Category: Features

Superannuation: Coalition guided by leftie Grattan Institute

20 August 2016

Grace Collier Columnist Melbourne @MsGraceCollier

Sacre bleu! In recent weeks, while defending the government’s superannuation policy in the media, Scott Morrison has morphed from a future prime minister into a dogmatic zealot.

Meanwhile in Canberra an under-the-carpet consultation process has begun. Coalition MPs are being canvassed by the party hierarchy about the superannuation “reforms” in an attempt to gauge the level of support or resistance before the changes are put to the house.

Will MPs vote for the policy or cross the floor and vote against it? The only MP who said he would cross the floor, George Christensen, has been made a whip, so does that mean he has been bought off?

And if the superannuation policy does pass the lower house, will some sage operators in the Senate threaten to block the Australian Building and Construction Commission bill and force the government to change the policy anyway, and thus make a fool of the wimps who voted for it?

These are the important questions of our time.

Typically, among Liberal MPs courage seems to be in short supply. Apart from one exception, who floored me by asking, “Why should we tax people less just because they’re old?”, every MP I spoke with thinks the policy is appalling and must be immediately sunk — by someone else.

Meanwhile, looking on is the base: the Liberal rank and file, the members, the donors and the volunteers. Here is where fury and despair remain widespread. Policymakers needn’t panic, this is not about the desire to avoid tax. Everyone knows half the households in this country are addicted to their welfare — er, “transfer payments” — and someone has to pay for that.

Out there in the real world, among half of us at least, there is acceptance we are compelled to work to fund the necessities of life, such as family tax benefits to the middle class, corporate welfare, politicians’ entitlements, education industry rorts, childcare scams and the installation of squat toilets in the Australian Taxation Offices. The only fly in the ointment is that the Coalition’s superannuation policy is terrible. Labor’s superannuation policy is better.

I am told that before the election, cabinet waved the policy through simply because nobody understood it and time constraints were pressing. Indeed, the policy is complex, contradictory and bizarre.

There is a cap of $1.6 million, yet hardly anyone is allowed to get to that cap unless they inherit wealth or something like that. Most MPs don’t understand their own policy, let alone where it came from — a publicly funded left-wing think tank, the Grattan Institute. Its report Super Tax Targeting is sexist and ageist. It urges the government to take money off “rich old men” who don’t need it and are committing “intergenerational theft” anyway via their superannuation accounts. Further, self-funded retirees should be aware the authors of the report — John Daley, Brendan Coates and Danielle Wood — regard them as greedy pigs.

Look at the report’s cover, pictured below.

grattaninstitutereportimage

Sceptics who doubt the Liberals would be so foolish as to adopt the institute’s leftist agenda should seek out the report on Google and read just the first page.

Back in June, when a public furore broke out about the policy, the institute put out a media release by Daley and Coates. It was titled “Tax-free super is intergenerational theft” and said: “A number of politicians have struggled this week to explain the Turnbull government’s proposed changes to superannuation … this complexity explains why intergenerational ‘theft’ through superannuation has continued for so long. No one has ever explained why we should have an age-based tax system … some of these voters are now objecting vociferously to losing their privileges but they were never justified in the first place.”

I sent off emails asking the Coalition powers-that-be to deny their superannuation policy was based on or informed by the report, and whether they deny meeting the authors. The Treasurer and Revenue and Financial Services Minister Kelly O’Dwyer declined to offer a denial and sent back a statement saying they talked to everyone.

Greedy pigs on the cover of the Grattan Institute report

The Grattan Institute was formed in 2008 and $30 million of taxpayer funds has been given to it.

It is housed in taxpayer-funded accommodation at the University of Melbourne and is crammed to the rafters with ex-Labor staff. All of this, in itself, is not such a bad thing. What is life without diversity? We can’t all be productive members of society. But the problem is that a body such as this shouldn’t be setting Coalition policy.

How on earth did this happen? Who knows, but the PM and his wife are listed on the “Friends of Grattan” web page as individual financial supporters. Further, Lucy Turnbull has been on the board since December 2012. So in the absence of any other rational explanation for the Liberals’ superannuation madness, there is always that.

It’s not intergenerational theft

https://s3.amazonaws.com/ozblogistan-blog-uploads/wp-content/uploads/sites/4/2016/08/20101745/download-13.jpg

 

 

 

Greedy pigs on the cover of the Grattan Institute report

 

Catallaxy Files – Judith Sloan

20 August, 2016

Grace Collier is completely on the money to call out the Grattan Institute for releasing tacky, biased pap and using cheap undergraduate humour to make its point.  A picture of pigs with their snouts in the trough as representing people who have worked hard and saved according to the applicable superannuation rules.

