Coalition members of a parliamentary joint committee (PJC) have accused their Labor party counter-parts of rushing its inquiry into the third tranche of the government’s MySuper bill, resulting in legislation which they believe is fundamentally flawed.
Senator Sue Boyce, Senator Mathias Cormann and Members of Parliament Paul Fletcher and Tony Smith used a dissent report on the MySuper bill to claim that the government has exempted the legislation’s “most contentious changes” from “its own basic regulatory impact assessment requirements.”
“The bill has been subjected to inadequate scrutiny by this committee because the Labor government, aided and abetted by majority members of this committee, have forced a truncated and rushed inquiry,” the opposition members of the PJC on Corporations and Financial Services said in their report.
“Witnesses had only very limited time to make submissions . . . only a half day hearing was set aside, with witnesses limited to just 30 minutes for each organisation, meaning the full range of issues have not been publicly canvassed.
“Worse still, committee members have only had days in which to assess the very complex evidence presented and draft reports and recommendations”.
The coalition members said while the PJC on Corporations and Financial Services has a reputation as providing “high quality, frank and fearless, and often bipartisan reports”, they believe the “rushed inquiry has damaged that reputation”.
“Even with the very limited time available to the committee, it is clear that this legislation is fundamentally flawed,” the report said.
The coalition PJC members now call on the government to “recognise the flaws in its legislation and the problems” with the inquiry and withdraw the legislation from the Parliament for “appropriately thorough consideration”.
The decision to withdraw the legislation should be paired with the preparation of a complete Regulatory Impact Statement, the report said.
In the event that the government decides to push ahead with the legislation, the coalition members called for two key amendments to be made.
The first amendment ensures that: a member who has previously exercised choice of fund while also opting for the dealt investment of that chosen fund cannot be automatically transferred into a MySuper product by having previous contributions defined as an ‘accured default amount’.
The second amendment ensures that any product which qualifies as a MySuper product is able to compete freely in the default super fund market.
Yesterday, the PJC released its report into its inquiry into the Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Bill 2012.
In the 102 page report, the PJC made two recommendations. The first that the Australian Prudential Regulation Authority (APRA) continue its industry consultation on the “product dashboard”.
Under the first recommendation, the PJC report called on APRA to consider a requirement that the investment return target be net of investment and administration fees in proposed subsection 1017BA(2)(a) of the Corporations Act 2001.
It also called on the prudential regulator to consider how best to quantify the likelihood of a negative return as part of the risk measure in proposed subsection 1017BA(2)(c) of the Corporations Act 2001.
APRA should also consider a clear definition of the liquidity measure in proposed subsection 1017BA(2)(d) of the Corporations Act 20001; and the options to minimise discrepancies between the information in the product dashboard and the information contained in the new short product disclosure statement regime.
The PJC’s second recommendation was to recommend the bill’s passage.
“This report has recognised various stakeholder concerns, particularly with provisions in Schedules 1, 3, 6 and 7 of the bill,” the report’s author, PJC chair Deborah O’Neill, said.
“The committee believes that while these concerns may have some legitimacy, they are not grounds to amend or delay the passage of the legislation.
“As this report has emphasised, the provisions in the bill are based on important principles that should not be diluted.
“There is an expectation that the regulators and stakeholders will develop sound practices that adhere to the provisions.”
The PJC is made up of 10 members: five Labor party members, four Liberal party members and one member of the Australian Greens, the report said.
