Mark Woodruff

Global investors who collectively manage over AU $27 trillion in assets under management have travelled to Sydney to hear the Australian Treasurer and other senior government ministers, the RBA Deputy Governor, regulators and Australian CEOs showcase key investment opportunities in Australia.

Hosted on Friday by Citi in collaboration with the Australian Government, the 2024 Citi A50 Australian Economic Forum welcomed almost 100 senior participants.

Attendees included representatives from some of the world’s largest fund managers from the US, Canada, Europe, Japan, Malaysia and Singapore and top domestic investors including the largest superannuation funds and asset managers.

Panels chaired by ministers, and including CEOs of Australian companies, discussed investment opportunities in the following key sectors: energy transition and climate change, housing, manufacturing and technology, and critical minerals.

The forum also delivered an update on the regulatory state of play from the Chairs of the ACCC, ASIC, APRA and FIRB.

“Global investors want transparency and certainty on the investment environment in Australia. This includes clarity on regulation and policy stability,” said Citi Australia CEO Mark Woodruff.

“Investors are also calling for proactive government and regulatory engagement to help mitigate challenges around regulatory settings, skills shortages, greenfield expansion and geopolitical risk,” Mark continued.

“At the A50 forum, government addressed these concerns directly. It was clear across all discussions that given the right framework and government support there is significant appetite for long-term investment in Australia.

“Australian business leaders need to ensure we highlight the tremendous opportunity for long term growth in Australia, in an outright and relative sense,” Mr Woodruff added.

The forum featured keynote addresses from Australian Treasurer, The Hon Dr Jim Chalmers MP on why Australia is a compelling and essential investment destination, particularly in an uncertain and unstable world, and recently appointed Deputy Governor of the Reserve Bank of Australia Andrew Hauser.

Other government representatives contributing to the event included Minister for Climate Change and Energy the Hon Chris Bowen MP, Minister for Industry and Science the Hon Ed Husic MP, Minister for International Development and The Pacific The Hon Pat Conroy MP, Chair of the House Economics Committee Dr Daniel Mulino MP and Assistant Minister for Regional Development Anthony Chisolm.

Also in attendance was Australia’s Consul-General in New York, Heather Ridout AO. Commenting on the forum Ms Ridout said, “Australia stands out as an investment destination, with a robust economy, strong governance structures and a highly skilled workforce that can serve as a fantastic gateway to Asia.

“By directly connecting investors with government, and facilitating frank conversations, the A50 forum is helping to catalyse investment opportunities in Australia.”

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John Maroney

The Labor Party’s confirmation today that if it wins office at the next federal election it will still abolish franking credit rebates from 1 July 2019 irrespective of whether the legislation has been passed shows a total disregard for self-funded retirees.

SMSF Association CEO John Maroney says Shadow Treasurer Chris Bowen’s confirmation yesterday on its franking credit rebates deadline at a Financial Services Council (FSC) of Australia forum stands in stark contract to its policies relating to capital gains tax (CGT) and negative gearing with both being grandfathered and not introduced until 1 January 2020.

“The Association has always opposed Labor’s proposal on the grounds it is iniquitous, discriminating against those retirees who have opted to manage their retirement savings through an SMSF while leaving many of those in APRA-regulated funds untouched – a clear violation of the sound policy principle of horizontal equity.

“But now Labor is taking this discrimination to a new level, giving those affected by its CGT and negative gearing proposals time to adjust their investment strategies while denying self-funded retirees the same option.

“That these retirees will not have the certainty of legislation to allow them to restructure their affairs and, in many instances, be severely financially disadvantaged because of it, is simply unjust.

“They have spent a lifetime working to be in a situation where they can self-fund their retirement – the very goal of the compulsory superannuation system that Labor introduced in 1992. Now they are not only having their self-sufficiency taken away but are being given no opportunity to find alternative strategies for their retirement savings.”

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Prof Deborah Ralston

The recently formed Alliance for a Fairer Retirement System highlights the risks facing thousands of small business owners from Labor’s proposal to disallow cash franking credit refunds. Earlier this week, Alliance representatives met with the Shadow Treasurer and Shadow Minister for Small Business, Chris Bowen, and with CEO of the Council of Small Business Australia (COSBOA), Peter Strong, to discuss the issue.

“Many small business owners may be unaware of the impact of Labor’s proposal on their retirement plans. Those who have invested equity in their company and rely on dividends to fund their retirement may be surprised to find a significant fall in income”, explained Professor Deborah Ralston, spokesperson for the Alliance.

The Alliance has launched a website to cater to the growing demand from organisations and individuals who are seeking support, information and research to better understand the impact of the proposal.

