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Yesterday BlueChip attended the FSC Post Budget Breakfast where Parliamentary Secretary to the Treasurer, the Hon Steven Ciobo MP, outlined to a select group of financial services folk the Government’s key fiscal initiatives for 2014/2015 and beyond.
There was a lot to digest but we had our ears tuned for amendments that directly affected the financial services sector.
Among these were the welcome changes to the non-concessional cap for superannuation, which ensures Australians’ excess contributions are not negatively impacted. According to Mr Ciobo this is intended to make saving for retirement easier and encourage Australians to save more for their future. More good news on the superannuation front was the government’s pledge to its commitment to increasing the Super Guarantee to 12% (albeit with a longer timeline – a year later than previously proposed).
Meanwhile ASIC did not fare so well, with the government announcing funding cuts to the regulatory body. A move that will force the financial services industry to increase its self-regulation. While this might make some in the industry nervous, Mr Ciobo said the saving of $120 million to tax payers over five years justified the funding cut.
While it is always important to hear from the horse’s mouth, clearly the views of the Government will not always align with those of other industry bodies.
So in the interests of fairness we have compiled below a brief summary of the major points made in response to the Budget of a number of key industry bodies.
Dante De Gori, General Manager, Policy and Conduct at the FPA said the leading financial planning association welcomed the fact that the Federal Government held firm on its commitment to avoid adverse changes to superannuation:
“Obviously one of the key areas of interest and concern for financial planners and their clients is the treatment of superannuation. Understanding the positive impact that adequate superannuation can make to clients, we welcome the pledge the Government has made to increasing SG to 12%. There has been a slight rejig of the timeline however which means we will reach 12% a year later than previously proposed. The increase to 9.5% will proceed from 1 July 2014 but will then pause at 9.5% until 30 June 2018, before increasing by 0.5% each year until it reaches 12% in 2022-23.
Pauline Vamos from ASFA is in favour of the government’s infrastructure package:
“As the superannuation system continues to mature and more people move from accumulating super to taking income streams, stable, long-term and income-producing assets such as infrastructure will become more attractive and more suitable investments for super funds. Many of the public assets potentially earmarked for sale would be an ideal match for the risk-return profile desired by super funds in this changing demographic environment.”
John Brogden, CEO of the Financial Services Council was supportive of keeping older people in the workforce, saying that this will help Australians in terms of funding their own retirement.
“Giving employers an incentive of $10,000 to hire older Australians who have been on income support for at least six months is a positive step towards ensuring people are employed for longer. The retirement savings of Australians are increased by $200 billion for every year a person remains in the workforce.”
Jordan George, Senior Manager, Technical & Policy, of the SMSF Professionals’ Association of Australia (SPAA), spoke about the non-concessional contributions cap, saying:
“We congratulate the Government on allowing taxpayers to refund excess non-concessional contributions, removing the overly punitive outcomes. SPAA has advocated for this treatment of excess non-concessional contributions for many years and is pleased to see the Government has responded to our concerns. Although the announcement is welcomed, the Government needs to work through the details of the proposal because the suggestion to allow taxpayers to withdraw earnings associated with the excess non-concessional contributions is likely to result in complex compliance requirements.”
To read more about the Federal Budget, check out the AFR’s commentary and analysis here.
