Industry reaction mostly positive

The financial services industry has given Federal Government’s response to the Henry Review of Taxation a mixed welcome, with most welcoming the proposed to changes to superannuation but suggesting that much more needs to be done.

The Institute of Chartered Accountants in Australia encapsulated much of the criticism of the Government’s approach by describing the response as being little more than a number of Budget announcements.

“The government’s initial response today could be mistaken for a series of budget announcements rather than a more strategic outlook for serious tax reform in Australia,” the ICAA’s tax counsel, lYasser El-Ansary said.

“There is clearly a lot more work for the government to do in mapping out a tax reform agenda for the decades ahead; today was certainly a start, but it didn’t go far enough in meeting our expectations,” he said.

The Financial Planning Association (FPA) gave the announcement a positive welcome with acting chief executive, Deen Sanders saying many of the proposed changes were “almost entirely in line with recommendations the FPA made to government about changes to the superannuation system.

“There is still plenty of work ahead to digest the detail of the Henry Review, but in the meantime the government’s response to the superannuation section of the review is welcome,” Sanders said.

The chief executive of the Investment and Financial Services Association, John Brogden, described the Government’s announcement to increase the superannuation guarantee to 12 per cent as the most significant reform of superannuation in a generation.

“I congratulate the Government on today’s announcement. Every Australian will benefit from increased savings. Australians will face retirement with greater security and confidence,” he said.

Speaking for the industry funds, Australian Institute of Superannuation Trustees chief executive, Fiona Reynolds, described the move to 12 per cent as a significant win for all Australians.

“This is the one rate rise we had to have and one that every Australian should applaud. It’s a Gold Logie performance by Henry and the Government,” she said.

Reynolds said the new measures addressed most of the industry’s long-held concerns about the inadequacy of Australian retirement incomes.

The chief executive of the Association of Superannuation Funds of Australia, Pauline Vamos said the Government, in its primary response the Henry Review, has set out nine specific proposals, four of which related to superannuation.

“Each of them will, when in place, substantially improve both the adequacy of retirement savings and the equity of the tax treatment of superannuation contributions. The focus on superannuation in the Government’s response confirms its central role,” she said.

“The gradual increase from 9 percent to 12 percent in the Superannuation Guarantee (SG) Contribution over the years 2013 to 2019, will go a long way towards helping working Australians to be either fully or partially self-sufficient in retirement,” Vamos said.