The superannuation industry is rejoicing today, as the Labor government announced a freeze on any legislative change to the superannuation industry for five years – but tax institutes and small businesses remain unconvinced.
Federal Treasurer Chris Bowen says the move will give greater certainty to the sector, which has recently been hit with a number of regulatory changes.
The Self-managed Superannuation Fund Professionals Association of Australia said in a statement it welcomed the announcement.
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“The commitment by the government and opposition to both make a commitment to no detrimental change is a step in the right direction to achieve bipartisan support for a more sustainable superannuation system that gives people greater confidence going forward,” chief executive Andrea Slattery said.
The freeze means changes like the 12% rise in superannuation and the tax cut for workers earning under $37,000 will not be altered, but it also means small businesses will continue being responsible for collecting workers’ super.
Council of Small Business of Australia executive director Peter Strong told SmartCompany no industry should be immune to changes for five years.
“We live in an age of change and we should be prepared to change. From our point of view it’s a lot of red tape over that five years, plus with technology changing the way it is we should be taken out of the collection process for superannuation soon.”
Bowen said at a press conference following the announcement the freeze will benefit Australians who are planning for their retirement.
But some organisations are sceptical, saying removing the possibility of change will have flow-on effects to other industries and harm the government’s commitment to return to surplus.
CPA Australia Business policy advisor Gavan Ord told SmartCompany in a broader context the policy could have negative impacts.
“There are obvious benefits to this, and we agree with those, we think the announcement by itself is good but in the broader context policies can’t be independent, particularly in this current environment of economic pressure. The government has already taken GST off the table, so what’s left?
“This limits what the government can do to address the budget issues. What’s left is corporate tax, personal tax and the cigarette tax,” he says.
Ord says by taking superannuation changes off the table the government is putting pressure on other sectors of the economy to make up for the predicted budget shortfall of $20 billion.
“Everything is interlinked; you can’t quarantine one thing without affecting other areas.”
Other superannuation regulatory changes coming into effect in the next few years include the introduction of MySuper products and new data and eCommerce standards designed to consolidate people’s super accounts.
Tax Institute tax counsel Deepti Paton told SmartCompany the announcement removes superannuation from the budget cycle, something the industry has long campaigned for, but the wording of the legislation could leave loopholes for minor changes.
“The announcement does say no major changes, but it does also say it will be enshrined in legislation, so it will depend on the manner it’s written up.”
“There are always small flaws we hope will be rectified over time, but it’s a wait and see game as to whether or not they will still be available to be corrected.”