Budget quiet on financial services
Reaction to the recent federal budget has been fairly subdued with most industry analysts noting the lack of news for the financial services industry.
Reaction to the recent federal budget has been fairly subdued with most industry analysts noting the lack of news for the financial services industry.
Most analysts have welcomed the headline growth figures and the removal of the East Timor levy, however there were few surprises.
Industry figures contacted by Money Management says the budget confirmed a number of announcements flagged as part of the GST and Ralph tax reforms, there was really no major policy initiatives.
BNP Investment Management chief economist Brigette Leckie described the budget as a “non-event”.
“The 2000/01 Budget has been a non-event, with the Government unveiling no major new policy initiatives,” Leckie says.
Hillross finanical planner Peter Nonnenmacher says the overall budget measures were positive, particularly the removal of the East Timor levy.
“Probably one of the big positives of the report was getting rid of the East Timor levy. At least now there will be a sense of cash flow for next year,” he says.
Godfrey Pembroke head of research, Janice Sengupta, says financial planners will feel the major effect of the budget through movements on financial markets.
“The dollar slipped again after the announcement and reports are coming out that the budget was received overseas with a fair bit of cynicism,” Sengupta says.
RetireInvest research and technical manager Assyat David says the government’s announced crackdown on social security entitlements for age pensioners combined with the taxing of trusts as companies will affect the way advice is given to wealthier retirees.
“The changes to taxation in regards to social security benefits and the ability to look into that will put a lid on trust structures used to previously enhance benefits,” David says.
While there were no ground breaking initiatives in the budget papers, there were a few minor announcements, including an extra $2.9 million allocation to the Aus-tralian Securities and Investments Commission to continue monitoring managed investments. The increase takes into account the extra work ASIC has taken on regulating managed investments since the passing of the Managed Investments Act which effectively the traditional fund manager/ trustee relationship.
The budget papers also set an “assumed” date for choice of fund to come into ac-tion. While the legislation has been stalled in parliament for a number of years, Treasury still says it will start up on July 1, 2001. Even if parliament breaks the ongoing deadlock, it is unlikely the new regime will be up and running for at least another two years.
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