It was probably inevitable that within two months of gaining office and with a minimum of fuss, the Coalition Government has sought to undo some of the last legislative acts of the former Gillard and Rudd Governments.
When the Treasurer, Joe Hockey and the Assistant Treasurer, Senator Arthur Sinodinos, last week announced that it would not be proceeding with the legislation which would have taxed people’s superannuation pension earnings above $100,000 and imposed a $2,000 cap on self-education expenses, their statement was broadly and rightly welcomed by the financial services community.
Looked at objectively, the tax on superannuation pension earnings above $100,000 was always problematic – the result of a burgeoning Budget deficit and something which would have carried with it all the administrative bug-bears of the old superannuation surcharge regime.
Having announced that they will not be proceeding with the unfinished legislative agenda of its predecessors, the Government will now have to find the tax savings intended to be achieved by the measures elsewhere – something which will become clearer when it issues its Mid-Year Economic and Fiscal Outlook.
Having witnessed the Government turning back what were unlegislated policy announcements, the financial services industry must now consider what the new administration intends to do about Labor Government legislation such as Future of Financial Advice and some elements of Stronger Super.
Discussions have already taken place between Government representatives and the major industry organisations such as the Financial Services Council (FSC), the Financial Planning Association (FPA) and the Association of Financial Advisers (AFA) – and the resultant industry mood has been somewhat subdued.
This would seem to confirm the early signals from Sinodinos, issued at the AFA annual conference, that the new Government is not going to be rushing to make changes and will, instead, be undertaking a period of consultation during which it “will discuss, listen and work through the FOFA issues with stakeholders”.
“We will not be rushed on this consultation – however we will provide certainty to the industry as to where the Government stands, any changes that will be required to refine the current regime and in what time-frame this will be achieved,” the new minister said.
The implementation time-frames of the FOFA legislation are such that the Government has no need to rush to make particular changes, but there will be significant disappointment in the broader financial planning community if it fails to deliver on the core amendments it promised during the FOFA debate.
Last week’s announcements regarding not proceeding with taxing superannuation pension earnings above $100,000 or imposing a $2000 cap on self-education expenses represented a good start by the new Government on creating more certainty. The industry will be looking for more of the same where FOFA is concerned.
