Five things you need to know this week - 10th March

By Drew Meredith.

1. Superannuation was in the spotlight this week as the government’s plant limit concessional treatment at $3 million was debated in Canberra and across the media spectrum. The idea put forward is that adding an extra 15 per cent tax to capital held in a super fund in excess of the cap will help raise approximately $2 billion per year. While the opposition latched onto the fact that the proposal breaks the Labor party’s promise not to “tinker with super”, the real concerns hinge on the lack of finer detail. Earnings being taxed on notional or unrealised value, as per the plan, is unprecedented in this area. Similarly, eschewing indexation on the caps is a strange oversight. Retirement planners are advised to wait on further clarity.
2. Quality of Advice Review lead, Allens partner Michelle Levy, said she was “bemused” by the government’s reaction to her plan to reform the industry by separating advice into a “continuum” whereby institutions provide a simpler form of advice under a broader personal advice definition. While the plan has been broadly welcome as the only feasible way to bring advice to the masses, the government wants to “stress test” the proposals. Due diligence is always wise, but the industry – and consumers keen to access advice – are keen to get reform under way.
3. Growth in superannuation drove Australia's managed fund industry to near-record levels in the December 2022 quarter. While most asset classes delivered positive returns and Australian equities outperformed, investors are looking more to offshore assets for portfolio diversification according to data out of the Australian Bureau of Statistics, which reported that consolidated assets out of managed fund institutions rose 2.4 per cent in September to almost $4.55 trillion. The figure was boosted by the value of Australia’s super pool rising 3 per cent to more than $3.4 trillion during the December quarter.
4. The launch of ChatGPT has seen millions of people across every part of the economy playing with the new ‘chat bot’ technology. Yet this is only the beginning and a small taste of the benefits that AI and machine learning can have for advice and investment businesses, let alone the financial sector more broadly. This massive change and opportunity will be discussed in depth at our Growth Symposium on March 22 in Sydney and March 29 in Melbourne, where consultant Michael Kollo will speak on what the service can and can’t do for the industry.?
5. A new report shows homeownership rates in Australia steadily declining from their peak in 1966, as longer lifespans and greater individual freedoms contribute to a changing definition of what wealthy means for Australians. Home ownership peaked for Australians in 1966 when 73 per cent of Aussies owned their own homes, but home ownership no longer means “wealthy” according to demographer Bernard Salt, who completed the research in partnership with AMP. “The difference between our homeownership obsession of 1966 and the much diminished (but recovering) homeownership rates of today is having other options, other interest, more liquid forms of wealth preservation,” the report stated.