Before the last election, both major political parties “promised” to leave superannuation alone if elected. Labor’s commitment was for five years, and the Coalition’s was for “no adverse changes” for the first parliamentary term. Both commitments were welcomed by the superannuation industry. After months of endless speculation about change (especially around taxation measures), it restored some sanity to the industry.
SMSFs, in particular, breathed a huge sigh of relief; the mooted changes were undermining confidence in our retirement income system as illustrated by research by organisations such as the SMSF Professionals’ Association of Australia (SPAA). Put simply, trustees were starting to look elsewhere for the retirement nest eggs in the wake of Canberra continually moving the superannuation goal posts.
So imagine the surprise of Australia’s one million trustees when they picked up the 26 September edition of The Australian Financial Review and found the new superannuation minister, Arthur Sinodinis, quoted as saying he wanted “to create a 'level playing field' between different types of retirement nest eggs", and that SMSFs should not have an "advantage” over industry and retail super funds.
Coming hot on the heels of a Reserve Bank report warning about SMSFs potentially being a factor in a looming property boom, you can appreciate why trustees were reaching for the valium – or something stronger.
But one million trustees, a majority of which can be safely assumed to be Coalition supporters, is a powerful voting bloc. No less a person than the prime minister, Tony Abbott, hosed down Sinodinis’ comments on the same day, adding for good measure, that he did not believe SMSFs were the root cause of property speculation.
Mr Abbott’s position can be taken to reflect the Coalition’s position; although nothing in politics is ever certain, it can be said with a strong degree of certainty that Sinodinis will think long and hard before making any adverse comment about SMSFs in the future.
Instead, and as would be expected based on their position in Opposition, it will be the industry funds that will come under the government’s scrutiny. In particular, expect the government to use the “Son of Wallis” inquiry being mooted for the banking and finance industry to shake up trustees of the industry funds.
For most industry funds, the current structure of trustees is split 50:50 between employers and employees (for which read unions), and the government has been adamant, publicly and privately, that it wants more “independent” directors on these boards.
The smarter industry funds are already moving towards this structure, but others have indicated they will strongly resist, arguing these funds have served their members well, so expect this issue to generate a lot of political heat in the months ahead.
By default, this is good news for SMSF trustees. The early days of the Coalition government suggest its political strategy will be low risk; political fights that can be avoided will be avoided. From this perspective, putting one million trustees offside just doesn’t make good political sense.
George Lucas, Instreet Investment