Both the Government and the Opposition went to the last Federal Election promising greater policy certainty but the processes around the FSI and the looming Tax White Paper has left that open to question.
|
Name |
Company |
Initials |
|---|---|---|
|
Mike Taylor |
Manageing Editor, Money Management |
MT |
|
Andrea Slattery |
Chief Executive, SMSF Assoication |
AS |
|
Andrew Gale |
Director, Chase Advisory |
AG |
|
Paul Harding-Davis |
Chief Executive, Premium Wealth Management |
PH |
|
Michael Hallinan |
Partner, Townsends Lawyers |
MH |
|
Phil La Greca |
Head of AMP SMSF Administration |
PL |
MT: Well staying on the theme of Government policy, I noted Andrea in your opening address you made a polite plea to both sides of politics to stick to their pre-election undertakings about no changes or significant changes to superannuation policy. Are we being optimistic, given that we’ve got the FSI exercise on foot and the Tax White Paper?
AS: Well I think the Tax White Paper is something that we’ll need to be very cognisant of, that they will be looking at all areas of taxation and I don’t think superannuation taxation is going to not be front and centre somewhere.
The Financial System Inquiry (FSI) actually looked at super in its total and it came out with a very good bill of health for instance for the SMSF sector. [With the respect to] the super sector itself really, [FSI] was looking not looking at changes to super but, rather, changes to the governance of superannuation. So from the FSI perspective while there were a lot of smaller recommendations through super, it was generally something that wasn’t going to have a major effect moving forward.
But the Tax White Paper, looking at the tax concession I think we need to be very, very sure that we’ve got the measurement right, all that we talked about before is important. We need to be very sure that we’re looking at the long term and we need to be very sure that when we’re talking about issues of equity and we’re looking at equity across the board, not just for a particular part, which is superannuation. And we need to remember that we need to set the objective of super. So the objective of super was always to provide retirement incomes. It was never, ever to be something that supported social security or the social security system.
There was always the intention for people to have self-sufficiency and as Don Russell said just this week, the self-sufficiency meant 50 per cent of the population was meant to be a self-sufficient in retirement and we currently have a situation we’ve got 20 per cent.
AG: I actually think the Tax White Paper is one of the periodic good opportunities to ensure some sound long term thinking.
Often times a lot of the debate is driven by short-termism and short term issues and the like. But periodically it’s a bit like when they put out an Intergenerational Report, it’s taking long term views and encourages long term thinking. So I think the advantage of something like a Tax White Paper is it does encourage robust thinking, long term thinking.
It does invite people to put in well thought out comprehensive submissions. It does create the opportunity to put the case in the superannuation context for example, which we know will be one of the areas of focus is to actually work through all these arguments and talk about its role in creating retirement incomes. Making sure that people allow for longitudinal effects with social security, making sure that you factor in other things like transfer payments and the like so that you look at the whole picture. I think that when that’s done people will realise the value and importance of the superannuation sector.
I actually think it’s a good opportunity to have a good robust medium to long term focused discussion.
PL: Yeah I think the tax paper is going to be a catalyst for hopefully proper open discussion. The hardest part I think is going to be making sure that in the super industry we don’t get too bogged down in special interest.
My concern would be that we don’t have, I know the SMSF Association is not likely to be in that situation, but the problem is we’ve got three, call it the four associations that will have a stake in super and will they for want of a better term, be all singing from the same hymn page? And that’s my biggest concern in terms of how super gets treated or how any outcome from that gets treated. So the special interest conflicts that would exist there. So that’s where I see the biggest risk for the super sector.
PH: It was always difficult in the Australian political context with a short election cycle to make really long term decisions. And it’s even harder now, because a simple process of being in opposition and opposing everything and giving no target to be critical has worked. But the special interest groups, what social media has enabled for them to have a voice on a specific component to get a really loud distraction to the core conversation, the threat to the things that Andrea raised is very real from people wanting to hijack superannuation for a very specific purpose. Or looking at a very narrow part of equity and saying we really need to change it, but the voice can now be loud enough that enough politicians might actually start listening.
PL: Well you’re right, because remember we saw that happen, we had an industry doing that, with the mining sector basically doing that. They basically said we don’t like what the government is proposing, so we all make noise and we’ll make noise publicly. We’ll use media to put a message through.
MH: I suppose the white paper is mythical in one sense, we haven’t got any firm proposals out for it yet. If it’s established and prepared, it’ll be year or two years away, so there’ll be a next election before it’s handed down. And it’s three or four years away for an implementation. The other point is of course that the minority amplify their presence in a way which is extremely annoying and very distracting. So it’s the people who complain the loudest and most persistently who will achieve the greatest influence as against people who are reasonable and don’t use social media.
For more from this round table meeting see part one – Reinterpreting the cost of tax concessions – Round Table – part three – Speaking with one voice – Round table – and part four – Spruikers, not LRBAs the problem – Round table.
