The early release principles dealt with in the Bill have
been introduced already in the Superannuation Industry (Supervision) (SIS)
Regulations which apply to complying funds. These principles ... have
not had the opportunity of going through the same Parliamentary review
process as an Act as they were introduced by way of regulations.[1]
1.1 On 19 June 1997, the Senate referred the Small Superannuation Accounts
Amendment Bill 1997 to the Committee for inquiry and report by 28 August
1997. The provisions of this Bill tighten the arrangements relating to
the early release of monies held in the Superannuation Holding Accounts
Reserve (SHAR).
1.2 The principles dealt with in this Bill are to be applied to the entire
superannuation system. Accordingly, on 26 June the Senate extended this
reference as follows: That the following matter be referred to the Select
Committee on Superannuation for inquiry and report:
(1) That the Senate notes that the Government has introduced the Small
Superannuation Accounts Amendment Bill 1997 which contains three principles
for tightening the provisions governing the early release of superannuation
benefits as outlined by the Government in the 1997 budget documents:
(a) to remove access to superannuation monies where the balance is less
than $500;
(b) to restrict access to superannuation monies for persons under preservation
age who are permanently leaving Australia; and
(c) to restrict access to superannuation monies on the grounds of severe
financial hardship by instituting a new severe financial hardship test
which requires persons to have been in receipt of specified Commonwealth
income support payments for a continuous period of 52 weeks if under age
55, or for a cumulative period of 39 weeks if over age 55.
(2) That, given that these principles are to be applied to the entire
superannuation system, the issues in paragraph (1) be referred to the
Select Committee on Superannuation for a comprehensive analysis and full
public hearings on their implication, particularly their impact on low
and middle income earners.
(3) That the committee report by 28 August 1997.
1.3 The Committee was granted two extensions of time to report. On 27
August 1997, the Senate extended the reporting date to 11 September 1997,
and on 4 September 1997 further extended the date to 25 September 1997.
1.4 The Committee advertised the reference in the Australian Financial
Review on 2 July 1997, and contacted a number of organisations directly
inviting their submissions. Three public hearings were held: in Melbourne,
Sydney and Canberra on 13, 14 and 20 August 1997 respectively. A total
of 21 submissions were received and the names of those making submissions,
together with a list of witnesses who gave evidence at the public hearing,
are listed in Appendices A and B.
1.5 The Committee thanks those persons and organisations who made submissions
and gave evidence.
1.6 The Committee was required to do two things:
- to recommend on the provisions of the Small Superannuation Accounts
Amendment Bill 1997 as referred; and
- to inquire into and report on the matters raised in the Bill, in accordance
with the broader terms of reference of 26 June 1996.
1.7 The SHAR was established by the Small Superannuation Accounts
Act 1995 (SSA Act), commenced operating on 1 July 1995 and is administered
by the Australian Taxation Office. It is a fee-free collection system
for small superannuation contributions, and provides for employers to
pay superannuation contributions to the SHAR rather than to superannuation
funds. SHAR was established to accept contributions from employers where
the employer's superannuation fund will not accept a particular contribution
because of requirements that fees and charges cannot exceed the interest
earned on such amounts. It is part of the small amounts protection regime.
1.8 Amendments in the Small Superannuation Accounts Bill restrict the
circumstances when monies held in SHAR can be withdrawn. Those circumstances
are as set out in the broader terms of reference (1) (a), (b) and (c)
set out in paragraph 1.2 above. The amendments tighten the preservation
arrangements in the SHAR. These amendments were to take effect on 1 July
1997, but do not apply to withdrawal requests lodged with the Commissioner
of Taxation before that date.
1.9 Chapter 7 of this report constitutes the separate report on the Committee's
inquiry into this Bill.
1.10 As stated in the terms of reference, the matters raised in the
amendments to the Small Superannuation Accounts Amendment Bill 1997 are
also to apply to the whole of the superannuation system. To achieve the
changes, the Superannuation Industry (Supervision) Regulations
and the Retirement Savings Accounts Regulations needed to be amended
with effect from 1 July 1997. Consequently, Statutory Rules Nos 150 -
153 amending those regulations were gazetted on 26 June 1997,[2]
and tabled in the Parliament on 25 August 1997.[3]
1.11 While the Committee has no reference to examine the amended regulations
themselves, the following information is given in the event of the disapproval
of the Senate with those regulations. The Acts Interpretation Act 1901
provides that regulations 'shall be laid before each House of the Parliament
within 15 sitting days of that House after the making of the regulations'.[4]
This allows for the disallowance provision to come into effect:
If either House of the Parliament, in pursuance of a motion of
which notice has been given within 15 sitting days after any regulations
have been laid before that House, passes a resolution disallowing any
of those regulations, any regulation so disallowed thereupon ceases
to have effect.[5]
1.12 The Committee's responsibility, however, was to inquire into the
issues and not to recommend on the amending regulations themselves. Accordingly,
the following chapters examine, in turn, the issue of preservation generally
and then the three specific issues raised by the amendments, namely:
- abolition of the $500 threshold;
- release of monies to a non-resident only after preservation age; and
- replacement of the 'severe financial hardship' test with an objective
test of hardship based on receipt of specified Commonwealth payments
for a specified period.
[Return to Table of Contents]
[1] Submission 11, ASFA,
p. 1.
[2] Insurance and Superannuation
Commission , ISC Policy Legislation Update, No. 5/97.
[3] Journals of the Senate,
No. 116, pp. 2307-8.
[4] See section 48.
[5] Section 48(4) of the Acts
Interpretation Act cited at p. 343 of Odgers' Australian Senate Practice,
7th Ed.
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