Even though it was only a 10-minute pre-recorded video, Daniel Mulino’s address to a Financial Services Council event offered some important early clues about his tenure as Assistant Treasurer and Minister for Financial Services.
The Labor MP for the suburban Melbourne seat of Fraser appeared in conversation with FSC chief executive Blake Briggs flanked by packed bookshelves and quoting Nobel laureate and New York Times columnist Paul Krugman, looking every bit the Yale PhD that he is. His opening remarks were all about productivity in the economy, showing signs of a refreshingly business-friendly approach, as foreshadowed by Professional Planner before the election.
But while he has begun to subtly put his personal stamp on the job, on the critical issue of financial advice reform he appeared very much the continuity candidate.
Mulino more than once praised his predecessor Stephen Jones, who resigned from politics before the election and has since been appointed Australian Ambassador to the OECD in Paris.
He described the passage of Tranche 1 of the Delivering Better Financial Outcomes legislation as a “big achievement” and completing the task as among his “top two to three priorities”.
2B or not 2B
He also said his immediate priority would be to oversee the legislative drafting of the elements of the reform package which remain undrafted, which he called Tranche 2B of the legislation. This includes contentious items such as repeal or reform of the best interest duty safe harbour steps and introduction of a so-called “new class of adviser”.
The comments are significant because there is an implicit endorsement of the work already progressed by Treasury under Jones, including a drafted-but-not-yet-legislated bill which would enable nudges in super and eradicate Statements of Advice for financial planners.
Indeed, he specifically mentioned the importance of “nudging” super fund members at certain times in their lives, as well as heralding a “simpler” regulatory regime for the whole advice ecosystem,
It would be open to a new minister – perhaps even expected – to want to go back to the drawing board and participate in some of their own consultation and reach their own verdict, given their own legislative legacy is ultimately at stake. Certainly some of Mulino’s more left-leaning colleagues would likely have wanted to scrutinise the merits of what is effectively a deregulation agenda before re-committing, especially given the consumer advocacy groups are not entirely on board with the direction of travel.
For organisations that have invested heavily in this reform project, via memberships of the many industry associations or their own in-house resources and lobbying activities, Mulino’s decision to effectively pick up where Jones left off at least means their efforts throughout the Quality of Advice Review (QAR) process will not have in vain.
‘Not in the next few weeks’
However, for the many Jones critics who argued the pace of reform has been too slow, Mulino’s continuity may also prove disappointing. Having initially come out gung ho on advice reform – famously describing the over-regulation of the sector as a “hot mess” early in his tenure – Jones subsequently struggled to get the bulk of the legislation over the line during the government’s first term.
Some legislative drafting mistakes, and an apparent lack of resources within Treasury, added to the delays. Arguably, Jones’ insistence on industry consensus also chewed up time, with the industry locked in lengthy back-room negotiations rather than simply being told which path the government liked best.
While Mulino was clear in his re-commitment to the reforms, his answer to the question around timelines may provide little solace to advocates for the reforms.
“What I’m working to do is to get the next piece of exposure draft out as soon as practical, and that’s not going to be the next few weeks, because it is a complex piece of work,” he said.
“I’m conscious that there are a wide range of views and I totally acknowledge and thank all the various players for trying to find the maximum overlap, the maximum area of consensus possible … I’m also conscious that the detail matters in an area like this, so I want to get this right.”
Briggs told Mulino he was right to “take the time to get it right”.
But more than three years into the QAR process, those still subject to the current problematic laws might well say more than enough time has passed.
