THE Your Future, Your Super legislation introduced into Parliament this week will implement a key Royal Commission recommendation that will save consumers up to $1.8 billion in fees in the first three years of implementation, according to Financial Services Council (FSC) analysis.

FSC CEO Sally Loane said the recommendation, to ‘staple’ a customer to a single fund, which they take with them from job to job, will put an end to the scourge of multiple accounts and unnecessary fees in the superannuation system. This is a policy FSC has advocated for a long time.

“The FSC also supports the objective of the broader package of reforms, which aims to weed out underperforming funds, empower consumers, and enhance the transparency of the super system for fund members,” Ms Loane said.

“FSC analysis on the benefits of stapling shows consumers will save up to $1.8 billion in fees in the first three years after implementation. The super industry can only justify calls to increase the super guarantee to 12 per cent if the system becomes more efficient.

“The Your Future, Your Super reforms, however, are not without weaknesses and we do have some concerns about the design of the new benchmarking methodology.

“To be clear, the FSC supports weeding out underperforming funds. Duds need to go, we don’t care if they are run by a profit-making company or a trade union and employer group," Ms Loane said.

“However, we want to see some changes to the design of performance benchmarks. The custodians of our superannuation system are responsible for investing $3 trillion in savings and small changes in trustee decision-making can have major ramifications for the allocation of capital in the Australian economy.

“The FSC is also concerned that while funds have been required to set CPI-linked investment return targets, and have measured themselves against these targets in Government mandated dashboards, they will now be retrospectively assessed against a new benchmark.

“While we will continue to work with Government in relation to the detail of the reforms, we commend their strong consumer-focused intent,” Ms Loane said.

The FSC’s submission to the Your Future Your Super draft legislation: https://fsc.org.au/resources/2130-fsc-submission-your-future-your-super-draft-legislation/file

About the Financial Services Council

The Financial Services Council (FSC) has more than 100 members representing Australia's retail and wholesale funds management businesses, superannuation funds, life insurers, financial advisory networks and licensed trustee companies. The industry is responsible for investing almost $3 trillion on behalf of more than 15.6 million Australians. The pool of funds under management is larger than Australia’s GDP and the capitalisation of the Australian Securities Exchange and is the fourth largest pool of managed funds in the world.

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THE NSW GOVERNMENT is slashing nearly 700 frontline TAFE NSW jobs, leaving campuses across the state unworkable and creating the conditions for a privatisation fire sale, according to the Community Public Sector Union of NSW (CPSU NSW).

TAFE NSW has advised the union of two major restructures which will see 10 percent of educational support jobs go. Restructures in student services and facilities management and logistics cut 678 positions, including 470 regional jobs.

"Gladys Berejiklian and Dominic Perrottet are deliberately dismantling TAFE NSW to ready it for sale," said Stewart Little, general secretary of the CPSU NSW.

"They're helpfully trimming it down for future corporate buyers to come in and snap it up in another NSW assets fire sale.

"What do the people of NSW get from this gutting of critical training infrastructure? Fewer jobs and a hobbled education system. In the middle of the worst economic downturn that the state has seen in a generation the Berejiklian government is closing pathways to prosperity."

The jobs cuts include people who work directly with students, such as student advisors, customer support officers, field officers, VET fee help coordinators, help desk operators, marketing and promotions support officers.

Workers who maintain the campuses are also going, including: gardeners, caretakers, facilities officers, tradespersons, tool store persons, security officers,  asset and fleet control managers, and site services assistants.

"The union will be fighting these job cuts at every stage. TAFE NSW is a vital piece of infrastructure that must remain in public hands, not dismantled for private operators."

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THE Australian Small Business and Family Enterprise Ombudsman Kate Carnell has welcomed the Australian Banking Association’s (ABA) new Financial Assistance Hub and is encouraging struggling small businesses to use it.

“This initiative by the ABA shows the banks are taking proactive steps to assist small businesses experiencing financial hardship,” Ms Carnell said.

“While it’s good news that 91 percent of deferred loans have resumed repayments, there are still a number of small businesses hurting out there. More than 11,000 business loans remain deferred and we know there were 493,000 businesses still receiving JobKeeper in December 2020.

“With government support measures including JobKeeper set to end next month, the number of small businesses in financial hardship is expected to rise," Ms Carnell said.

“The financial assistance hub can help struggling small business owners who are unable to meet reduced payments or restructure their loans, find a tailored solution.

“I congratulate the ABA for taking a compassionate approach as small businesses try to get back on their feet.

“Small businesses under financial strain should make use of this supportive online tool.” 

www.asbfeo.gov.au

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WHILE SOME tourism businesses across Australia have seen an uptick in revenues from domestic visitors, many regional and remote tourism businesses and supply chain distributors with a dependency on international markets remain on a knife edge.

