Ahead of an impending election, the federal Budget has offered nothing for the financial advice profession.
What will be the last Budget from the current Labor administration with an election due to be called within days, the government handed down a $27.6 billion deficit for FY26 after two years of surpluses.
“Inflation is down, unemployment is low, wages are up, interest rates have started to come down, growth has rebounded solidly,” Treasurer Jim Chalmers said.
“At the same time, the Government has delivered the biggest Budget turnaround in a Parliamentary term – improving the Budget by $207 billion – while delivering responsible cost of living relief to millions of Australians to ease pressures on households.
“We’ve turned two big Liberal deficits into two Labor surpluses and the deficit in our third year, of $27.6 billion, is almost half of what we inherited from the Coalition.”
Shadow Treasurer Angus Taylor said this was a Budget “for the next five weeks, not the next five years”.
“This is a Budget for an election, not one for our country’s future prosperity,” Taylor said.
“At a time when living standards have suffered the biggest collapse on record and when the security environment is the most dangerous since the Second World War, Labor’s Budget has failed to deal with the economic and national security challenges our country faces.”
As usual, there was little directed for the financial advice sector, but the Budget included changes to the Tax Practitioners Board (TPB) regime, updating the registration framework for tax practitioners and providing funding to the TPB to undertake compliance from 1 July 2025 to target high-risk tax practitioners.
This measure intends to implement recommendations from the 2019 Independent Review of the Tax Practitioners Board and is estimated to increase tax receipts by $47 million and payments by $27.4 million over five years.
‘No-surprise budget’
None of the six recommendations made by the Financial Advice Association of Australia in its pre-budget submission, which was headlined by the proposal to have the government subsidise the professional year and adviser exam, were included in tonight’s package.
Other recommendations – enabling ATO portal access, enhance tax deductibility of advice, lower the ASIC levy, make the Compensation Scheme of Last Resort “equitable and sustainable”, and introducing “friends of AFCA and CSLR” roles – were similarly not included.
Although the FAAA praised the tax cuts included in the budget, general manager for policy Phil Anderson said notable omissions were ASIC levy and CSLR levy relief.
“The lack of detail in the Budget follows the recent release…of the next tranche of draft legislation for the Delivering Better Financial Outcomes reforms, which were also frustrating in their lack of scope and detail,” Anderson said referring to Friday’s announcement.
“It is disappointing that the government has not been able to move ahead on a clear pathway in improving the accessibility and affordability of financial advice, at a time when an increasing number of Australians would benefit from professional quality advice.”
The Financial Services Council welcomed the “no-surprise” budget which it said offered the industry stability before the election.
“We congratulate the Treasurer for focusing on cost-of-living challenges facing Australians, and delivering stability and certainty for the financial services industry in advance of the federal election,” CEO Blake Briggs said.
However, Briggs noted there “remains significant opportunity” to refocus on economic growth and regulatory simplification opportunities to grow the economy, noting the council’s election proposals which included a “red tape razor gang”.
The key initiatives
The Budget commits to improving cost of living by delivering more tax cuts, providing $1.8 billion to extend energy bill relief to the end of the calendar year and $2.6 million to increase award wages for aged care nurses. Additionally, the Budget provides $784.6 million to make PBS scripts no more than $25, and $1.8 million for new and affordable medicines.
The Budget’s initiatives also include cutting student debt by 20 per cent and making the repayment system fairer.
The Budget strengthens the current Medicare system through funding including $7.9 billion to increase bulk billing to 90 per cent of GP visits by 2030, $1.8 billion for public hospitals, $662.6 million to grow the number of doctors and nurses and $792.9 million to deliver better healthcare for women. The Budget also commits to adding 50 more Medicare Urgent Care Clinics to a total of 137.
Initiatives laid out in the Budget to make buying a home easier include building more houses faster, banning foreign buyers from buying existing properties and provides up to $10,000 for eligible apprentices who work in housing construction.
Education from childhood to degree level is a focus with the Budget investing $5 billion towards building an early childhood education and care system as well as introducing guaranteed eligibility for a minimum of 3 days a week subsidised early childhood education and care. Additionally, making free TAFE a permanent initiative, reforming universities and putting public schools on a path to full funding.
The Budget provides $3 billion to support green metals production, $2 billion expansion of the Clean Energy Finance Corporation and a more dynamic economy through new National Competition Policy measures.
DBF-woes
The budget comes just half a week after the government announced only part of the draft legislation for the second tranche of the DBFO.
Financial Services Council chief executive Blake Briggs said as the election approaches, the financial advice industry can consider the draft legislation as an indication the government is still committed to reforming financial advice following the election.
“Layers of red tape and onerous regulation has meant that financial advice now costs more than $5000 in some cases, putting it out of reach for millions of Australians,” Briggs said.
“The government’s broader financial advice reform package has the capacity to reduce the cost of providing advice by 40 per cent.”
Council of Australian Life Insurers CEO Christine Cupitt said it was “meaningful progress” but noted the omission of key parts of the bill that would help life insurers and risk advisers.
“For the millions of Australians who are waiting in line for affordable advice about life insurance, reforms to the Best Interests Duty and introducing the new class of adviser are essential,” Cupitt said.
But the stiffest criticism came from the FAAA which said the DBFO draft legislation was “disappointing” and needs “substantial change” criticising every part of the bill.
“This is a pretty disappointing outcome considering the large amount of time and resources that have been invested over three years to finding ways to deliver high quality financial advice to more Australians,” CEO Sarah Abood said.
She added the biggest concern, along with the underwhelming changes to Statements of Advice, was that the new law would give super funds the ability to collectively charge for comprehensive retirement advice which she described as “concerning on many levels”.
“Firstly, the cost of collectively charged retirement advice is likely to be very much larger than the cost of collectively charged intra-fund advice,” Abood said.
“Thus members of these funds will be paying much higher amounts for advice they are not actually receiving – including members who have sought, and paid for, their own personal financial advice but must still pay for the collectively charged advice provided to other members of the fund on top of that,” Abood said.
