The long-flagged withholding tax cuts and an implementation date for the promised superannuation clearing house facility represent the financial services centrepiece of the Rudd Labor Government’s first Federal Budget brought down last night.
While delivering little significant change to the financial services environment, the Budget package was warmly welcomed by a broad cross-section of the financial services industry, with the Financial Planning Association, the Investment and Financial Services Association (IFSA) and the Association of Superannuation Funds of Australia all finding positive elements.
However, even though the Australian Securities and Investments Commission will now be taking on responsibility for financial literacy, neither it nor its sister regulator, the Australian Prudential Regulation Authority, have picked up significant new funding to cover their tasks.
The Budget documents revealed that with many of the major regulatory changes now in place, the two bodies would have to largely operate within their existing allocations.
With the exception of the withholding tax changes and the implementation date for the superannuation clearing house, which had been flagged well before the Budget, the Government steered clear of major changes to the financial services environment capable of significantly increasing the workload of financial advisers.
However, it did do some tidying up, amending the rules affecting capital protected borrowings and prescribed private sector funds.
As well, the Assistant Treasurer, Chris Bowen, announced that the Government would be proceeding with the Taxation of Financial Arrangements — something that will affect the tax handling of a range of transactions.
The Treasurer, Wayne Swan, last night used his Budget speech to place the withholding tax cuts front and centre, trumpeting the often-used IFSA argument that the measure would assist in Australia becoming a financial services hub for the Asia Pacific region.