The May Federal Budget with its almost inevitable changes to superannuation was always going to prove problematic for financial advisers and their conversations with clients. Now, the Prime Minister, Malcolm Turnbull, has also placed the probability of a July Federal Election high on the agenda.
Assuming the Government goes to a double dissolution election on the first weekend in July after bringing down a budget on the first Tuesday in May, financial planners will find themselves in a two month policy no-man’s land. They will be faced with Budget changes which may or may not become law depending upon who wins the Federal Election and the resultant make-up of the Parliament.
Given the industrial relations issues which will be used as the trigger for a double dissolution, superannuation may prove to be a mid-rank issue in the election campaign, while financial planning will likely hardly register on the campaign radar.
Why will superannuation be a mid-rank issue? Because it is an industry which has the financial and lobbying muscle necessary to use the election campaign environment to fight any Budget changes it deems to be inappropriate.
And the Government should not underestimate the willingness of the superannuation to mount such a campaign in circumstances where some of its most senior executives have expressed strong discontent at the way in which the Government appears to have focused on superannuation while abandoning any attempt at meaningful tax reform.
The Government’s strategists would do well to recognise that for the first time in about five years, the major superannuation lobby groups – the Financial Services Council (FSC), the Association of Superannuation Funds (ASFA) and the Australian Institute of Superannuation Trustees (AIST) are all singing from the same hymn sheet.
FSC chief executive, Sally Loane has written extensively on the need for the Government to avoid seeking to use superannuation as a quick fix way of meeting its Budget needs, while AIST chief executive, Tom Garcia has suggested the Government has been deceitful in starting a tax debate only to drop it to pursue the easier topic of changes to superannuation.
More generally, financial planners may care to reflect upon whether the election of the Coalition in 2013 has delivered them any of the benefits they may have hoped for. Despite the pre-election rhetoric the Labor Party’s Future of Financial Advice (FoFA) changes remain largely in place thanks to the make-up of the Senate and, despite legislative and regulatory efforts, the influence of the industry funds remains largely undiminished.
Indeed, life/risk advisers may reflect that the Life Insurance Framework was something which evolved out of a process sanctioned by former Coalition Assistant Treasurer, Josh Frydenberg and ultimately signed-off by his successor, the current Assistant Treasurer, Kelly O’Dwyer.
Will a re-elected Turnbull Government with a Senate majority revisit the FoFA changes? Perhaps, but there may be larger policy fish to fry.
Mike Taylor
Managing Editor
