Uncertainty around the super changes
Here we outline the 4 key uncertainties around the super changes proposed by the Government.
1. Who will win the election?
If the Government is re-elected, their proposed super changes are the only game in town.
If Labor is elected, then we need to understand their super changes (outlined in our Budget Survival Guide) with an understanding that they may well retain some of the Government’s proposed changes (the Government has already taken the flack for proposing them and it may be in Labor’s interests to retain some of them).
These were our predictions in late 2015 in Investing Insights:
Prime Minister Turnbull elected with a healthy majority
We almost wrote ‘re-elected’ there until we remembered that PM Turnbull hasn’t actually been elected yet. While much can happen between now and the Federal election in 2016, we believe Turnbull’s centralist positions combined with the sense of relief that the Rudd-Gillard-Abbott era is finally over should see his Government comfortably re-elected.
June 2016 comment: We continue to believe this is the likely election result.
Budget full of super surprises
We expect the first Turnbull/Morrison Federal Budget in May to be a bold one. They will announce major changes to super that will likely impact many of our clients. We will communicate with you in advance of this time. Read more online here bit.ly/SuperChanges.
June 2016 comment: This prediction eventuated and you can read more on our Budget 2016 Survival Guide [here].
2. If the Government is re-elected, will they want to implement all their proposed super changes?
With the Government having announced their super changes in the recent Budget, there is no way politically that they can be seen to backtrack on any of their measures before the election is done and dusted. This would make them look economically indecisive.
Having said that, there is undoubtedly pressure being brought to bear by the LNP’s core constituency to remove or at least modify some of the proposed changes. This is especially the case from the party’s more conservative base which plays into tight factional position PM Turnbull finds himself in the party room. We expect this issue to rear its head in the public domain quite soon after the election should the Government be re-elected. We would not be surprised if the Government listens to these concerns and makes compromises but this can only happen after the election.
3. If the Government is re-elected, will they be able to pass the proposed super changes through the Senate?
This will be dependent on the make-up of the Senate and the relative positions of minor parties and independents following this rare Double Dissolution election. Key here is the success of the Greens, the Xenophon Party in SA and independents such as Lambie, Lazarus and Hanson. We already know that in the current Parliament the Abbott Government struggled to get much of its key agenda items through such a motley crew of Senators. Will the new Parliament be any different?
4. If the proposed changes are passed in the Parliament, when will they be passed and will this give us enough time to plan and implement?
Given the opposition to the proposed super changes from the Opposition, minor parties and key constituencies within the LNP, it will be interesting to see if an (assumed) re-elected Government seeks to rush the changes through or takes a slower, more conciliatory approach where they consult and ask for feedback from stakeholders. The Government has been stung by the ‘retrospectivity’ criticism from its core constituency and while they cannot be seen to change before the election, they may be able to do so after the election. We would not be surprised to see them give ground on the 1 July 2007 retrospective start date for the $500,000 lifetime cap on non-concessional contributions. The timing on all of this post-election is clearly up in the air.