“Inbound tour operators (ITOs) have been the backbone of the export tourism industry, providing the conduit for millions of visitors coming to Australia each year,” ATEC managing director Peter Shelley said.

“With the end of JobKeeper, international borders closed and no further support, 81 percent of ITO businesses will close and that will destroy Australia’s ability to quickly get back in the game once borders reopen.

“Thousands of Australian businesses rely on the economic activity delivered by international visitors and around half of those visitors have been delivered though international retail travel agents serviced by Australian based ITOs  --  we simply can't afford to lose their expertise, connections and experience.

“Australian based ITO businesses are the ‘on-the-ground’ network that understand the destination, they have established relationships with thousands of local tourism products and experiences from which they create tailored travel itineraries for international visitors."

Australia has traditionally had around 200 ITO businesses of varying sizes which support tourism businesses to connect with around 50 international markets. Mr Shelley said without them "we are likely to see the decimation of the Australian inbound travel distribution ecosystem".

“These are specialist businesses which have established unique commercial connections with travel wholesalers in our largest inbound markets around the world over half a century," he said.

"The recovery of inbound tourism will be driven by international travellers booking with retail travel agents who will provide security around booking flexibility and deposits, manage changes to travel arrangements if required and above all, provide guidance on COVID safe travel.

“Without a strong Australian ITO network, travel retailers will simply direct their travellers to other destinations which are easier to book and service, leaving Australia and thousands of tourism businesses high and dry."

www.atec.net.au

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“While we are heartened to see Australians travelling domestically, domestic tourism spend will never replace the billions of dollars in export revenue delivered by international visitors ,so it would be short sighted to rely on this current domestic enthusiasm to underpin the long term viability of our industry.
 
“Securing the future of a few hundred businesses and those that are the ‘connectors’ with international travellers, will be critical to our recovery and therefore an important short term investment in the future of our inbound tourism sector which will deliver enormous returns over future years.

CLASS ACTIONS AUSTRALIA is warning that Federal Treasurer Josh Frydenberg’s intention to water down Australia’s stock market disclosure laws would weaken the economy by making it easier for company directors to "act poorly and dodge accountability".

Mr Frydenberg has announced the government’s intention to permanently relax stock market disclosure laws. The Treasurer had originally introduced the changes as a temporary measure to respond to the Covid-19 crisis.

“Funny how the pandemic crisis has apparently abated enough to stop JobKeeper, but is still serious enough to warrant permanently watering down corporate responsibility,” Class Actions Australia spokesperson Ben Hardwick said.

“The ASX is about to hit an all-time high, and the Treasurer thinks it’s important to offer extra shields to company directors to avoid accountability. It’s madness.

“Australia’s robust stock market disclosure laws mean investors can operate from a position of knowledge," he said. "Australian directors know they have to be open with the market or they might be accountable to their investors through a class action. Josh Frydenberg is apparently uncomfortable with this situation.

“His plan to water down continuous disclose laws would advantage powerful company directors over mum and dad investors.”

Mr Hardwick said he thought it was unlikely the government’s new laws would make it through the Senate, because they were "not just morally wrong, but economically irresponsible".

“Robust disclosure requirements and class actions are our economy’s best friend,” Mr Hardwick said.

“If you truly believe in markets then you’ll consider transparency and accountability to be good things, because they allow investment to flow rationally. If, however, you prefer crony capitalism and protecting corporations from consequences then you’ll take a different view.

“Josh Frydenberg has revealed his hand with this decision, but I suspect the Senate crossbench may have greater integrity when it comes to defending the true interests of investors and our markets.

“The last thing we should want is for Australia to develop an international reputation as a jurisdiction that’s soft on corporate misbehaviour. That’s a surefire way to dry up investment.”

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CPA AUSTRALIA is calling for urgent financial support needed for businesses harmed by lockdowns.

Surveys by CPA Australia show that businesses cannot continue to absorb lockdown losses and severely impacted businesses need financial support to survive lockdowns.

CPA Australia is calling for Federal, State and Territory governments towork together to deliver a national response in which financial support becomes "standardised, scaleable, targeted and rapidly deployed".

CPA Australia chief executive officer, Andrew Hunter said future lockdowns are foreseeable "as we continue to deal with the impacts of COVID-19". However, businesses cannot continue to absorb losses created by snap lockdowns and border closures. 

“Most Australian states have implemented at least one snap lockdown," Mr Hunter said. "Each time, many businesses have experienced significant, unrecoverable losses.

“We’ve been living with COVID-19 for more than a year now. JobKeeper ends next month and we still don’t have a substitute for businesses that are compulsorily closed or those otherwise impacted by lockdowns, such as suppliers and customers outside the lockdown areas.

