Surprise election announcement brings uncertainty

The political year officially kicked-off last week, with both the Prime Minister and the Leader of the Opposition delivering keynote speeches to the National Press Club in Canberra.

The content of the PM's speech was overshadowed by the surprise announcement of a 14 September 2013 election date. The PM claimed that announcing the date some seven months ahead of time would provide certainty and would separate the politics from the focus on policy. She denied this would be the start of the longest election campaign in Australia's history.

The reality is that this year was always going to be seen through the prism of an impending election. By announcing the election date so far in advance of the usual five to six weeks’ notice period, the effect will be to start the election campaign now. As noble an aim as it might be, separating the politics from the policy is never possible and certainly not during an election campaign.

Importantly, for the bureaucracy, it is business as usual until the writs are issued in August. This means that the caretaker period of government does not commence until August, allowing the normal functions of government to continue, including decision-making that would bind an incoming government.

This is important in the tax context, because the Government has a large program of significant legislation that it will need to introduce and pass in the few Parliamentary sitting weeks that remain before the election (the last sitting day will be 27 June). In addition to this, there is the long list of announced but unenacted tax measures on which we are continuing to speak with the Government to achieve movement.

With regards to pending tax policy changes, the PM's speech made it quite clear that substantial new structural savings were being examined, but she refused to be drawn when questioned about superannuation changes, or indeed child care rebate or baby bonus changes.

So, on the one hand the PM is claiming to give certainty with the naming of the election date, but on the other hand, by allowing speculation about impending changes to continue, is creating uncertainty. In particular, the superannuation system depends heavily on the confidence that people have in it. Tinkering with the superannuation system impacts negatively on people's confidence in the system, and their confidence in putting their hard-earned money aside to save for their retirement.

Robert Jeremenko
Robert
Jeremenko
Robert Jeremenko CTA is Senior Tax Counsel of The Tax Institute.

The Tax Institute is Australia’s leading professional association in tax. Its 13,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.

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