In our first instalment, we focused on the shock and surprise that resulted from the banking crisis, an overhaul of the Reserve Bank of Australia (RBA), and Australia’s relatively slow progress on inflation.
Here are four more issues that caught many off guard in 2023.
Tax on high super balances
The concessional tax rate applied to future earnings for superannuation balances above $3 million will be 30 per cent from the 2025–26 financial year, Treasurer Jim Chalmers revealed in February this year.
According to the Treasurer, this “modest adjustment” will mean that 99.5 per cent of Australians with super accounts will continue to receive the same tax breaks, while the 0.5 per cent of people with balances above $3 million will receive less generous tax breaks.
The federal government began consulting on draft legislation to bring about the super tax changes in October.
However, they have been met with significant criticism since first being announced, particularly given that it will mean taxing unrealised capital gains. Concerns have also been raised over the $3 million threshold, which will not be indexed.
Also in February, the Treasurer unveiled the government’s proposed objective of super: “to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way”.
The objective, which received a warm welcome from industry groups, super funds, and financial services companies, was officially introduced to Parliament in November.
Banks set to return to advice
Just under a year after the Quality of Advice Review final report was handed to the government, Minister for Financial Services Stephen Jones proposed the creation of a new class of financial advisers, creating an opportunity for banks to re-enter the advice sector.
In reforms announced on 7 December, Mr Jones confirmed that the government supports the creation of a new class of financial advice providers, dubbed “qualified advisers”.
This new class of advisers will not be able to charge a fee or receive a commission relating to the personal advice they provide. They will generally be employees of licensed financial institutions, with the licensee set to assume full responsibility for the advice provided.
The Australian Banking Association, whose members include the big four banks, welcomed the proposed changes as being “sensible”, while NAB has indicated that it will carefully evaluate the potential impact of the reforms on its role in the realm of advice.
House prices stage recovery
Australian house prices sank by 7.5 per cent between April 2022 and January 2023. But over the next 10 months of this year, prices moved 8.3 per cent higher in what CoreLogic has described as a “clear ‘V’ shaped recovery”.
This recovery has been fuelled by supply shortages from surging immigration levels and less interest rate sensitive buyers seeking to take advantage of last year’s price falls.
But AMP chief economist Shane Oliver has warned that housing prices are showing clear signs of slowing again as the prospect of future rate hikes shakes up the market.
Magellan’s struggles continue
Towards the end of 2022, then-Magellan chief executive officer David George unveiled an ambitious plan for the troubled fund manager to once again reach more than $100 billion in funds under management (FUM) within five years.
A year later, in October 2023, Mr George was out after 15 months in the role and Magellan’s $100 billion FUM goal was all but abandoned.
At Magellan’s annual general meeting in November, executive chairman Andrew Formica told shareholders that he is “eager” to restore Magellan as one the country’s leading fund managers but conceded that it will be “a long path back to recovery”.
For the month of November, Magellan reported a nearly $1 billion increase in FUM, the first monthly increase since January this year. However, at $35.2 billion, Magellan’s FUM has fallen more than $81 billion over the past two years.
Here’s to a better year ahead for Magellan, and for all!
