CPRS chaos poses big risks for fin services
Friday, 27 November 2009 11:40am
By Alex Dunnin | In Regulatory
The Liberal Party political implosion, if it leads to a double dissolution election, is not just about the Carbon Pollution Reduction Scheme but could also change the course of financial services reforms.
A double dissolution election could lead to major changes in the make-up of the Parliament and, with significant looming reforms likely to be presented to Parliament next year on issues such as financial planner fiduciary responsibilities, superannuation tax concessions and the role of regulation, the ramifications could be far reaching.
Raising the stakes is Liberal Party Leader Malcolm Turnbull's gutsy brinkmanship in not only challenging his own Party but in his direct challenge to Prime Minister Kevin Rudd to call an election if the Senate fails to pass the amended emissions trading legislation.
The result of any double dissolution election will impact financial services reforms because, if the polls are right, a new parliament is likely to contain more minor party Senators and make it less likely major changes to wealth management will be resisted.
The severity of the findings released this week in the Ripoll Report suggest any resistance will already be tough to overcome.
Financial services strategists will be closely watching today's, and this weekend's, political machinations because it seems fait accompli the Rudd government would be re-elected as it already holds an 18-seat majority in the lower house, set against the backdrop of a recovering economy.
But the contest of interest is in the Senate where the Government is six seats in the minority.
The challenge for the conservative parties is, however, that under a double dissolution, all Senators are spilled and the size of the quota needed to win a seat is almost halved from 14 per cent in a normal Senate election to just 8 per cent.
If the current polls mean the conservative parties are likely to find it difficult to hold their support then Coalition Senators elected during the reign of the Howard government could be in for a tough fight.
The risk for some segments of the financial serrvices lobby is that if the small Senate quotas result in more left leaning or pro-climate change action Senators being elected then their attitudes to post-GFC, post-Ripoll and post-Cooper financial reforms could be even more radical than the industry has so far imagined.
For example, the Greens already hold five Senate seats. If this increased then the Greens and not the Coalition could return to holding the balance of power and mark a distinct shift to the left in Australian real politik.
Adding to this, the Nationals with a highly concentrated outer rural voter base in only two States are likely to compete for seats against the Liberals and so not materially impact the fight. In anycase they only hold four Senate seats already making them junior to the Greens in the Senate chamber.
There is a lot more riding on the Liberal Party's CPRS negotiations than just climate change. Maybe this weekend would be a good time to see "2012", that movie about the end of the world.
This story was found at: http://www.financialstandard.com.au/news/view/27423
Printed: Wednesday, 8 February 2012 11:57pm