It’s not a stunt, Senator Stephen Conroy has resigned from parliament, effective from 30 September.
Senior Labor figure and so-called factional warlord, Conroy resigned from parliament by tabling a speech in the senate late on Thursday night. Bill Shorten is oversees and apparently knew, but no-one bothered to tell acting leader Tanya Plibersek. Continue reading Saturday salon 17/9
One million Chinese tourists account for 23% of tourist trip spend at $8.9 billion, an increase of 38% in the last year.
I’m not sure how excited we should get. I remember being told in Heidelberg Castle in 2008 that they got 4 million each year. In Prague the number of 70 million was quoted. Tourism here is small beer, but I wouldn’t like to live in that sort of melee. Our Brisbane Queen Street mall on Friday afternoon was pleasantly cosmopolitan. Continue reading Saturday salon 4/6
Treasury secretary Martin Parkinson says the superannuation system is being used as a wealth creation vehicle for the rich.
Paul Drum from Certified Practising Accountants Australia says there is nothing wrong with wealth creation as such. If you want to provide income for the future you need to create a pile of wealth. (By my calculations, for example, if you don’t buy a house and need to pay $400 per week in rent, then you’ll need capital of at least $416,000 with growth capacity at least equivalent to the CPI. Of course if you buy an equivalent dwelling it will cost you more than $416,000 in most places around the country.)
Drum says we need to look at equity aspects, but doesn’t elaborate.
Richard Denniss of the Australia Institute says we’ve created an intergenerational wealth transfer system rather than a retirement incomes system:
So if we want to create a system that helps the majority of Australians have slightly higher incomes when they retire, that’s fine, we can talk about that.
But the idea that superannuation is used as a tax minimisation vehicle of very high income earners to pay far less tax than we’ve deemed fair, and then in turn to pass tens of millions of dollars onto their children, this isn’t the retirement income scheme, this is a intergenerational wealth transfer scheme.
The Treasurer himself said that in 2050 the proportion of people getting a pension or part pension will be about the same as now – roughly 80%. As a retirement incomes system super is a failure.
Tax concessions for super are about to pass total expenditure on pensions and in a few years will exceed the GST. Something needs to be done.
Part of the problem here is that superannuation assets are not included in the will and are not sold up when a superannuant dies. The benefits simply flow on to the next of kin. Directly held shares, on the other hand, must be sold, triggering capital gains tax.
When one spouse dies the benefits go to the other. Also, if I’m right the other spouse could cash out the super, tax free.
Family trusts provide similar intergenerational tax free wealth transfer.
Richard Denniss says cap super, to limit the call on the public coffers.
That is one change among others that is certainly needed, but what should the limit be?
When super was an issue with the Gillard government in 2013, we were told that a pile of $1 million would provide a ‘comfortable’ retirement income of $50,000 for a couple who owned a house.
In calculating income from super the rule of thumb is that you can draw an income of 5% of capital, so $2 million could produce an income of $100,000 per annum. That’s about 50% above average household income. More than enough, I should think!
Do it, please, Labor, when you get the chance and ignore the cries of class warfare. The LNP are more likely to be concerned about those who ‘waste’ their super on trips away, then rely fully on the pension.
“there are no cuts to health, no cuts to education, pensions don’t change…”
That was Tony Abbott at the National Press Club just days before the last election, as reported by Peter Martin.
JOE TO SLASH AGED CASH
was the headline of Samantha Maiden’s Murdoch paper report in the Courier Mail on Sunday.
Budget pain to hit all: Hockey
That was the headline of Laura Tingle’s front page article in the AFR on Monday.
Treasurer Joe Hockey says no group will be safe from cuts in the May budget, as he braces voters for potential changes to the age pension and tighter asset tests.
Large numbers are cascading everywhere. Maiden’s article tells us that 94% of Australians over 70 qualify for either a pensioner concession card or a seniors health care card. Some 78% of the cost of scripts claimed under the PBS is going to concession card holders. Half of the $40 billion age pension bill goes to households with assets of more than $500,000. The $40 billion bill could rise to $70 billion over the next decade.
Labor increased the aged pension from 65 to 67 but that is to be phased in by 2023. The LNP are considering lifting the eligibility age to 70.
Another option is to include the family home in the assets test if it is worth more than $1 million.
Moreover, Hockey reckons the age pension indexation needs to be sustainable. Labor increased the rate and indexed it to average male earnings, which escalate faster than the CPI. Hockey appears to favour a return to the CPI.
Cutting the ‘seniors supplement’ (I get $500 taken off my tax because I’m old) has also been mentioned.
Justin Greber quotes the savings (paywalled) calculated by Stephen Anthony of Macroeconomics. Anthony reckons we need to cut the budget by about 1% of GDP or $16 billion. Overall he says:
the primary focus for the government should be in stemming middle- and upper-class welfare, with the most obvious savings in the aged and family benefits, drugs, industry assistance and removing overlaps between different levels of government.
As to the oldies, he says changing the indexation back to the CPI will save $900 million. Including the family home in the assets test will save $1.1 billion, while cutting the seniors supplement would garner a further $500 million. Peter Martin identifies a further $1.5 billion in carbon price compensation, so in all about $4 billion could be screwed out of the oldies.
Peter Martin also points out that the aged pension has increased by 25% since the indexation changed four and a half years ago, compared to the CPI of 13%.
There’s little doubt that rich old men could contribute a little more.
For context we need to note that the Australian budget is approaching $400 billion.
As a disclosure I’m modestly self-funded with no superannuation. I’d appreciate help with pharmaceuticals but get none other than the normal PBS. In this post I’m not arguing the merits or otherwise of any of the proposed changes. I do think, however, that we could consider paying a bit more tax.
Yet Peter Martin argues that tax increases are already included in the forward estimates because they don’t compensate for bracket creep. The CPI and bracket creep could make our incomes virtually flatline in real terms. He favours increasing the GST.
New Zealand increased the GST in two phases from 10 to 15% without stalling the economy or undue public concern. John Hewson says we are the champions in the OECD in tax concessions, including notoriously concessions to rich retirees and the fossil fuel industry. There are plenty of options available and Anthony stresses the problems are in the out years, not the next budget or two. There should be time for debate.
The Commission of Audit report is said to be available shortly as is a review of the welfare system.
My main worry in all this is that the poor and the vulnerable are going to be hit as well when there really is no need. Also there are sectors where we need to increase spending, such as skills, education including universities, research, innovation and smart industry development. Did everyone see the 4 Corners program on the hollowing out of sophisticated manufacture with the demise of the car industry? That at a time when the CSIRO prepares to cut another 300 jobs.
Meanwhile the Fairfax poll is now 48/52 in favour of Labor. There are some problems for Abbott in the regions, perhaps over foreign investment and trade policies. However, the Labor TPP surge is largely courtesy of a stunning increase in the Greens vote. 26% of 18-24 year-olds now favour the Greens. From 16-39 the LNP vote is lower than Labor, while within the margin for error. It’s the oldies that are keeping Abbott afloat. They don’t always vote in their own interest.
You can use this post as an open thread on politics.
