Turnbull’s cabinet reshuffle has seen the position of Assistant Treasurer elevated to the cabinet level, bringing with it the portfolio for superannuation and financial services.
Kelly O’Dwyer has been appointed as the new Assistant Treasurer replacing Josh Frydenberg who has now become the Minster for Resources, Energy and Northern Australia.
Tom Garcia, chief executive of the Australian Institute of Superannuation Trustees (AIST) said he welcomed the return of superannuation and the financial services portfolio to the cabinet.
“Elevating the financial services portfolio to cabinet recognises the key role superannuation plays in the Australian economy,” Garcia said. “We need to get the settings right for all Australians, define clear objectives for super and move to a point where we have a world-class retirement income system that ideally has bi-partisan political support.”
He added the new treasury team has been appointed at a critical time in the Government’s superannuation reform agenda as it moved to finalise its response to the Financial System Inquiry (FSI) and potentially re-consider the need for genuine tax reform.
The Association of Superannuation Funds of Australia (ASFA) called upon O’Dwyer to focus on three key areas: ensuring adequate delivery of income stream in retirement; defining the superannuation system’s purpose and understanding what ‘success’ looks like, and improving the system to better align with the principles and goals that underpin it.
Pauline Vamos, chief executive of ASFA, drew attention to ASFA’s proposed limits to tax concessions to those with superannuation balances of over $2.5 million, while simultaneously exploring ways to make the system fairer for those with broken work patterns.
Last September O’Dwyer published an article Repair weak super foundations which claimed there were “all manner of problems with the superannuation system, and the retirement system more generally”.
In it she says: “The system effectively encourages Australians to over-capitalise on their homes, spend all or some of the balance on other forms of consumption, and then turn to the age pension.”
She adds: “The situation is exacerbated by yet another quirk in the system … there’s a nice little period to retire and burn through your concessionally-taxed superannuation without contributing materially to the tax base before you are old enough to qualify for the age pension.”
O’Dwyer compares superannuation to a building that needs its foundations fixed before it is expanded, and asserting in this policy space Labor has more positions than the Karma Sutra.
Out of the peak bodies the Financial Services Council (FSC) was the most excited by O’Dwyer’s appointment expecting her and her team to hit the “ground running during this term to complete the reform agenda established by their predecessors”.
“This includes delivering reforms to reduce superannuation fees, concluding the Financial System Inquiry and creating more trade opportunities as Asian demand for financial services increases,” said Andrew Bragg, acting chief executive of the FSC.
Industry Super Australia (ISA) saw the appointment as an opportunity to reshape policy.
“It is critical that both the Treasurer and Assistant Treasurer consider resetting the current policy focus to ensure the super system can achieve the objective of delivering a comfortable retirement to all Australians,” said Robbie Campo, deputy chief executive at ISA.
“In addition, the Government should reject the banks’ lobbying to weaken consumer protections for those Australians who do not choose their own super fund. The strong recommendation of the FSI Report was to retain a merit based selection process that quality filters only the best performing funds. This policy setting also facilitates investment in the broadest range of assets including infrastructure.”
O’Dwyer is also the Minister for Small Business, replacing Bruce Billson, and is one of five women now in federal cabinet positions – an increase from two under Abbott’s tenure.
She has held the safe seat of Higgins since 2009, after Peter Costello, for whom she served as an adviser, stepped down.
Prior to being a MP she took an executive position at the National Bank of Australia.