The new website www.fairerretirement.com.au provides information, and relevant news for small business, investors and retirees. It also provides an opportunity for individuals to lodge their personal stories concerning potential outcomes if the proposed policy goes ahead.

Announcing the launch of the Alliance website in Brisbane today is a team from the Alliance including spokesperson, Professor Deborah Ralston, Ian Henschke, Chief Advocate for National Seniors Australia, John Maroney, Chief Executive Officer of the Self Managed Superfund (SMSF) Association, Alan Marshall, President, Association of Independent Retirees and Michael Lorimer, Managing Director of SISFA.

he launch of the website comes off the back of growing scrutiny about Labor’s proposal, including Treasury’s recent analysis that casts doubt about the likely revenue generated. This recent coverage is just another thread in the growing fabric of discontent by everyday Australians who stand to be adversely impacted by the proposal.

A case study on the website highlights the plight of a Queensland small business owner, Arthur Smith who after years of building his small business, will commence his retirement in the near future. In this case the proposed policy would lead to a loss of one-third of his retirement income, previously comprised of dividends and franking credits. He notes that he and his wife, as self-funding retirees, “see (the removal of cash refunds) as an attempt to “steal” from us in order to fund a whole range of policies that we don’t necessarily agree with”, impacting his ability to enjoy the retirement he and his wife expected.

The Alliance was formed last month to explore options to fix problems with the existing superannuation taxation, Age Pension means testing and broader retirement income systems. In addition to the six original members, three more national associations have recently joined the Alliance:

• Association of Independent Retirees
• Australian Investors Association
• Association of Financial Advisers

Well known personal finance author, Noel Whittaker, will deliver a short presentation during the launch highlighting some of the key issues of concern to the Alliance.

The organisations that form the Alliance include:

• Australian Shareholders’ Association
• Australian Listed Investment Companies Association
• National Seniors Australia
• SMSF Association
• Self-managed Independent Superannuation Funds Association
• Stockbrokers & Financial Advisers Association
• Association of Independent Retirees
• Australian Investors Association
• Association of Financial Advisers

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Sally Loane

Inquiries into the financial services sector have cost the industry more than $3 billion since the global financial crisis, Sally Loane, chief executive officer of the FSC, told industry executives at a lunch in Melbourne organised by public relations firm Pritchitt Partners yesterday.

“Currently there is the Parliamentary Joint Committee Inquiry into Life Insurance, a three-stage Productivity Commission Review of Superannuation, another into Competition in the Australian financial system, and Labor’s Senate Economics Inquiry into Consumer Protections in Financial Services, all on-going. As well, there’s a taskforce conducting a review of ASIC’s enforcement powers – one in particular looking at industry consumer codes in our sector.

“The FSC is against calls for a Royal Commission.

“Royal commissions are a slow process, only look at past practice and inevitably go off at tangents.

“Any continuing reforms and changes in financial services are always needed quickly to keep up with the fast rate of change in the industry, not least because of technology and the rapidly changing needs and expectations of the community,” Ms Loane said.

Chris Bowen recently outlined Labor’s planned Royal Commission, making it clear that all superannuation funds would be included whilst also adding that they would do a stock take of APRA and ASIC.

Ms Loane questioned why this couldn’t be done with a more simple inquiry, instead of an expensive and time-consuming vehicle like a Royal Commission.

“Our sector has undertaken substantial reform and remediation and our view is that a Royal Commission into financial services is not necessary.

“We believe that the financial services industry as a whole has much to be proud of, having introduced standards and codes in recent years that will help deliver value, build trust in the community, and reduce the cost to Australians of managing financial affairs.

“We are uniquely placed to take up the mantle of consumer reform so that the government can get on with its job of governing. Proving as an industry we can regulate ourselves also strengthens consumer trust in the sector. In this light, we are concerned about a proposal that could act as a handbrake on self-regulation,” she said.

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Chris Bowen

The SMSF Association welcomes and congratulates the Hon Chris Bowen MP who has been re-appointed Labor’s Shadow Treasurer and the Hon Katy Gallagher MP who has been appointed Shadow Minister for Small Business and Financial Services.

Association Managing Director/CEO Andrea Slattery says the Association is looking forward to working with the Opposition to build a bipartisan approach to superannuation and financial services during the life of this Parliament.

“We particularly look forward to working with Katy Gallagher in the Financial Services portfolio at a time when the superannuation industry is facing significant change from Budget night measures.

“The Association’s support for a number of the positive measures and opposition to a few Budget measures is well known, and we are hopeful of being able to present our case to the Opposition to explain why we believe some of those changes will impact on the ability for people to save adequately and achieve a dignified and secure retirement.

