Superannuation and insurance: Related parties and member cost', APRA working paper, November 2012, pp. 1, 2. The paper was also referred to by the Minister in their second reading speech on the bill: see House of Representatives Hansard, 29 November 2012, p. 13896.

[4]        Schedule 1, item 72, proposed section 58A.

[5]        Schedule 1, item 72, proposed subsection 58A(1).

[6]        Explanatory memorandum, paragraphs 1.8–1.10.

[7]        Australian Institute of Superannuation Trustees, Submission 8, p. 4.

[8]        Australian Institute of Superannuation Trustees, Submission 8, p. 4.

[9]        Industry Super Network, Submission 5, p. 1.

[10]      Super System Review, Final report: Part two—recommendation packages, June 2010, p. 60.

[11]      Schedule 1, item 72.

[12]      Explanatory memorandum, paragraph 1.12.

[13]      Law Council of Australia, Submission 2, p. 3.

[14]      Mr Andrew Bragg, Senior Policy Manager, Financial Services Council, Proof Committee Hansard, 22 January 2013, p. 3.

[15]      Law Council of Australia, Submission 2, p. 3.

[16]      Ms Pauline Vamos, Chief Executive Officer, Association of Superannuation Funds of Australia, Proof Committee Hansard, 22 January 2013, p. 9.

[17]      Mr Richard Watts, External Relations Manager and Legal Counsel, Industry Super Network, Proof Committee Hansard, 22 January 2013, p. 23.

[18]      Ms Pauline Vamos, Chief Executive Officer, Association of Superannuation Funds of Australia, Proof Committee Hansard, 22 January 2013, pp. 9–10.

[19]      Commonwealth Bank Group Wealth Management, Submission 6, p. 3.

[20]      Mr Jonathan Rollings, Principal Adviser, Financial System Division, Treasury, Proof Committee Hansard, 22 January 2013, p. 31.

[21]      Ms Pamela McAlister, Deputy Chair, Superannuation Committee, Legal Practice Section, Law Council of Australia, Proof Committee Hansard, 22 January 2013, p. 18.

[22]      Mr David Haynes, Project Director, Australian Institute of Superannuation Trustees, Proof Committee Hansard, 22 January 2012, p. 29.

[23]      Financial Services Council, Submission 7, p. 5. The Financial Services Council gave three examples of types of clauses in a trust deed that may be affected by the proposed amendment: conflict clauses (a clause which provides that the trustee may deal with itself, contract with any person associated with the fund and transact or deal with a related party); authorised investments clauses (a clause which provides that the trustee may invest in a fund of which the trustee or a related party is the manager, operator or trustee or invest in an insurance policy where the trustee or a related party is the insurer; and administration/investment management/custodian clauses (a clause which provides that the trustee may use the services of a related party administrator/investment manager/custodian). Submission 7, p. 6.

[24]      Ms Pamela McAlister, Deputy Chair, Superannuation Committee, Legal Practice Section, Law Council of Australia, Proof Committee Hansard, 22 January 2013, p. 18.

[25]      Mr Jonathan Rollings, Principal Adviser, Financial System Division, Treasury, Proof Committee Hansard, 22 January 2013, p. 32.

[26]      Schedule 1, item 73, proposed subsection 68C states: 'A provision in the governing rules of the fund is void to the extent that it purports to preclude a director of the trustee from voting on a matter relating to the fund'. Section 29VQ of the SIS Act (introduced by the Trustee Obligations Act) states: 'A provision of the governing rules of a regulated superannuation fund is void to the extent that it is inconsistent with: (a) the obligations that apply to a trustee of the fund under section 29VN; or (b) if the trustee of the fund is a body corporate—the obligations that apply to the directors of the body corporate under section 29VO'.

[27]      Explanatory memorandum, paragraph 4.3.

[28]      Australian Securities and Investments Commission, Submission 51 to the Parliamentary Joint Committee on Corporations and Financial Services' inquiry into the collapse of Trio Capital and any other related matters, September 2011, p. 96.

[29]      Explanatory memorandum, paragraph 4.7.

[30]      Mr Jonathan Rollings, Principal Adviser, Financial System Division, Treasury, Proof Committee Hansard, 22 January 2013, p. 33.

[31]      Schedule 1, items 4 and 5.

[32]      Australian Institute of Superannuation Trustees, Submission 8, p. 5; Industry Super Network, Submission 5, p. 2.

[33]      Australian Institute of Superannuation Trustees, Submission 8, p. 5.

[34]      Mr David Haynes, Project Director, Australian Institute of Superannuation Trustees, Proof Committee Hansard, 22 January 2012, p. 26.

[35]      Financial Services Council, Submission 7, p. 4.

[36]      Mr Andrew Bragg, Senior Policy Manager, Financial Services Council, Proof Committee Hansard, 22 January 2013, pp. 1–2.

[37]      Association of Superannuation Funds of Australia, Submission 10, p. 4 (emphasis omitted).

[38]      Mr Andrew Bragg, Senior Policy Manager, Financial Services Council, Proof Committee Hansard, 22 January 2013, p.  2.

[39]      Mr Jonathan Rollings, Principal Adviser, Financial System Division, Treasury, Proof Committee Hansard, 22 January 2013, p. 33.

[40]      Super System Review, Final report: Part two—recommendation packages, June 2010, p. 56.

