The ‘fiscal cliff’ negotiations in the US Congress last week have brought into even sharper focus the recovery of the global economy.
However, the Association of Superannuation Funds of Australia (ASFA) is focused on recovery of a quite different kind – the additional cost recovery capabilities recently awarded to the Australian Prudential Regulation Authority (APRA).
The 2012/2013 federal budget contained provisions for an additional $134 million to be paid to APRA in supervisory levies, largely to cover the expenses of the SuperStream productivity reforms.
The increase raised the ire of some segments of the financial services industry such as some APRA-registered entities, which are expected to foot the bill through the Department of Finance and Deregulation’s (DFD’s) cost recovery scheme.
Furthermore, in May 2012 the financial services minister Bill Shorten announced that the government intends a total increase in levies of $467 million between 2013 and 2018.
Several in the industry – superannuation funds in particular – have expressed displeasure with the increase, warning it is super fund members that will ultimately be adversely affected through fee hikes.
Even the SMSF Professionals’ Association of Australia (SPAA) – which has warmly welcomed many aspects of the SuperStream reforms – has voiced opposition to the increased levies in response to calls for the SMSF sector to offer a greater contribution.
A recent ASFA submission to the Australian National Audit Office (ANAO) details the association’s concerns in no uncertain terms.
The submission, filed on 21 December 2012, claims the model of agencies like APRA being funded by levies represents a “moral hazard” for accountability and control over the decision-making processes.
Second, the association asserts that both APRA and the Australian Tax Office (ATO) are compelled to provide cost recovery impact statements (CRISs) in the wake of the new SuperStream allocation, according to the terms of the guidelines set out by the DRD.
“The imposition of the new SuperStream component in 2012/2013 represents a new arrangement, or a material amendment to an existing arrangement and in either case would necessitate a CRIS being prepared prior to the arrangement or change being introduced,” the submission states.
“Given the sheer magnitude of this levy – especially in light of the fact that the DFD guidelines have a $5 million threshold – it is reasonable for the industry to expect information with respect to the various activities being performed, the anticipated deliverables, the basis upon which expenditure has been incurred and a breakdown of past and anticipated costs.
“This has not been forthcoming,” the submission said.
As a corollary, the industry body has called on the ANAO to conduct audits of both organisations and their cost recovery reporting practices.
The submission also questions the way in which levies are calculated under the current scheme, arguing that “the basis for the determination of the amount of the levy should strive to achieve equity between different products of different sizes”.