“We also want to urge the Opposition to work with the Government to enshrine in legislation the objective and underlying principles of superannuation as quickly as possible. It’s our firm belief that much of the uncertainty surrounding superannuation could be minimised by having its long-terms goals and those principles underpinning it legislated for.”

She says it is pleasing to see Chris Bowen reappointed as Shadow Treasurer. “Having built a good relationship with Chris, we are confident he will listen seriously to our concerns about some of the Budget measures.”

Slattery says the Association also wanted to thank the Hon Jim Chalmers MP for the constructive and important role he played when he was the Shadow Minister for Financial Services and Superannuation in the last Parliament.

“Jim was always prepared to listen to and consider the Association’s point of view on a range of superannuation and financial services issues, and it’s pleasing to see his efforts have been recognised with his promotion to the Shadow Finance portfolio.”

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Chris Bowen

The Financial Services Council (FSC) welcomes the Government’s commitment to enshrine the objective of superannuation in legislation as recommended by the Financial System Inquiry (FSI).

Sally Loane, CEO of the FSC, said: “A clearly defined objective for superannuation, with broad public support, would strengthen confidence in stable, long-term settings for what is our only truly inter-generational public policy.”

“Consumers need confidence that superannuation savings accumulated during their working lives will provide them with appropriate living standards in retirement. Enshrining the objective of superannuation in law is a very positive step for building and maintaining confidence in the system.”

“The FSC commends the Assistant Treasurer for taking a long-term view of superannuation.”

“It is also very positive to see that the Opposition has indicated bipartisan support for enshrining the definition of superannuation in legislation.”

Shadow Treasurer, Chris Bowen, has proposed that superannuation should have the objective of providing “…a dignified retirement without recourse to the full age pension.”

Ms Loane also said: “In conjunction with the FSI’s recommendations to raise standards of governance and promote competition in the superannuation system, defining the objective of the system is central to developing a mature superannuation sector that delivers the best outcomes for consumers.”

“Superannuation is Australia’s only truly intergenerational policy, intended to deliver adequate retirement incomes for all Australians and reduce the cost to taxpayers of our ageing population.”

Financial System Inquiry Recommendation

Recommendation number 9 of the FSI, and David Murray’s primary recommendation for superannuation, was for policy makers to: “…seek broad political agreement for, and enshrine in legislation, the objectives of the superannuation system and report publicly on how policy proposals are consistent with achieving these objectives over the long term.”

The FSI’s Final Report proposed the following definition for consultation: “To provide income in retirement to substitute or supplement the Age Pension.”

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Sally Loane

Last week’s announcement that Japan, Korea, New Zealand, the Philippines, Thailand and Australia intend to participate in the Asia Region Funds Passport (ARFP) will significantly boost the trade of managed funds within economies in Asia.

Sally Loane, CEO of the Financial Services Council said: “The Asia Region Funds Passport will provide the regulatory framework and architecture for mutual recognition of fund operators and investment funds between participating countries.”

“The inclusion of Japan is welcomed by the Australian financial services industry. It is a game changer for the passport and the Asian region.”

“With $4 trillion of funds under management Japan is one of Asia’s largest funds sectors. Its participation will provide the passport with scale, efficiency, competition and choice.”

“The passport will offer investment managers across the region a viable alternative to the European Union’s regime which has a strong foothold in Asia.”

“It will mean the economic benefits of cross-border financial services will remain within the Asian region, instead of Asian savings benefiting Europe.”

“With 60 per cent of the world’s population but only 12 per cent of the worldwide funds under management, Asia has an enormous potential to increase its funds management capabilities.”

“Consumers across the Asian region will be able to benefit from a more diverse set of investment products offered by a range of managers, whilst still receiving high levels of regulatory protection and oversight,” Ms Loane said

A study by AT Kearney and the Financial Services Council shows it is conceivable that the ARFP could exceed $600 billion of funds under administration, around 11 per cent of the market, by 2030.

Ms Loane also said: “The Statement of Understanding signed today in the Philippines shows a strong commitment from participating economies to continue the excellent work which has been achieved to date.”

“The FSC commends the work that has been undertaken by the APEC Ministers, government departments and regulators in progressing this essential regional architecture.”

The vision of an Asian passport has been supported by many Australians – particularly Mark Johnson, Chris Bowen, Mathias Cormann and Josh Frydenberg who have championed this project.

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The Asia Region Passport agreement is expected to be signed at the APEC Finance Ministers’ in Nusa Dua.