“We understand the need for swift action to control the spread of COVID-19. However, it seems businesses are being treated as an afterthought when making lockdown decisions. If governments are going to rip the rug out from under them at short notice, they need to provide a safety net.”

CPA Australia is calling on governments to work together to develop and deliver financial support to businesses severely impacted by lockdowns and is recommending:

• Standardised (consistent across jurisdictions)

• Scaleable (to the duration of each lockdown)

• Targeted (to severely impacted businesses)

• Rapidly deployed (in hours not days or weeks)

Mr Hunter said, “This is not a reaction to events in an individual state. The next lockdown could occur anywhere in Australia.

“Sympathy won’t pay for spoilt produce, cancelled bookings and empty chairs at empty tables. Businesses need more certainty – they need a coordinated national response that will deliver help fast when the next lockdown occurs.”

CPA Australia first proposed a standardised model of disaster support for businesses before the pandemic and reiterated calls for it in its 2021-22 Federal Budget Submission. Mr Hunter said the proposal was equally applicable to natural disasters such as bushfires and floods, as it is to the current circumstances.


About CPA Australia

CPA Australia is Australia’s professional accounting body and one of the largest in the world. CPA services more than 168,000 members in over 100 countries and regions, supported by 19 offices globally. Core services include education, training, technical support and advocacy. CPA Australia provides thought leadership on local, national and international issues affecting the accounting profession and public interest. CPA Australia engages with governments, regulators and industries to advocate policies that stimulate sustainable economic growth and have positive business and public outcomes.  www.cpaaustralia.com.au

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CLASS ACTIONS AUSTRALIA is warning that Federal Treasurer Josh Frydenberg’s intention to water down Australia’s stock market disclosure laws would weaken the economy by making it easier for company directors to "act poorly and dodge accountability".

Mr Frydenberg has announced the government’s intention to permanently relax stock market disclosure laws. The Treasurer had originally introduced the changes as a temporary measure to respond to the Covid-19 crisis.

“Funny how the pandemic crisis has apparently abated enough to stop JobKeeper, but is still serious enough to warrant permanently watering down corporate responsibility,” Class Actions Australia spokesperson Ben Hardwick said.

“The ASX is about to hit an all-time high, and the Treasurer thinks it’s important to offer extra shields to company directors to avoid accountability. It’s madness.

“Australia’s robust stock market disclosure laws mean investors can operate from a position of knowledge," he said. "Australian directors know they have to be open with the market or they might be accountable to their investors through a class action. Josh Frydenberg is apparently uncomfortable with this situation.

“His plan to water down continuous disclose laws would advantage powerful company directors over mum and dad investors.”

Mr Hardwick said he thought it was unlikely the government’s new laws would make it through the Senate, because they were "not just morally wrong, but economically irresponsible".

“Robust disclosure requirements and class actions are our economy’s best friend,” Mr Hardwick said.

“If you truly believe in markets then you’ll consider transparency and accountability to be good things, because they allow investment to flow rationally. If, however, you prefer crony capitalism and protecting corporations from consequences then you’ll take a different view.

“Josh Frydenberg has revealed his hand with this decision, but I suspect the Senate crossbench may have greater integrity when it comes to defending the true interests of investors and our markets.

“The last thing we should want is for Australia to develop an international reputation as a jurisdiction that’s soft on corporate misbehaviour. That’s a surefire way to dry up investment.”

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THE Joint Standing Committee on Trade and Investment Growth has commenced an inquiry into the prudential regulation of investment in Australia’s export industries. 

The inquiry will investigate the potential impact on investment opportunities for Australian exporters of changes in practices by banks, insurers and superannuation funds, as well as the advice and guidance provided by financial regulators which affects the investment opportunities for Australian exporters. Submissions from interested individuals, businesses and organisations are invited by Wednesday, March 31, 2021.

The committee chair, George Christensen MP, said that, given the importance of exports to Australia’s economy, the inquiry would be an opportunity to examine an issue which could have significant ramifications for the country’s economic recovery from COVID-19 and beyond.

"Exports from sectors such as agriculture, resources, and Defence manufacturing generate billions of dollars for the Australian economy and attract a significant amount of investment. If there are changes in the financial services sector which impact on Australia’s exporting industries, particularly those in regional areas, the Parliament must take an interest," Mr Christensen said.

The committee deputy chair, Ged Kearney MP, said, "The inquiry will consider the possible opportunities and challenges that could arise for Australian exporters from any changes in financial services sector practices."

More information about the inquiry, including the full terms of reference and details on how to lodge a submission, is available on the committee’s webpage. The preferred method of receiving submissions is by electronic format lodged online using a My Parliament account.

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