Scrutiny of Bills Sixteenth Report of 1999
13 OCTOBER 1999
ISSN 0729-6258
MEMBERS OF THE COMMITTEE
Senator B Cooney (Chairman)
Senator W Crane (Deputy Chairman)
Senator T Crossin
Senator J Ferris
Senator B Mason
Senator A Murray
TERMS OF REFERENCE
Extract from Standing Order 24
(1)
(a) At the commencement of each Parliament, a Standing Committee for
the Scrutiny of Bills shall be appointed to report, in respect of the
clauses of bills introduced into the Senate, and in respect of Acts of
the Parliament, whether such bills or Acts, by express words or otherwise:
(i) trespass unduly on personal rights and liberties;
(ii) make rights, liberties or obligations unduly dependent upon insufficiently
defined administrative powers;
(iii) make rights, liberties or obligations unduly dependent upon non-reviewable
decisions;
(iv) inappropriately delegate legislative powers; or
(v) insufficiently subject the exercise of legislative power to parliamentary
scrutiny.
(b) The Committee, for the purpose of reporting upon the clauses of a
bill when the bill has been introduced into the Senate, may consider any
proposed law or other document or information available to it, notwithstanding
that such proposed law, document or information has not been presented
to the Senate.
SENATE STANDING COMMITTEE FOR THE SCRUTINY OF BILLS
SIXTEENTH REPORT OF 1999
The Committee presents its Sixteenth Report of 1999 to the Senate.
The Committee draws the attention of the Senate to clauses of the following
bill which contains provisions that the Committee considers may fall within
principles 1(a)(i) to 1(a)(v) of Standing Order 24:
Superannuation Legislation Amendment Bill (No. 4) 1999
Superannuation Legislation Amendment Bill (No. 4) 1999
Introduction
The Committee dealt with this bill in Alert Digest No. 12 of 1999,
in which it made various comments. The Assistant Treasurer has responded
to those comments in a letter dated 29 September 1999. A copy of the letter
is attached to this report. An extract from the Alert Digest and
relevant parts of the Assistant Treasurer's response are discussed below.
Extract from Alert Digest No. 12 of 1999
This bill was introduced into the House of Representatives on 11 August
1999 by the Parliamentary Secretary to the Minister for Finance and Administration.
[Portfolio responsibility: Treasury]
The bill proposes to amend the Superannuation Industry (Supervision)
Act 1993 to:
- provide a definition of a related party of a superannuation fund,
a Part 8 associate of a member of a fund, a standard employer-sponsor
of a fund, and a Part 8 associate of a standard employer-sponsor of
a fund;
- provide definitions of a Part 8 associate and of a related trust;
- amend the coverage of in-house asset rules to include investments
in, loans to, and leases and lease arrangements with, a related party
of the fund. In-house investments will also include investments in a
related trust;
- provide that in-house asset rules do not cover business real property
leased by a superannuation fund with less than 5 members, or investments
in widely held unit trusts;
- provide transitional arrangements for the changes to the in-house
asset provisions;
- amend provisions applicable when an investment is not an in-house
asset, but has the effect of achieving an investment in an in-house
asset;
- amend provisions relating to the acquisition of assets from members
and relatives, so that they apply to acquisitions from all related parties,
with specified exceptions; and
- enable superannuation funds with fewer than 5 members to use up to
100 per cent of their assets to purchase business real property.
Retrospective application
Schedule 1, item 45
Item 45 of Schedule 1 to this bill provides that most of the proposed
amendments are to apply either from 12 May 1998 (the night of the 1998
Budget) or from the date on which the bill was introduced into the Parliament.
The bill, therefore, has a measure of retrospective effect.
However, subitem 45(6) provides that neither the criminal sanctions nor
the civil penalty sanctions of the Principal Act are to apply to conduct
engaged in before the commencement of the provisions contained in the
bill if that conduct would not have constituted an offence or contravention
under the law as it stood before those amendments came into force.
Subitem 45(6) provides some protection against the inherent problems
when legislation is made to operate retrospectively. However, the period
of retrospective application in the case of this bill is approximately
15 months. The Explanatory Memorandum observes that a decision to amend
the investment rules was announced in the 1998-99 Budget. A number of
representations were then received, but an exposure draft bill was not
released until 22 April 1999 (more than 11 months later). Various submissions
were then received in response to that exposure draft.
The Committee is aware of the value of consultation in developing legislative
proposals. It also notes the mitigating effect of proposed subitem 45(6)
on the application of offence and penalty provisions. However a period
of 11 months between the announcement of a proposal and the appearance
of exposure draft legislation giving effect to that proposal seems somewhat
lengthy. The Committee, therefore, seeks the Treasurer's advice
on whether the consultation process was the sole reason for the delay
in introducing this bill, and whether those consultations differed from
the process typically followed.
Pending the Treasurer's advice, the Committee draws Senators' attention
to the provisions, as they may be considered to trespass unduly on personal
rights and liberties, in breach of principle 1(a)(i) of the Committee's
terms of reference.
Relevant extract from the response from the Assistant Treasurer
The Committee has sought the Treasurer's advice as to:
- whether the consultation process was the sole reason for the delay
in introducing this Bill and whether those consultations differed from
the process typically followed.
The consultations undertaken and the consideration of view raised by
interested parties was a significant factor underlying the timing of the
legislation. As noted by the Committee, the process included the release
of an exposure draft of the legislation for public comment. A number of
amendments were made to the legislation as a result of this part of the
consultation process, including the provision of broader transitional
arrangements.
Consultation processes vary between different pieces of legislation,
having regard to the subject matter and interest groups involved. The
Government considers the approach chosen was appropriate for this legislation.
As noted by the Committee, provisions in the Bill ensure that a person
is not guilty of an offence and civil penalty sanctions do not apply in
respect of conduct engaged in before the commencement of the provisions
contained in the Bill, if the conduct would not have been an offence or
a contravention before those amendments.
The Bill also contains transitional provisions that ensure that a range
of transactions are not affected by the new provisions. For instance,
a small superannuation fund (with fewer than 5 members) can elect to have
grandfathering provisions apply to investments made in a related trust
until 30 June 2009, up to the amount of the outstanding debt of the trust
at 12 May 1998.
I also note that, given the objective of preserving the integrity of
the superannuation investment rules, it is appropriate that aspects of
the provisions take effect from the date of the original announcement.
In view of these considerations, I do not believe that these provisions
should be regarded as breaching principal 1(a)(i) of the Committee's terms
of reference.
I trust this information satisfies the concerns raised by the Committee.
The Committee thanks the Assistant Treasurer for this response.
Barney Cooney
Chairman
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