On May 5, just two days after announcing what his Government called the biggest superannuation reform in a lifetime, the Minister for Financial Services, Superannuation and Corporate Law, the Hon Chris Bowen, sat down with the industry to discuss three of the four reviews which have so preoccupied it this past year. Henry, Ripoll and Cooper are three names bound to echo around the halls of super funds for many years, even if the increase in the compulsory Super Guarantee (SG) from 9 to 12 per cent went against Henry’s recommendations, the banning of commissions was far stronger than anything in Ripoll’s final report, and the response to Cooper has not yet been made. This roundtable was also too early to discuss the ‘Johnson’ report on making Australia a financial services hub, which the Government ended up completely endorsing last month, including clarity that non-Australian assets managed by firms based here would not be subject to any tax liabilities. Nevertheless, the industry had plenty to ask the Minister. The result was a lively roundtable, and we thank Vanguard Investments, which claims to have never paid a commission anywhere in the world, for agreeing to sponsor it. Proceedings kicked off with the big question of whether the SG increase had any chance of getting to the Senate before a Federal election later this year.
Minister Bowen: I think getting it done before the election obviously depends largely on when the election is. If the election is sooner rather than later, that is more difficult. If it’s later rather than sooner, it’s a touch more likely, but I don’t think anybody should be relying on this going through before the election, because that would be a difficult task. I’m not ruling it out. We have to draft legislation, consult and then get it through both Houses, and against the opposition of the Opposition, which makes it more difficult. It’s easier to get it through, obviously, in terms of timing, if I can say to the managers that govern business in both Houses that it’s going to go through without much opposition, then it’s easier to get it in an earlier spot. If there’s opposition, then it takes longer, and clearly there will be opposition to this. The superannuation reforms are part of a broader package, of course, and they are tied to the revenue coming from the Resource Super Profits Tax. And again, the Opposition have indicated that they oppose 12 per cent [contributions]. They haven’t been quite so explicit on the other measures we announced in relation to superannuation, and clearly they’ll oppose the Super Profits Tax. So there’s still a deal of work to do, to convince the parliament that these are worthwhile reforms, particularly going to 12 [per cent]. The legislation perhaps here would be simpler than the rather complex process of the financial planning reforms, but it would also need to be considered in relation to the broader tax reforms announced by the Government. And there’s a deal of consultation to go on around them. The most complex part of the legislative reforms we announced on May 2 would be the $500,000 threshold on the over-50s cap. That has a degree of complexity about it, which I need to do some consulting with the industry on, in relation to how to make that work. We did that with our eyes wide open, knowing it would be a process which we’d need to talk to industry about how it would work, and there’s going to need to be some changes in the way the Government does business in relation to tracking multiple funds, et cetera. I think that’s probably a good thing, in terms of a wider process of tracking down lost money as well. So the timing is a bit of an open question, it depends on how much progress we can make in terms of the consultation and the legislative timetable.