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Industry reacts to Federal Budget

Treasurer Jim Chalmers handed down the Federal Budget last night, delivering its second consecutive surplus as well as a raft of measures to ease the cost-of-living crisis.

Despite many of the measures presented in the Budget having been announced prior to its release, it has been generally well received by those in the financial services industry.

Superannuation measures

The Association of Superannuation Funds of Australia (ASFA) welcomed measures to further strengthen and improve equality in Australia's superannuation system, and bolster Australia's investment environment.

"ASFA is pleased to see frameworks that will be developed to encourage investment in the crucial energy transition. Projects that provide an appropriate return for super funds and advance our nation's prosperity are a double dividend for Australians," ASFA chief executive Mary Delahunty said.

Meanwhile, ASFA analysis found that paying superannuation on paid parental leave combined with the legislated increases in the superannuation guarantee and duration of paid parental leave to 26 weeks will lead to an increase in superannuation balances at retirement of around $5100.

For a woman who received paid parental leave at age 28 for a first child and at age 30 for a second child, the increase in superannuation balance would be at least $10,700 in today's dollars, ASFA said.

"Future generations of Australian women stand to add thousands to their super balances thanks to this change in policy.  This is a crucial and long-overdue step in improving their financial security in retirement," Delahunty said.

Super Members Council chief executive Misha Schubert said paying super on parental leave would benefit 180,000 Australian families each year.

"The historic announcement to pay super on parental leave takes Australia another major stride closer to ending the financial motherhood penalty many women face when they have children," she said.

"It's a watershed reform that will powerfully strengthen retirement savings for Australian mums and help to narrow the gender gap at retirement."

Wages boost for feminised industries

Schubert said the anticipated pay rises for highly feminised industries like early childhood education and aged care workers has been welcomed.

"These are big steps on the road to gender equity - and the government has signalled it intends to continue that work. Australia cannot rest until all women have a financially secure retirement," Schubert said.

Schubert said lower rates of pay for feminised industries are a key driver of the gender super gap.

"Anticipated pay rises for Australia's female-dominated workforces in aged care and early education - expected to flow from imminent decisions in the Fair Work Commission - will help tackle gender inequity at retirement," she said.

Tax cuts

From 1 July 2024, all 13.6 million taxpayers will get a tax cut, which will flow through into their pay packets immediately thereafter.

The tax cuts replace the original Stage 3 tax cuts which were legislated by the former government.

"The tax cuts will put more money into the pockets of taxpayers, especially low- and middle-income taxpayers, and provide welcome relief from the surging cost of living," H&R Block director of tax communications Mark Chapman said.

"As originally designed by the Liberal/National government, the tax cuts delivered most of the benefit to those on high incomes. So, nothing at all for people earning $40,000 and only $875 for people earning $80,000.  This has now been rectified - people earning $40,000 will get a tax cut of $654 and people earning $80,000 will get a tax cut of $1679."

With the cost of living disproportionately impacting low- and middle-income taxpayers, Chapman said the tax cuts will provide some much-needed extra cash in the pockets of hard working families to pay mortgages, food and fuel bills.

Cost of living relief

The Budget delivered broad-based cost-of-living support, but its spending measures risk stoking inflation, the Committee for Economic Development (CEDA) said."While its previous Budgets struck a good balance between supporting vulnerable Australians and fiscal repair, this Budget is less concerned with addressing the longer-term structural deficit," CEDA chief economist Cassandra Winzar said. "The Albanese government's second surplus, while welcome, has again been driven by higher income tax takes and strong commodity prices. These are all temporary windfalls and are unlikely to persist as the economy slows. "Cost-of-living relief, primarily delivered through the Stage 3 tax cuts and electricity rebates, is being delivered broadly, rather than targeted at those doing it toughest. Electricity rebates may alleviate headline inflation but will drive spending elsewhere. This risks working against monetary policy."

What's missing

The Financial Advice Association Australia (FAAA) said its calls to fix the problems with the CSLR, ASIC funding levy, the financial advice exam cost and ATO portal access have been ignored in this year's Federal Budget.

FAAA chief executive Sarah Abood said she is disappointed that while financial advisers continue to struggle with significant cost increases, like many small business operators, calls to the government have been disregarded.

"Minister Stephen Jones has acknowledged the importance of financial advice but there is little remedy for the skyrocketing costs that advisers have been and will continue to pay. Much of these costs will inevitably be passed on to consumers, further raising the cost of professional financial advice that more Australians need more than ever," Abood said.

"While there are some positives here for advisers running small businesses, in the extension of the instant asset write-off scheme for a further year, along with energy rebates, we continue to urge the government to consider the six ideas we have put forward. These will have a direct practical impact on reducing the cost to consumers of professional financial advice."

Read more: ASFAFederal BudgetTreasurer Jim ChalmersAssociation of Superannuation Funds of AustraliaMisha SchubertMark ChapmanMary DelahuntySarah AboodCassandra WinzarCommittee for Economic DevelopmentFair Work CommissionH&R BlockMinister Stephen JonesSuper Members CouncilThe Financial Advice Association Australia