Any change in a federal government necessarily impacts on a broad range of industries, with the super industry key among them.
So swallowing a healthy dose of prognostication, what would a coalition government mean for the super industry in just over 18 months’ time?
Not much at first
Firstly, the industry shouldn’t expect too much too soon. Based on past trends and with all things being equal, it is likely the next election will be held between November 2012 and April 2013.
Some may argue the government may wait until after the May 2013 budget, however, this would mean the government would need to take time to sell its initiatives and if it fails, as it has so far, it would experience a ‘dead cat bounce’ in the polls.
That blow to morale would be tantamount to a nail in the coffin heading to the ballot box.
Therefore, if the coalition does win between November 2012 and April 2013, there will be very little time to prepare for the 2013/14 budget.
Of course, industry lobbyists will flock to Canberra hoping for immediate change in areas of concern for their constituents, however, the first budget after an election is generally a ‘hold’ budget with nothing more than the top two or three big ticket election promises paid for.
Repeal of the rise in the super guarantee
The one thing the super industry can be sure of is that the coalition will not honour Labor’s plan to increase the super guarantee from 9 per cent to 12 per cent over the coming years.
Opposition treasury spokesman Joe Hockey has already told Investor Weekly the coalition has deep concerns that a rise in the super guarantee will hurt small business and lead to job losses and a reduction in take-home pay.
Small business industry bodies are certainly of that view and considering one of the two main support bases for the coalition is small business, you can bet Labor’s promised rise in the super guarantee will end up in the ‘dust bin of history’.
Small restorations and reviews
Over the course of its first term in office, the coalition will likely set about restoring some of the smaller super initiatives introduced under the Howard government’s Better Super reforms, wound back under Labor.
While it is unlikely the co-contribution for low-income earners will be restored to the days of $1.50 for every dollar voluntarily contributed up to $1000, the threshold for accessing the scheme may be significantly relaxed.
One thing is almost guaranteed: not long into its first term the coalition will launch yet another review into superannuation.
The cap on voluntary super contributions will most likely be the first of Labor’s ‘wind backs’ to be included in any such review, although the current heavy penalties for ‘breaching’could be relaxed sooner rather than later.
Clearing houses and the role of the Australian Taxation Office versus the current Medicare model will be included in the review, as will the issue of ‘default funds’ for employees who don’t nominate a fund under the modern awards system, currently dominated by union-run industry funds.
Opposition assistant treasury spokesman Matthias Cormann recently told an Investor Weekly panel discussion that the current process was a “national disgrace”.
“It is a closed-shop, anti-competitive process, riddled with inherent conflicts of interests, which channels consumers into potentially underperforming funds,” Cormann said.
Considering the heart of the default funds issue is about an unfair advantage provided to unions, amendment to legislation on default funds may be removed from the bailiwick of the assistant treasurer and bundled into Tony Abbott’s all-but-certain shake-up of workplace agreements and industrial relations laws.
The Financial Services Council (FSC) will again submit the case for a rise in the super guarantee, however, this time none of FSC chief John Brogden’s Christmases will come at once and the submission will be rejected.
A coalition review may also look at repealing other super ‘disincentives’ introduced by Labor, including the inclusion of salary sacrificed super contributions as part of means testing for many government benefits, such as the family tax benefit, childcare assistance and the Commonwealth Seniors Health Card.
The key point in all of this is that despite all intentions, it will simply be another review; one that will be studied long and hard before it finds its way into government policy.
Those hoping the coalition’s current hard-worded opposition to many of Labor’s changes to super will translate into immediate action following a coalition victory are likely to be disappointed.
Politics and governance are two very different things and while super will be a handy football to continue to kick around prior to the next election, the reality is that change still takes time.
Brad Emery was press secretary to assistant treasurer Peter Dutton under the Howard government.
