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(Feb-2005): Staying on the path of reform
The Investment and Financial Services Association (IFSA) is taking an entirely pragmatic approach to 2005 with chief executive officer, Richard Gilbert pointing to the realities which will come in the wake of an election year.
Gilbert is not one of those who believe that the next 12 months will be a period of radical change or heavy reform with respect to the regulatory environment surrounding superannuation, although he is not entirely opposed to those who believe that the regulatory regime would be well served by a simplification.
According to Gilbert, delivery is the Government’s priority in the immediate aftermath of an election, and that is what has to be built into expectations for the next 12 months.
Having said that, Gilbert points to the recent statement by the Minister for Finance and Administration, Senator Nick Minchin with respect to abolishing the superannuation surcharge and suggested that if only that was achieved it would be an entirely satisfactory outcome.
“Abolition of the surcharge would certainly go a long way towards removing a lot of the complexity afflicting superannuation,” he said.
That does not mean that Gilbert believes that abolition of the superannuation surcharge is the only initiative likely to be achieved in 2005, but he has taken heart from the fact that Senator Minchin has canvassed the proposition in the context of tax changes which are affordable.
The Minister said in late January that he was “determined to advocate on the abolition of the superannuation surcharge and the removal of taxes on imported business inputs”
Gilbert believes that beyond the minister’s comments with respect to the superannuation surcharge there are other issues which can be dealt with in 2005 including reviewing the broader taxation issues affecting superannuation funds, not least, being the taxation of contributions and the need to bring the income tax paid by funds into line with capital gains tax.
Beyond the taxation issues, Gilbert believes that more work remains to be done with respect to “broadening and deepening” the superannuation co-contribution regime.
The IFSA chief executive also sees benefits flowing to the industry from the fact that the Government now boasts a majority in both the House of Representatives and the Senate.
“In terms of the Government’s capacity to deliver, that is something we applaud because of the possibility of delivering positive outcomes,” he said. “However, if the only thing that was achieved in 2005 was the removal of the surcharge, then that would be positive.”
Like most of the other industry spokesmen contacted by Super Review, Gilbert believes that the implementation of the new choice of fund regime will be a focal point for much of the year.
However, he suggests that the ultimate shape of the new regime will not be determined by what happens this year so much as by what shakes out down the track.
“There will be a lot a lot of huffing and puffing in the debate surrounding putting the right regulatory environment in place but, ultimately, I think we will see a minimal set of changes,” Gilbert said.
He said that the benefits and freedom generated by the choice regime would become more obvious down the track.
Looking at other issues impacting the superannuation sector over the next 12 months, Gilbert points to the recent release of the Treasury discussion paper dealing with defined benefit pensions being issued by self-managed super funds.
He said that there were key questions relating to the capacity of funds with one or two members having the capacity to offer defined benefits pensions.
AUTHOR
Mike Taylor
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