- Treasurer: The Hon. Scott Morrison. The new Treasurer comes to the Treasury portfolio with prior experience in the key economic portfolio of Social Services. As one of the Abbott Government’s best performers, he will have the job of reinvigorating economic reform over the next 12 months before the election. The previous Treasurer, Joe Hockey, has announced he will retire from Parliament.
- Assistant Treasurer and Minister for Small Business: The Hon. Kelly O’Dwyer. The Assistant Treasurer (which covers tax and financial services) is now a Cabinet position which is a good move for the industry and reflects its importance to the economy and employment. Kelly O’Dwyer has a big task as she replaces two Ministers:
1. Josh Frydenberg, the former Assistant Treasurer, who has moved to Resources, Energy and Northern Australia, and
2. Bruce Billson, the former Minister for Small Business, who has gone to the backbench.
- Kelly O’Dwyer and Josh Frydenberg were both former staffers to Howard Government Treasurer Peter Costello.
- Finance Minister: Senator Mathias Cormann retains Finance. He has and will continue to play a key role in getting economic reforms through the Senate.
- Cabinet Secretary: The Hon. Arthur Sinodinos. Arthur Sinodinos was previously Chief of Staff to Prime Minister John Howard. He was Assistant Treasurer under the Abbott Government and commenced the Financial Systems Inquiry and the superannuation governance reforms. However he voluntarily went to the backbench while he was called as a witness to the NSW Independent Commission Against Corruption. He will be essential to resetting the policy agenda for the next year.
- Social Services: The Hon. Christian Porter. New to Parliament since 2013, Christian Porter is a former Treasurer and Attorney General for WA. He shares Prime Minister Turnbull’s concern for meaningful tax reform.
Financial services and tax reform
Ironically (former) Assistant Treasurer Josh Frydenberg had previously prepared the Government’s response to the financial systems inquiry (FSI) which was due to go before Cabinet on last Monday night when the Liberal Party leadership changed to Malcolm Turnbull. It will now be up to the new Treasurer and Assistant Treasurer to review the response, in line with the new focus on innovation and forward thinking.
Some components of the Government’s response to the FSI have already been released. Superannuation governance reforms were tabled in Parliament last week which will mandate that trustee boards must have one third of independent trustees plus an independent chair. APRA will take a leading role here to ensure that trustees are not just independent in name only.
Other issues to be considered in the response to the FSI are:
- life insurance reforms, including changes to life insurance commission
- a clear objective for superannuation to be enshrined in legislation
- more innovation in product design particularly in superannuation income stream products, including compulsory deferred annuities
- reform of superannuation fees
- registration of financial advisers and improvements in education and standards of professionalism for financial advisers
- a more competitive system for selecting default super funds.
Although the new Ministers will be reviewing the Government’s response to the FSI, it is not likely its release will be delayed much beyond October.
The new Treasurer has indicated that the tax reform process will continue as scheduled, with a draft white paper (called a green paper) to be released in October and a final white paper early in the New Year. However, it is clear that tax reform will be the linchpin for the Turnbull Government and issues previously ruled out by former Prime Minister Tony Abbott such as super tax concessions, capital gains tax concessions and negative gearing will be back on the agenda, along with changes to the GST.
A mini-budget and/or early Mid-Year Economic Fiscal Outlook (MYEFO)?
The new Prime Minister and Treasurer do not have much time to reset the economic agenda. The next election must be held before January 2017. Practically, that means the latest date for an election would be November or early December 2016. The Turnbull Government may bring forward the release of 2015 MYEFO from December to October 2015 and may even consider a mini-budget to reset the agenda.
Other developments
Legislation has also passed that will raise the threshold for sending small lost/inactive accounts to the Australian Taxation Office. From 31 December 2015 the threshold will increase from $2000 to $4000 and from 31 December 2016 the threshold will increase to $6000.
Conclusion
We have a new Prime Minister, Treasurer and Assistant Minister in Cabinet with a reform agenda and a limited time to set that agenda before the next election. That means big ticket items such tax, superannuation and financial services will be back in the headlines. So hold onto your hats. There will be interesting times ahead.
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