Leigh Penberthy, president of industry body the Australian Salary Packaging Industry Association, was stepping out of a board meeting with several heads of salary packaging companies as he took our call.
“Around the table, I can tell you at least everyone was smiling,” he said.
“People are saying they’ve had more enquiries over the past three days than they have had over the previous three weeks.”
“But the reality is, it’s pretty hard to make up for two months of lost sales.”
SmartCompany understands 300 people in total have lost their jobs in the industry, which employs 3500, since July 16.
Penberthy says that if the election hadn’t been so close, the figure would have been much higher. Instead, most businesses in his industry just put people on leave.
Of the people who were fired, some are being hired back.
But it’s been slow going. Before the government’s changes, the industry had been growing at 8-9% a year. Now, things are moving more cautiously.
“There’s certainly an implied risk now,” Penberthy says. “A number of the larger organisations who ceased salary packaging arrangements haven’t yet announced whether they’d allow their staff to continue with the packaging. Some organisations are going to review how they manage their salary packaging, and some might be reticent to it now.”
Ultimately, it’s a risk that’s always existed with an industry such as this, says Fleet Network’s Cain.
“When you operate in an industry that revolves around a tax concession – and there are 260 of those in our tax laws – you’re always going to have legislative risks entailed.
“But that risk is no stronger now than it’s been before. The Liberals have made their position on this pretty clear, given the impact it has on car manufacturing and so many other industries that rely, to a lesser-or-greater extent, on ours. So I’d like to think, for the next little period, we can focus on building.”
Now that the status quo is set to remain, salary packaging companies are focusing on getting the word out there.
When SmartCompany called Selectus, whose boss Paul King told the ABC a few weeks back that he was looking at 100 redundancies because of the changes, we listened to a pre-recorded message before being put through to an operator.
“Selectus is delighted to advise that the new federal government has confirmed their strong support of workplace benefits, including novated vehicle leasing,” said a voice, before running briefly through the status quo.
Fleet Network has let all its clients know what the Coalition’s election victory means for salary packaging, though Cain says most were aware the change in government would bring a continuation of the current situation.
“The big shock, the drama of this, was just around the lack of consultation,” he says. “Coming after 20-odd years of this concession existing in this form, it just surprised everyone.”
Penberthy is looking on the bright side.
“We have a view that it might create some opportunities with people who haven’t thought about the product. It’s certainly raised awareness, in a way.
“I’ve had a number of people calling me saying, ‘we’ve never thought about this before, and we’re keen to learn more about it’.” When selling a product as unintuitive as salary packaging, this can be a boon.
For the Australian Salary Packaging Industry Association, the onus now is to build relationships with both sides of parliament, so the industry isn’t blindsided in the future.
“We’ll be working with the new government once the ministers are installed to make sure they have a deeper understanding of the industry,” Penberthy says. “And we’ll do the same with the Labor ministers once their leadership positions are clear.
“We went through the Henry Tax Review process, and that consultation was engaging and wide-ranging. It seems to me the Liberal side of parliament understands that discussions are required to get the policy right.
“Naturally they’ll pursue their own policies, but they should understand the outcomes of those changes. The issue with Labor was that they didn’t understand. After the announcement we went to quite some lengths to have the conversation, but they’d made their party position very strongly at the onset, so it was quite hard for them to back down from that.
“But we’re positive. Whoever decides on the policies in this area in the future – we’ll make sure we’re in conversation with them.”
Myriam Robin is a reporter for SmartCompany and its sister site LeadingCompany. She has degrees in economics, international studies and journalism. She likes writing about businesses taking risks and doing new things.
