Significant changes will be made to superannuation policy if the Liberal Party wins the September election, shadow assistant treasurer and shadow financial services minister, Mathias Cormann, vowed at the Financial Services Council conference on Thursday.
In contrast to comments made by Treasurer Chris Bowen on Wednesday, in which he ruled out more changes to superannuation over the next five years, Cormann told Australians to brace themselves for “positive, predictable, well considered and carefully implemented” changes including raising the concessional and non-concessional caps, an overhaul of the way superannuation is distributed under awards, tougher corporate governance requirements for industry fund boards and the removal of regulatory barriers that restrict product innovation.
“We will revisit both concessional contribution caps and super co-contributions for lower income earners, which are both too low after five years of cuts under the current government, once the budget is back in a strong enough position,” he said.
“We will move to properly address the issue of excess contributions in relation to both concessional and non-concessional caps, making sure Australians saving for their retirement are not unfairly penalised for genuine unintended errors.”
Cormann also restated the opposition’s commitment to unwinding key planks in the Future of Financial Advice reforms, namely the opt-in requirements. He said the Coalition, if elected, would set aside at least two parliamentary sitting days each year for the express purpose of “repealing counterproductive, unnecessary or redundant legislation”.
Cormann acknowledged that parts of the FoFA legislation had been good for the industry, but said the reforms had been too costly to implement and failed to strike the right balance between consumer protection and the need to ensure the ongoing availability, accessibility and affordability of high quality financial advice.
He listed five main changes:
| 1 The complete removal of opt-in |
| 2 The simplification and streamlining of the additional annual fee disclosure requirements |
| 3 Improving the best interest duty |
| 4 Providing certainty around the provision and availability of scaled advice and |
| 5 Fixing the ban on commissions on risk insurance inside superannuation. |
The FSC has estimated that FoFA and the broader changes to superannuation have already cost $1.5 billion to implement. It predicted an ongoing increase in compliance costs of around $375 million per annum.
“We have long been on the record that in government the Coalition will fix FoFA by implementing all of the 16 recommendations we made as part of the Parliamentary Joint Committee inquiry into this legislation,” Cormann said.
“If we are elected at the next election, we will be in a position to move quickly on these changes. We already have the legislative changes drafted – having consulted closely with organisations like the FSC and others.”
Senator Cormann confirmed the opposition’s commitment to seeing the superannuation guarantee gradually rise to 12 per cent, but said it would push back the deadline by two years to 2021 instead of 2019.
“We won’t rescind it, but slow down the full phase-in. That will help us fund income tax cuts and pension increases without a carbon tax, which is good for families, for business and for our economy overall,” he said.
Cormann criticised the treasurer’s announcement on Wednesday that Labor would not make any significant changes to superannuation for the next five years.
“According to Mr Bowen, we can’t have both certainty and stability in superannuation policy settings and still pursue positive changes over the next five years at the same time. But let me say this, we can, as the Coalition, rule out any unexpected negative changes to superannuation while promising to pursue some of the positive changes which are long overdue,” he said.
“We will move to ensure there is genuine competition in the superannuation default-fund market by letting any MySuper product compete freely, [and] changing the current discredited, non-transparent and anti-competitive arrangements through Fair Work Australia.
“We will move to improve corporate governance arrangements for superannuation by implementing relevant Cooper Review recommendations in relation to the appropriate provision of independent directors on industry fund boards and the better management of conflicts of interest – ignored by the current government.”
He also flagged the establishment of a “major financial systems inquiry” for the purposes of ensuring the industry’s financial systems architecture put Australia in a position to maximise opportunities domestically and offshore.