In its campaign to impose higher taxation in order to fund bigger government, the Grattan Institute has come out with some completely loony proposals ($11,000 annual concessional contributions cap –  is this a joke?) dramatically to increase taxation on superannuation, proposals which have appealed to our left-leaning government.

Read my lips: we don’t have age-based taxation.  Current income is taxed in the same way irrespective of age.  The taxation of savings is another matter and every economist (not that Daley is not an economist) knows that savings need to be taxed in a different way from current income – apart from the little twinks at Grattan.  (Wood should know better, by the way.)

(What’s that you say?  The pigs are actually the staff at the Grattan Institute who have their snouts in the trough courtesy of two Labor governments just giving away taxpayer money ($30 million) without any competition and with nary a proposal as the ends to which the monies would be put.)

Here’s the key section of Grace’s piece:

Most MPs don’t understand their own policy, let alone where it came from — a publicly funded left-wing think tank, the Grattan Institute.

Its report Super Tax Targeting is sexist and ageist. It urges the government to take money off “rich old men” who don’t need it and are committing “intergenerational theft” anyway via their superannuation accounts.

Further, self-funded retirees should be aware the authors of the report — John Daley, Brendan Coates and Danielle Wood — regard them as greedy pigs. Look at the report’s cover, pictured [above].

Sceptics who doubt the Liberals would be so foolish as to adopt the institute’s leftist agenda should seek out the report on Google and read just the first page.

Back in June, when a public furore broke out about the policy, the institute put out a media release by Daley and Coates. It was titled “Tax-free super is intergenerational theft” and said: “A number of politicians have struggled this week to explain the Turnbull government’s proposed changes to superannuation … this complexity explains why intergenerational ‘theft’ through superannuation has continued for so long. No one has ever explained why we should have an age-based tax system … some of these voters are now objecting vociferously to losing their privileges but they were never justified in the first place.”

I sent off emails asking the Coalition powers-that-be to deny their superannuation policy was based on or informed by the report, and whether they deny meeting the authors. The Treasurer and Revenue and Financial Services Minister Kelly O’Dwyer declined to offer a denial and sent back a statement saying they talked to everyone.

The Grattan Institute was formed in 2008 and $30 million of taxpayer funds has been given to it.

It is housed in taxpayer-funded accommodation at the University of Melbourne and is crammed to the rafters with ex-Labor staff. All of this, in itself, is not such a bad thing. What is life without diversity? We can’t all be productive members of society. But the problem is that a body such as this shouldn’t be setting Coalition policy.

How on earth did this happen? Who knows, but the PM and his wife are listed on the “Friends of Grattan” web page as individual financial supporters. Further, Lucy Turnbull has been on the board since December 2012. So in the absence of any other rational explanation for the Liberals’ superannuation madness, there is always that.

We remind Scott Morrison of his broken “tax-free super” promises

Email dated 16 July 2016 from Save Our Super to Treasurer Scott Morrison in lead up to the Liberal Federal Parliamentary Party meeting to be held on Monday 18 July 2016:

Dear Mr Morrison,

I write to you in your capacity as the Treasurer in the second Turnbull L/NP Coalition Government.

This email relates to the superannuation issue. Therefore, if possible, would you please read it before the Liberal Federal Parliamentary Party meeting to be held in Parliament House, Canberra next Monday 18 July 2016. It may go a long way to explain the anger and dismay felt by many Liberal Party/National Party members and conservative supporters of the L/NP Coalition. I am one of many.

I am a Melbourne QC. I live in Kelly O’Dwyer’s electorate of Higgins in Victoria.

Also, I am the founder of Save Our Super; see: http://saveoursuper.org.au . A brief biography of my background can be found on that website under “Our People”.

Save Our Super is an organisation I formed as a consequence of the Government’s current superannuation policies. Those policies were announced by you on 3 May 2016, when you delivered Budget 2016 on behalf of the first Turnbull L/NP Coalition Government.

It is no understatement to say that those policies were sprung on the Australian public without notice or any real consultation. They were not “evidence-based” public policies by any reasonable use of that term.

Moreover, they were, and remain, in direct contradiction to that which you had told the Australian public on many occasions prior to you delivering Budget 2016.

You made at least 12 “tax-free superannuation” promises in May-June 2015, and in your Address on 18 February 2016 to the Self-Managed Superannuation Funds National Conference in Adelaide. You gave that Address less than three months before you delivered Budget 2016 on behalf of the L/NP Coalition Government.

