A hands-off Federal Budget?
If the Treasurer, Wayne Swan, is wise, he will closely examine his first Budget as a part of a Rudd Labor Government and the problems that administration created by needlessly tinkering with superannuation — specifically, the concessional contributions caps.
It is now less than a month before the Treasurer, Wayne Swan, hands down his first Budget as part of a minority Gillard Labor Government.
And if the Treasurer is wise, then he will closely examine his first Budget as a part of a Rudd Labor Government and the problems that administration created by needlessly tinkering with superannuation — specifically, the concessional contributions caps.
Indeed, it would be worthwhile for Swan and Prime Minister Julia Gillard to reflect upon the long-running unintended consequences which can flow from ill-conceived policy and Budget decisions — with the changes to the concessional contribution caps being an outstanding case in point.
The changes added only a negligible amount to the Budget bottom line, but the political fallout has been significant.
Now, of course, the Government has indicated it is prepared to review the excess contributions tax being imposed on taxpayers who, often unwittingly, have been found to be in breach of the concessional caps.
It follows that any changes to the excess contributions tax would be announced in the context of the Federal Budget — something that would be nothing more nor less than a tidying up of the badly thought through changes contained in a previous Budget.
For a party which, with some justification, claims considerable ownership of Australia’s superannuation system, the Australian Labor Party has arguably failed to deliver any significant policy improvements since it was returned to office in 2007.
Rather, many of its efforts have served to reinforce concerns about the uncertain and tenuous nature of the underlying policy settings.
It is against this background of perceived policy untidiness that the Assistant Treasurer and Minister for Financial Services, Bill Shorten, should move carefully with his decisions regarding the Future of Financial Advice (FOFA) changes.
As this week’s Money Management roundtable has made clear, the potential for unintended consequences flowing from the proposed FOFA changes considerably outweighs the risks that went with the Government’s earlier Budget tinkering with the concessional superannuation contribution caps.
While many of the proposed changes have merit, it is already clear that, improperly implemented, they carry with them the danger of actually contradicting the Government’s original policy intentions by further entrenching the dominance of the major banks, institutions and industry funds.
The Government can ill afford any further policy untidiness in the financial services sector, and the financial planning industry can ill afford the imposition of policy which runs counter to the provision of strongly independent advice.
AUTHOR
Mike Taylor
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