ACTING CHAIR—I welcome our first witnesses, representatives of the Association of Superannuation Funds of Australia. Do you wish to make an opening statement?

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Dr Pragnell—Yes. Thank you. The Association of Superannuation Funds of Australia, ASFA, is pleased to appear before this committee inquiry into the Tax Laws Amendment (Simplified Superannuation) Bill 2006 and five related bills. These bills introduce the government’s simplified super changes announced on budget night 2006.

ASFA is a non-profit, non-political national organisation whose mission is to protect, promote and advance the interests of Australia’s superannuation funds, their trustees and their members. Our members, which include corporate, public sector, industry and retail superannuation funds, account for more than 5.7 million member accounts and over 80 per cent of superannuation savings.

It is important to realise that it is possible some technical difficulties with the regime will not become evident until the new regime becomes operational. We should anticipate a lengthy breaking-in period, during which government, Treasury and the ATO must take a pragmatic and consultative approach with industry. As well, given the newness of the regime, and the tight time frames for implementation, we would strongly encourage a collaborative and pragmatic enforcement approach by the ATO when dealing with superannuation funds. Funds seeking to do the right thing in the first year or two of the new regime should not be subject to serious penalties due to misunderstanding of the requirements or lack of clarity. We appreciate this opportunity to appear before the committee and welcome any questions.

Senator JOYCE—Haven’t people got some period of time in which to provide their tax file numbers—30 days or something like that—after they start work? I am thinking of that figure of over $10 billion, and there are a number of questions. Itinerant workers, for instance, who, to be completely frank, might be dodging the system—they might even be from this country—have 30 days to provide tax file numbers, so they will come up with a number, 123456789, just before they leave to go somewhere else. That is just the reality of an economy. How are you going to do this—carry a big stick and try to beat it out of them? Of that $10 billion, is there a segment there that is just written off in perpetuity? It has been there; it will probably never be collected. The people who put the money in have no intention of collecting it. It has been there for 15 years. It is from periods of work less than 30 days. Is there any breakdown of that amount?

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Dr Anderson—I think there is some breakdown, which we do not have here, but you are right in that there would be some like that. We know that there are fictitious names that seem to go with people—

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Senator JOYCE—Johnnie Walker and Jim Beam would have a lot of super!

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Dr Anderson—There was a footballer one year who also seemed to have a lot.

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Senator SHERRY—So do Elvis Presley and George Bush, apparently!

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Dr Pragnell—And also many people with 1 January 1960 as a birth date and some employers and some funds.

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Senator JOYCE—In the quest to find these people, they do exist but they have no intention nor were they ever really wishing to be part of the system. Do we have any breakdown that shows that that $10 billion actually belongs to that—

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Senator SHERRY—I think the ATO has some data.

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Dr Anderson—I think we do have a bit of an estimate. But I think we also know that that is a part of that $10 billion. Another part is not really lost, but there is a considerable amount that is just waiting there and could be attached to a person.

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Senator JOYCE—The rest is mine!

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Senator BERNARDI—Senator Joyce has touched on an important point: how many of these accounts are old accounts that were introduced or are essentially non-active under a perhaps less rigorous compliance regime? Senator Sherry said about 17 per cent of super funds are not holding tax file numbers. I wonder what percentage of new superannuation accounts are established without tax file numbers being provided in a timely manner?

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Dr Anderson—We do know that that is still happening. Non-quotation of tax file numbers by employers is not something that used to be part of the practice in the old days but is not anymore. We know that it is still not being passed on by employers.

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Senator BERNARDI—If 100 new accounts are established, what would be the percentage of new accounts that would not have a tax file number supplied either immediately by the employer or within a reasonable time frame of 60 days or thereabouts?

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Dr Anderson—I think you would have to look at the figures given by REST to see that.

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Senator BERNARDI—You do not have them to hand, do you?

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Dr Anderson—We do not have them to hand, but they do suggest to me, at least, that the practice in that particular workforce of not handing on the tax file numbers is, to some degree, still continuing.

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Senator BERNARDI—In your experience is this practice more prevalent in the retail industry versus other industries?

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Dr Anderson—It tends to occur more where you have more casual part-time workers. It does not always appear to be just small business. It is actually much more widespread, which surprised me.

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Senator SHERRY—I asked the tax office and the Treasury about this matter. I asked them: when a refund is paid to a member paying higher contributions tax would there be a lost interest component. I do not want to misquote them, but they were not sure at that point. Should a lost interest component, perhaps at the long-term government bond rate, be included in the refund of the tax?

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Senator JOYCE—There is.

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Dr Pragnell—There is an interest component in the bill in respect of certain circumstances being met where the employer has failed to do certain things. Currently, it is in the bill, so there is a lost interest component in there.

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Senator SHERRY—Good.

Senator JOYCE—Do you think there is an unnecessary crossover at times between accountants and financial planners? As an accountant it used to be the bane of my disaffection that we would spend 10 or 15 years becoming qualified and getting postgraduate qualifications, then apparently we are not allowed to tell someone to basically do a glorified form of putting their money into the bank.

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Senator BERNARDI—I think we should have an in camera discussion about that!

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Senator JOYCE—Do you think there is room for greater latitude to be given to accountants, taking on board their obvious competency in dealing with people’s money and seeing that they deal with every other section of the person’s money?

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Dr Anderson—It is a difficult question to answer. I think there is particular expertise that is needed, perhaps, that not all accountants have. I have noticed that some accountants are reluctant to give certain investment advice unless they have undergone qualifications other than the normal run-of-the-mil