Minister hints at reform

Is thisthe new minister for financial services? Not quite, but senator Helen Coonan, appointed Minister for Revenue and Assistant Treasurer in the ministerial reshuffle following the last election, is as close as it gets.

With the former Minister for Financial Services, Joe Hockey, now the Minister for Small Business and Tourism, Coonan will share most of the responsibilities for financial services and regulation with Senator Ian Campbell, who as Parliamentary Secretary to the Treasurer has responsibility for financial market conduct, disclosure and supervision.

But it is Coonan, with responsibilities over taxation policy, superannuation, prudential regulation and financial institutions who is likely to be the high profile face of financial services during the Howard Government’s third term.

Her first priority will be to get the Government’s election promises in regards to financial services, namely in superannuation, enshrined into legislation.

During the election campaign, the Government promised, amongst other things, a reduction in the superannuation surcharge, greater allowances for splitting superannuation contributions amongst couples and a government superannuation co-contribution for low income workers. Coonan has given herself until the first of July to make good.

But Coonan is also set to focus on a much broader review of retirement income policy. That will mean, Coonan says, the government’s ill-fated choice of super fund policy will be back on the agenda at some stage.

Greater tax concessions for superannuation, a much sought after prize for the superannuation industry, will also be on the agenda, although the industry is unlikely to get the outcome it so desires.

“The concessional treatment of superannuation contributions, fund income and benefits is already the largest single tax expenditure [for the government],” Coonan says.

Coonan will also turn her attention to the safety of the financial services sector, a process already started by Hockey in the wake of a number of high profile collapses, such as HIH and CNAL, in the last year.

This process will include an examination of mass marketed tax effective schemes, which Coonan has singled out as an area of concern for prudential and taxation policy alike.

“I am concerned that we have a system that is as safe as possible but I wouldn’t want at this stage to be pre-empting whether it just needs minor tinkering or whether it requires a major overhaul,” she says.

Coonan has already met with a number of industry representatives, including the Investment and Financial Services Association (IFSA), to discuss priorities for reform.