[41]      Schedule 1, item 73, proposed sections 68C and 68D.

[42]      Explanatory memorandum, paragraph 6.4.

[43]      Schedule 1, item 39, proposed paragraph 29TC(1)(g). The explanatory memorandum states that '[g]iving trustees discretion will mean the trustee could put the money into a cash option such as bank deposits or Government bonds. This could be done to reduce risk and preserve the balance accumulated by the member until a beneficiary can be identified and the benefits paid out, which in some cases may take several years'. Explanatory memorandum, paragraph 6.47.

[44]      Super System Review, Final report: Part two—recommendation packages, June 2010, p. 113.

[45]      Parliamentary Joint Committee on Corporations and Financial Services, Inquiry into the Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Bill 2012, October 2012, p. 37.

[46]      Parliamentary Joint Committee on Corporations and Financial Services, Inquiry into the Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Bill 2012, October 2012, pp. 37–38 [recommendation 1].

[47]      Association of Superannuation Funds of Australia, Submission 10, pp. 7–10.

[48]      Mr Richard Watts, External Relations Manager and Legal Counsel, Industry Super Network, Proof Committee Hansard, 22 January 2013, p. 23.

[49]      Mr David Haynes, Project Director, Australian Institute of Superannuation Trustees, Proof Committee Hansard, 22 January 2012, p. 26.

[50]      Mr Jonathan Rollings, Principal Adviser, Financial System Division, Treasury, Proof Committee Hansard, 22 January 2013, p. 37.

[51]      Association of Superannuation Funds of Australia, Submission 10, p. 2.

[52]      Revised explanatory memorandum, Superannuation Legislation Amendment (MySuper Core Provisions) Bill 2012, paragraph 6.14.

[53]      Australian Institute of Superannuation Trustees, Submission 8, p. 11.

[54]      Mr David Haynes, Project Director, Australian Institute of Superannuation Trustees, Proof Committee Hansard, 22 January 2012, p. 26.

[55]      See Industry Super Network, Submission 5, p. 10; Association of Superannuation Funds of Australia, Submission 10, p. 2.

[56]      Mr Jonathan Rollings, Principal Adviser, Financial System Division, Treasury, Proof Committee Hansard, 22 January 2013, p. 34.

[57]      Mr Jonathan Rollings, Principal Adviser, Financial System Division, Treasury, Proof Committee Hansard, 22 January 2013, p. 35.

[58]      The Hon. Bill Shorten MP, House of Representatives Hansard, 28 November 2012, p. 13782.

[59]      Mr Richard Watts, External Relations Manager and Legal Counsel, Industry Super Network, Proof Committee Hansard, 22 January 2013, p. 19.

Additional Comments by Coalition Members

[1]        Mr Andrew Bragg, Senior Policy Manager, Financial Services Council, Proof Committee Hansard, 22 January 2013, p. 3.

[2]        Ms Pauline Vamos, Chief Executive Officer, Association of Superannuation Funds of Australia, Proof Committee Hansard, 22 January 2013, p. 9.

[3]        Ms Pamela McAlister, Deputy Chair, Superannuation Committee, Legal Practice Section, Law Council of Australia, Proof Committee Hansard, 22 January 2013, p. 18.

[4]        Ms Pauline Vamos, Chief Executive Officer, Association of Superannuation Funds of Australia, Proof Committee Hansard, 22 January 2013, p. 6 (emphasis added).

[5]        Ms Pauline Vamos, Chief Executive Officer, Association of Superannuation Funds of Australia, Proof Committee Hansard, 22 January 2013, p. 8 (emphasis added).

[6]        Ms Fiona Galbraith, Acting General Manager, Policy and Industry Practice, Association of Superannuation Funds of Australia, Proof Committee Hansard, 22 January 2013, p. 12 (emphasis added).

[7]        Ms Pauline Vamos, Chief Executive Officer, Association of Superannuation Funds of Australia, Proof Committee Hansard, 22 January 2013, p. 10.

[8]        Mr Richard Watts, External Relations Manager and Legal Counsel, Industry Super Network, Proof Committee Hansard, 22 January 2013, p. 21 (emphasis added).

[9]        Mr Richard Watts, External Relations Manager and Legal Counsel, Industry Super Network, Proof Committee Hansard, 22 January 2013, p. 24 (emphasis added).

[10]      Mr David Haynes, Project Director, Australian Institute of Superannuation Trustees, Proof Committee Hansard, 22 January 2012, p. 26 (emphasis added).

[11]      Mr David Haynes, Project Director, Australian Institute of Superannuation Trustees, Proof Committee Hansard, 22 January 2012, p. 28 (emphasis added).

[12]      Mr Jonathan Rollings, Principal Adviser, Financial System Division, Treasury, Proof Committee Hansard, 22 January 2013, p. 36.

[13]      Mr Jonathan Rollings, Principal Adviser, Financial System Division, Treasury, Proof Committee Hansard, 22 January 2013, p. 34.

[14]      Mr Jonathan Rollings, Principal Adviser, Financial System Division, Treasury, Proof Committee Hansard, 22 January 2013, p. 35.

[15]      Mr Jonathan Rollings, Principal Adviser, Financial System Division, Treasury, Proof Committee Hansard, 22 January 2013, p. 35.