The short week was kicked off by the release of the 2020 (or is it the 2021?) Federal Budget.
While there were few surprises, thanks in large part to the government previews for the last few weeks, the extent of the reforms may have come as a bit of a shock. Significant amounts of spending have been proposed to prop up a variety of economic sectors and more of the reforms proposed in the Hayne Royal Commission are being enacted.
YourSuper could reshape the superannuation industry
Perhaps the most startling introduction was the Your Future, Your Super plan that would create a public performance measurement for funds, create enforcement actions for underperformance, and create a system that would limit the amount of duplicate accounts created for a person.
The news was welcomed by the Super Consumers Australia’s Xavier O’Halloran. “Overall, the government's 'Your Future, Your Super' reforms create a better superannuation system for consumers and lift standards across the sector. These reforms will leave more people with more money in retirement.
“The 'Your Future, Your Super' reforms are a good start to ensuring that all Australians get a fair deal from our superannuation system. We look forward to working with the government to implement these reforms and to further tackle high fees and unfair conditions that consumers face when building their retirement savings.”
Understandably, many superannuation funds – who have been expecting developments like this – are taking a wait-and-see approach to responding, wanting to see the final system that is proposed before making a public comment about its implications.
The budget’s impacts on investing
Between additional support for businesses and individual tax relief, there may be a strong economic uptick.
Crestone Wealth Management chief investment officer Scott Haslem says the equity markets should respond positively to the news. “In conjunction with continued market speculation that the Reserve Bank of Australia (RBA) will cut the cash rate and potentially lower the interest rate on the Term Funding Facility, the significant fiscal and monetary support being provided to the economy should ensure a pro-cyclical impetus for domestic portfolios.”
Actuaries Institute says more needs to be done for climate change and natural disaster prevention
The Actuaries Institute conducted a review of the budget, including the debt and deficit implications. While the group welcomed increased funding for mental health, which reflects community needs arising from high unemployment rates – expected to peak at 8% in the December quarter – they believe more needs to be done for disaster risk reduction.
“We acknowledge that $20.9 million has been allocated for disaster risk reduction as part of a broader $130.5 million package over five years from 2019-20, to support resilience to disasters triggered by natural hazards,” said Actuaries Institute president Hoa Bui. “But we trust that the Royal Commission into National Natural Disaster Arrangements, due to report later this month, will recommend the creation of greater natural disaster resilience measures to combat the escalating economic impacts of climate change.
“Timely investment to mitigate the potential impacts of climate change will protect future Budgets from significant adverse effects.”
A budget for women?
There has been criticism from Labor around the lack of support for women, including addressing childcare funding, however the Actuaries Institute’s Bui was complimentary. “We do applaud the Government’s initiate to support women particularly through initiatives for STEM education measures,” Grace concluded.