The Federal Opposition has moved directly counter to the Government on Limited Recourse Borrowing Arrangements (LRBAs) with Shadow Treasurer, Chris Bowen signalling a Labor Government will legislate to end the practice within self-managed superannuation funds (SMSFs).
Barely two days after the Treasurer, Josh Frydenberg signalled the Government would allow the LRBA situation to continue subject to a review in three years’ time, Bowen accused the Government of failing to grasp the nettle and said a Labor Government would be moving for abolition.
“As it stands it will be left to a Labor government to take the responsible decision and adopt the recommendation of the Financial System Inquiry – a report delivered years ago – to restore the prohibition on direct borrowing by superannuation funds on a prospective basis,” he told a Sydney conference.
Bowen accused Frydenberg of deliberately ignoring the concerns of the Council of Financial Regulators (CFR) and the Australian Taxation Office (ATO) which had produced a report which stated: “The regulator members of CFR and the ATO note that no longer allowing limited recourse borrowing will address a number of significant risks which could be detrimental to individuals’ retirement incomes due to shifts in the property market, particularly for those with high levels of leverage and low diversification of assets”.
Elsewhere in his speech, Bowen committed to lifting the superannuation guarantee to 12 per cent without further delay.