Responses from throughout the financial services industry have so far been lukewarm on last night’s Federal Budget announcement, with some measures welcomed but some opportunities also missed.
Reforms to promote greater private infrastructure have been broadly welcomed, with measures such as the removal of tax impediments for institutional investors drawing support from the Association of Superannuation Funds of Australia (ASFA) and Mercer.
The Commonwealth Bank praised several positive measures that would aid small business, such as the extension of the asset write-off to motor vehicles, the early cut to the company tax rate for small business and changes to Pay As You Go tax instalments.
Several measures around superannuation were criticised, however. ASFA expressed disappointment the Government superannuation co-contribution was not being indexed, but supported changes to excess contributions cap penalties and the $80 million allocated through Stronger Super.
The Self-Managed Super Fund Professionals Association of Australia (SPAA) supported the move to allow for the $25,000 in additional concessional contributions to apply to the indexed $25,000 concessional cap for the over 50s from July 2012, but was disappointed the $500,000 threshold would not be indexed, which SPAA chief executive Andrea Slattery (pictured) described as “short-sighted”.
The SPAA was also critical of the changes to excess contribution cap penalties, which Slattery said were a positive start but fell way short of a sensible solution.
The Institute of Actuaries of Australia expressed disappointment that the issue of longevity was largely ignored.
Institute chief executive Melinda Howes supported the allowance for pensioners to earn an extra $250 per fortnight without affecting pension payments, but said there were more solutions available to address longevity.
These include allowing development of flexible ‘new generation’ annuities that protect against the risk of outliving your retirement savings and the market risk of losing superannuation capital in retirement, she said.
Mercer described it as a “bits and pieces Budget” and said that although it was economically responsible, annual tinkering with the superannuation system would serve to undermine confidence in the system, and added that the continued freeze of the superannuation co-contribution limit of $1000 without indexation was disappointing.
