The Financial Services portfolio is emerging as a launch pad for political careers and, as Mike Taylor reports, the new minister, Bill Shorten, finds himself confronted by a worthy opponent in the Coalition's Mathias Cormann.
Financial Services has arguably become the Australian Labor Party’s (ALP) portfolio of choice for ambitious politicians on their way to the top.
When the dynamics of the portfolio are appropriately analysed, no one should be particularly surprised that it has emerged as a launch pad for political careers.
Consider this. The minister tasked with handling the financial services portfolio is dealing with a multi-trillion dollar sector, which is a major growth engine for the Australian economy.
At the same time, that person has responsibility for policy implementation impacting some of the Australian Labor Party’s key stakeholders — the trade unions and the industry superannuation funds.
This should then be combined with the Minister’s oversight of key regulators such as the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA).
As yet, the Minister for Financial Services remains outside of the Cabinet room but as the most recent previous incumbent, Chris Bowen, has demonstrated full Cabinet power resides just one further step up the ladder.
But Australia’s new Assistant Treasurer and Minister for Financial Services and Superannuation, Bill Shorten, is arguably even better placed than his predecessor, Bowen, because he has been allowed control of the full scope of the junior Treasury portfolio.
Bowen had to be content with handling Financial Services, Superannuation and Corporate Law while Senator Nick Sherry handled the role of Assistant Treasurer. Shorten has been granted control of both elements.
With the past week or so having been spent receiving briefings from senior public servants within in the Department of Treasury, Shorten’s immediate priority will be determining an appropriate action plan in circumstances where he already knows the broad parameters of the Government’s agenda in financial services.
Where first Sherry and then Bowen had the relative luxury of being able to commission reviews and inquiries and await the outcomes, Shorten knows the outcome of those processes and must implement the findings.
However he must seek to implement those findings in extraordinary political circumstances — as a minister in a minority ALP Government mendicant on the support of independents in the lower house and ultimately reliant on the Australian Greens assuming the balance of power in the Senate.
Shorten will know almost from the outset where the pitfalls exist. He will know that most elements of the Future of Financial Advice (FoFA) reforms are achievable but that he will need to tread warily on commissions with respect to insurance.
He will also know that while some elements of the Cooper Review recommendations such as SuperStream will gain support in both houses of Parliament, the same cannot be said for the MySuper proposal and the new minister will have to weigh whether it is worth a prolonged political fight.
For its part the Federal Opposition has recognised that while Financial Services is not a senior portfolio area it deserves the attention of someone who could be regarded as a rising star. Enter West Australian senator, Mathias Cormann.
Belgian-born Cormann has already established a reputation as a solid debater in the Senate and brings with him a solid political pedigree having worked as a senior adviser to former West Australian Premier, Richard Court and then to former Federal Liberal Immigration Minister, Chris Ellis.
In addition, Cormann has worked in the insurance sector and before entering the Senate was acting general manger of HBF Health Insurance.
While Cormann has covered two junior portfolios in the shadow Cabinet he is regarded as having been most impressive for his work on some key Senate Committees.
Legally qualified and married to a lawyer, Cormann told Money Management this week that he was intent on spending the first few weeks in his new portfolio meeting the relevant stakeholders and coming to terms with the issues.
However, a pointer to the way in which he intends on dealing with the policy issues is expected to emerge when the Senate moves to supplementary estimates towards the end of next month.
“I’ll be asking a lot of questions about what the Government was promising at the election and we’ll see what comes out of that,” he said.
While Cormann said that he was approaching many of the financial services industry issues with an open mind, one of those about which he is already determined is the linking of the rise in the superannuation guarantee to the implementation of the Resources Rent Tax (RRT).
“I think the Government has been totally dishonest in linking the superannuation guarantee to the RRT and, in doing so, trying to drive a wedge between the mining industry and the superannuation industry,” he said.
Cormann said that he would be pursuing the issues around the RRT and the scrutinising the details.
Shorten, it seems, will have a debate on his hands.