The anticipated signing of the Asia Region Passport agreement at the APEC Finance Ministers’ meeting in Nusa Dua, Bali, Indonesia will be the most significant trade related development to date for Australia’s financial services industry.

John Brogden, CEO of the Financial Services Council said: “An agreement to establish an Asian region funds passport opens up the possibility of Asia’s savings being managed from Australia, and for Australians to more easily tap into the extraordinary economic growth and development in the region.”

The pilot for the Asian passport is expected to begin in 2016.

“While there is still work to be done before the Passport gets off the ground, the signing of the agreement will be a landmark event for the financial services industry,” Mr Brogden said.

Once established, the Passport will, for the first time, allow funds to be traded amongst the participating economies.

“It is expensive and cumbersome for fund managers to distribute their products in different markets in the Asia region in the current environment,” Mr Brogden said.

“The Asia Region Funds Passport will remove regulatory inefficiencies so fund managers can offer their products across the region and investors can take advantage of economic growth in the Asian market.”

Mr Brogden also said: “The FSC acknowledges Chris Bowen, former Treasurer and Minister for Financial Services, for his significant personal contribution to getting the Passport off the ground. We are now working with Joe Hockey to see the Passport come to fruition.”

“We greatly appreciate the significant efforts made by Treasury and ASIC in getting the Asia Region funds passport to this point. Their commitment to the establishment of the passport and detailed work behind the scenes has made this possible”

“The industry and government now need to turn their attention to urgently implementing the remaining outstanding Johnson reforms in order to ensure we capitalise on this enormous opportunity.”

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The Hon. Chris Bowen MP

Both the government and the opposition have provided their support for the 13^th annual Financial Planning Week running nationwide from 26^th August to 1^st September this year.

The Financial Planning Association initiative is designed to encourage, empower and educate all Australians about the positive difference that trusted financial advice can make to their lives.

The Hon. Chris Bowen MP, Treasurer said: “The year 2013 will be remembered as the year superannuation commenced its increase to 12% and the year FOFA commenced. I commend the work of the Financial Planning Association who has played an instrumental role in helping to shape the reforms and improve professionalism in financial planning.  An important priority for a re-elected Rudd Labor Government will be to ensure that legislation to enshrine the term financial planner is passed through the parliament as rapidly as possible. I support the FPA’s work through its Financial Planning Week initiative to help Australians gain a better understanding of how quality financial advice can help them to retire with comfort and dignity.”

Senator Mathias Cormann, Shadow Assistant Treasurer and Shadow Minister for Financial Services and Superannuation said: “There is no doubt that Australians who start planning early, with the benefit of high quality advice to help them make informed decisions about financial challenges and opportunities throughout their lives, will end up better off. Those organisations which step up to the plate to champion the importance of high quality professional financial advice deserve our support. That’s why I strongly support the Financial Planning Association’s commitment to the promotion of professional standards and high quality advice. With increased public trust in the high standards of Australia’s professional financial planners more Australians will seek advice and benefit from the improved financial health and wellbeing which comes with having a plan.”

The FPA welcomed support from the government and the opposition, highlighting the significance of cross party support for increasing access to advice for all Australians.

“Our research tells us that 61% of Australians do not receive financial advice and 87% are unaware of the Future of Financial Advice (FoFA) reforms*. The FPA community is committed to improving these statistics and Financial Planning Week is one way we can do this. Our qualified financial planners have volunteered their time through the Ask an Expert campaign and are providing the general public with free financial advice throughout Financial Planning Week. We encourage all Australians to use this opportunity to improve their financial futures,” said Rantall.

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Andrea Slattery

The SMSF Professionals’ Association of Australia (SPAA) welcomes the announcement by the Treasurer Chris Bowen to commit to no major changes to superannuation tax policy for five years.

SPAA chief executive Andrea Slattery says: “This initiative is welcome. SPAA has been advocating that continual change to the superannuation rules acts as a disincentive for people to save for retirement.

“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.

“SPAA has always insisted, as far as possible, that superannuation be above short-term budgetary political pressures. “Superannuation is a lifetime commitment with the aim of reducing the long-term costs to government and allowing people to retire with dignity.

“Several recent reports that SPAA has commissioned have graphically illustrated that people’s confidence in the system is being undermined, and this commitment to not change superannuation tax policy by the Government and Opposition should help reverse this sentiment.”

Mrs. Slattery says SPAA also supports the decision to bring forward the legislation to establish the Super Council as another way to ensure superannuation is depoliticised.

“There are many examples of similar boards that advise government that play an important role in giving advice that is objective, independent and above day-today politics. To ensure this happens it is critical that eminent people from across the community who truly understand the retirement needs.

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