Tuesday, May 04, 2010

Breakfast with the Prime Minister today

Squeezed tightly between two clients I listened intently to Kevin Rudd talk this morning.

I say "squeezed tightly" because the sold-out event drew the financial services industry in force to the Shangri-La ballroom in Sydney to hear Chris Bowen, Minister for Financial Services, Craig Dunne, AMP CEO, John Brogden IFSA CEO and the Prime Minster.

Chris Bowen told a great story about a Prime Minister who began a national savings system yet left the office before he could complete the vision. He went on, of course, to say that last weekend another Labor Prime Minster finished the job by announcing the phase in of a 12% Superannuation Guarantee Charge.

The Prime Minster positioned super as a buffer that helped Australia avoid the worst of the global economic slowdown, and as one of our greatest national strengths - contributing both to the nation's economy and the security of Australian families.

Certainly there wasn't a lot of talk about banks today - as the PM went on to say super gave depth to domestic investment markets, diversification in the financial system and provided a source of capital for business.

What he didn't say was that all the talk about retail term deposits being granted concessional tax status, of say 15%, came to nothing. There was a firm view, pre-Henry announcement, that we would see a product created that enjoyed the same tax benefits as super and also provided a ready pool of onshore bank funding.

The Prime Minster also talked about Australia in 2009 and painted a picture of a nation that, in 2009, remained an attractive source of capital globally, with a strong financial sector making up the single largest sector of our economy.

Australians' expertise in funds management, risk analysis and financial markets, he argued, should encourage us to take what we have learned here and apply it in the region to make Australia (and Sydney) a regional hub for financial markets.

Continuing challenges for super? Adequacy, fairness and efficiency.

So what of the future for super? 

Many in the industry have called for regulatory certainty around super in order to give investors full confidence in the system - and the impetus to invest more with certainty.

Short term, it sounds as though the Government plan is to let the dust will settle.

I'm sure I heard an assurance there would be no more changes to super in next week's Federal Budget.

Longer term the promise is for "a fair system" that is "simpler and more efficient".

And I'll still be interested to see if that much-written about long term deposit product appears on Tuesday night in the Treasurer's speech.

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