We have posted them on Save Our Super’s website; (see under the tab “Scott Morrison’s tax-free super” for the source; and see under the category  “Quotes” for the full Address and source).

I have set them out below for your convenience.

You are the one most likely to be accepted by the Governor-General as the Treasurer in the second L/NP Coalition Turnbull Government in about a week’s time.

We believe you should be reminded of your broken promises, at least for the purpose of the forthcoming Liberal Federal Parliamentary Party meeting to be held in Parliament House, Canberra next Monday 18 July 2016.

Scott Morrison’s 12 tax-free superannuation promises : May to June 2015

3AW – 19 June 2015

MINISTER MORRISON: Well we do want to encourage everyone … to be saving for their retirement and particularly when you are drawing down on that when you are retired we don’t want to tax you like Chris Bowen does.

2GB – 25 May 2015

My own view is that the superannuation system, for example, meant I don’t want to tax people more when they’re basically investing for their own future… That’s why I think Chris Bowen’s idea, …of …taxing superannuation incomes, is a bad idea, I don’t support it…

Question Time – 25 May 2015

And when they get into their retirement, we are going to make sure that their hard-earned savings in their superannuation will not be the subject of the tax slug that those opposite want to impose, … Those opposite see it as a tax nest—a tax nest for those to plunder.

The shadow minister earlier referred to ‘trousering’. The ‘trouser bandit’ sits over there because he, together with the shadow Treasurer, wants to come after the hard-earned superannuation savings…

What we will do for them is: we will not tax them like the ‘trouser bandit’ opposite.

3AW – 18 May 2015

It’s the Labor Party who wants to tax superannuation, not the Liberal Party, particularly the incomes of superannuants and I think that’s a fairly stark contrast that’s emerging.

Doorstop – 8 May 2015

The Government has made it crystal clear that we have no interest in increasing taxes on superannuation either now or in the future.

… unlike Labor, we are not coming after people’s superannuation…

Press Conference – 7 May 2015

MINISTER MORRISON: What we are not going to do is we are not going to tax those savings, like Bill Shorten wants to do. That is the difference, we will not tax your super, Bill Shorten will.

MINISTER MORRISON: Yes, and there are other taxation arrangements that apply to superannuation already and we are not going to increase those taxes as the Labor Party does and nothing we have done with the Greens has in any way changed the Government’s position on not taxing your super. We will not tax your super.

ABC AM – 5 May 2015

…what is not fair is if you save for your retirement and you create yourself a superannuation nest egg and the Government then comes along and taxes that income; which is what Labor are proposing to do.

ABC RN – 5 May 2015

We don’t think that people who have done that should be punished with higher taxes, Bill Shorten does, and so does Chris Bowen and I think that’s a stark difference between the Government and the Opposition on these issues.

3AW – 1 May 2015

The Government does not support Labor’s proposal to tax superannuants more on the income they have generated for their retirement.”

Australians “… spooked out of… their [superannuation] investment” – Scott Morrison

Treasurer Scott Morrison, 18 February 2016

“One of our key drivers when contemplating potential superannuation reforms is stability and certainty, especially in the retirement phase. That is good for people who are looking 30 years down the track and saying is superannuation a good idea for me? If they are going to change the rules at the other end when you are going to be living off it then it is understandable that they might get spooked out of that as an appropriate channel for their investment. That is why I fear that the approach of taxing in that retirement phase penalises Australians who have put money into superannuation under the current rules – under the deal that they thought was there. It may not be technical retrospectivity but it certainly feels that way. It is effective retrospectivity, the tax technicians and superannuation tax technicians may say differently.”

In light of the above, how can the public trust anything you say in future, let alone superannuants and those who advise others regarding superannuation?

As to the latter, see Jim Brownlee’s letter set out below; (see under “Letters to Save Our Super”, and Save Our Super’s Disclosure).

“Government Destroys Financial Adviser’s Trust in Superannuation

26 June 2016

I have been an ASIC-registered Financial Adviser for more than three decades. Over that time, I have provided my clients with retirement-planning advice. I have promoted the Government’s (both Liberal and Labor) carrot and stick message of (1), the increased long-term vulnerability of the aged-pension and, (2), tax concessions specifically structured to encourage self-funding superannuation retirement savings.

