The announcement of the revised Future of Financial Advice reforms in late April is the likely reason for the absence of key initiatives impacting the financial services sector in the 2011/12 Budget, handed down by Treasurer Wayne Swan overnight.
Treasurer Swan announced small changes to superannuation, including an increase to the concessional contribution cap for people over 50 with less than $500,000 in superannuation, and the ability for individuals who breach the concessional contributions cap by up to $10,000 to request that these excess contributions be refunded to them.
The Government has also proposed changes to small business taxation arrangements. These include the introduction of tax deductions for the purchase of small business assets and vehicles, and a revised FBT treatment of cars.
The Government’s push to move Disability Support Pension recipients back into paid work, and the $2 billion investment in mental health are two initiatives that may have an impact within the life insurance sector.
There are also some tweaks to private health insurance and the medicare levy, and the introduction of the much-debated “flood levy”. However, overall the financial services and life insurance industries have been subject to minor changes only.
According to the Government, the Budget is largely focused on addressing inflationary pressures from a booming mining industry and strong economy. “These include addressing the skills shortage, increasing the labour force, and building infrastructure,” said Dr Craig Emerson, Minister for Trade, speaking at the Financial Services Council (FSC) Budget Breakfast.
John Brogden, FSC CEO, said the infrastructure initiatives in the Budget would make infrastructure a more attractive investment for superannuation funds and fund managers.
The Financial Planning Association (FPA) believes the government could have taken advantage of Australia’s strong economic position to embark on a “more ambitious reform program”. FPA CEO Mark Rantall said: “Whilst the concessional contributions amendments are welcome, there needs to be a substantial rethink of how we engage Australians in contributing to a stronger, long term retirement income position.”
