Financial services quietly banks on a Coalition election win
In a two-horse race at the forthcoming Federal Election, Mike Taylor writes that financial services companies are mainly backing self-interest.
As the Federal Election looms ever closer, the Australian financial services industry now knows that there exist distinct and important differences between the policies of the major parties and, if they are honest, most are hoping for a Coalition victory.
The Financial Services Council (FSC) conference in Brisbane represented perhaps the first and last time two of the key protagonists could display their policy wares to the industry. The Government’s policy position was put by the Federal Treasurer, Chris Bowen, while the Coalition approach was outlined by the Shadow Assistant Treasurer, Senator Mathias Cormann.
What became very clear is that while the Government may have changed Prime Ministers, it had not fundamentally changed the policy settings put in place by the former Prime Minister, Julia Gillard, and the former Minister for Financial Services, Bill Shorten.
Chris Bowen has a very different approach to that of Shorten, but he made clear at the FSC that a re-elected Labor Government would not in any way be relenting from the Shorten-led approach to the Future of Financial Advice (FOFA) changes or Stronger Super.
And irrespective of their Labor Party factional differences, Bowen saw fit at the FSC conference to pay tribute to Shorten’s legislative reform efforts in the financial services portfolio.
Also, while broadly unspoken by a cautious and polite financial services gathering, was the reality that if a future Labor Government actually delivered on a five-year moratorium on significant tax change to superannuation, then that Government believed it already had the policy settings right.
What is clearly attractive to the financial services industry in the election of a Coalition Government is that the Federal Opposition has committed to delivering key changes with respect to both FOFA and Stronger Super.
This fact was emphasised by Cormann in his address to the FSC conference, along with a promise to reactivate a lot of the industry’s key policy issues including delivering on the major recommendations of the so-called Johnson Review and releasing the long overdue findings of the Board of Taxation Review.
In short, Cormann highlighted the Coalition’s essential political and policy advantage – that it is in no way particularly wedded to the outcomes of FOFA and Stronger Super or the manner in which those outcomes were achieved.
Further, he made it clear that in Government he would deliver on unwinding elements of FOFA such as opt-in and fixing the no-detriment provisions; while where superannuation is concerned he would break down the default funds under the modern awards regime via MySuper while exposing industry funds to tougher governance provisions.
As well, Cormann acknowledged Shadow Treasurer, Joe Hockey’s intention to conduct a high-level review of the financial services industry in similar terms to the Wallis Review, one which takes account of the exponential growth in the size and influence of the superannuation industry.
So the differences confronting the industry with respect to party policy are significant: on the one hand a re-elected Labor Government which simply beds down the changes implemented by Shorten, while on the other it has a Coalition Government which would eliminate what it sees as the worst of the Shorten changes and then move to whatever emerged from its so-called “Son of Wallis” review.
While it is no secret which party the majority of financial services CEOs would like to see win the next Federal Election, don’t expect to see many of them publicly expressing those views. All the major industry groups are remaining pointedly apolitical.
The FSC made clear last week that it stood ready to work with whatever party gained power, and similar sentiments have been expressed by the Financial Planning Association and the Association of Financial Advisers.
However, no one is really in any doubt about which outcome will prompt the popping of most champagne corks in the industry (French, of course).
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