ASIC requires me to give my clients a Statement of Advice (“SoA”). It sets out the Government’s superannuation tax incentives. Those tax incentives underpin my SoA’s recommendations. They are crucial to the client’s decision. I am invariably asked “What happens if the Government changes things?”. UntiI now, I have always answered: “In my long-term experience, Governments have always ‘grandfathered-in’ protection for existing arrangements.”  

But Treasurer Scott Morrison, in his May 2016 Budget, changed all that.

Last year, before that Budget, he said to the Australian people:

“The Government has made it crystal clear that we have no interest in increasing taxes on superannuation either now or in the future.

… unlike Labor, we are not coming after people’s superannuation…”

Not only did the Government not do what the Treasurer promised, they did precisely what the Treasurer promised that the Government would not do.

The Government came after people’s superannuation and announced proposed increased taxes on superannuation.

Furthermore, the Treasurer added insult to injury. He announced those increased taxes without also announcing that Australians who had acted in good faith and saved for their retirement under the then existing rules, would have their superannuation savings protected by grandfathering.

What am I supposed to tell my clients now, when they ask me, as they will, “What happens if the Government changes things?

Am I now to say, “Well, I remember the Liberal Government’s May 2016 Budget. I wouldn’t put my savings into superannuation because you can’t trust the Government not to change the rules, and not protect your savings by grandfathering the existing rules”.

Jim Brownlee

Authorised Financial Adviser Representative.

Berwick, Victoria”

Please let me know your view of the Government’s current superannuation policies and the outcome of the meeting next Monday, 18 July 2016. I intend to publish this email and any replies I receive on Save Our Super’s website.

If you wish to raise with me any aspects of the Government’s current superannuation policies, or any suggested changes to those policies, I am only too happy to discuss them with you.

Please feel free to contact me on 0400 — — or by email on jack.hammond@saveoursuper.org.au

Regards,

Jack Hammond QC

http://saveoursuper.org.au

jack.hammond@saveoursuper.org.au

Kelly O’Dwyer: Who you stand up for on super depends on where you sit in Parliament!

(21 Mar 2013)  House of Representatives Hansard
Ms O’DWYER (Higgins) (10:40) [whilst in Opposition to the Gillard Labor Government]:

I rise today to speak on the Superannuation Legislation Amendment (Reform of Self Managed Superannuation Funds Supervisory Levy Arrangements) Bill 2013. We have heard a number of speeches in this place as to the import of this bill, but let me recount that the bill amends the Superannuation (Self Managed Superannuation Funds) Supervisory Levy Imposition Act 1991 to increase the maximum levy payable by a trustee of a self-managed superannuation fund for an income year from $191 to $259 from the 2013-14 financial year. It brings forward the liability to pay the levy during the income year instead of the current requirement to pay some months after the year ends, when the SMSF lodges its returns.

Whilst the government made the announcement in the Mid-Year Economic and Fiscal Outlook last year that it would increase the levy from around $191 to $259, the implementation and timing is such that these changes will in fact result in a total levy being paid in the 2012-13 year of $321 and a total levy in the 2014-15 year of $388. We on this side understand that levies do need to be recovered on a cost-recovery basis. We respect that attitude, we respect that that is a responsible way to manage the budget and, in that statement, we do not oppose this bill.

However, it has been clear from the evidence presented to the Parliamentary Joint Committee on Corporations and Financial Services that there is a suggestion that the amounts and levies being charged on self-managed super funds are over and above what would be considered cost recovery.

Evidence was presented to the committee by the Self-Managed Superannuation Professionals’ Association of Australia that there was no justification provided, no evidence presented, by the government that this was in fact cost recovery. They said in evidence to the Parliamentary Joint Committee on Corporations and Financial Services:

As we alluded to previously, the increased costs have been around changes from the Stronger Super package. We have seen those in the 2011-12 budget papers and again in the 2012-13 papers, but, in contrast, in the recent 2012-13 MYEFO papers, there was no justification or reasons given accompanying the increase in the levy.

This was indeed curious, and members asked questions of the ATO. They asked questions regarding the increase and the bring-forward provisions of the bill. The ATO were asked the specific question:

Who proposed this increase in the levy? Was it the tax office or the government?

The ATO’s response was:

I think it is best to take that one on notice. My recollection—but my memory sometimes fails—is that on this occasion the discussion was probably initiated by Treasury, but I may be mistaken.

We are not convinced that this cost increase was one that did not come directly from the government. In fact, the government has a very strong track record of ripping money out of the superannuation sector. Over five years it has ripped more than $8 billion out of the superannuation sector.

I wanted to talk in the time available today about the changes that the government has made to superannuation and how it is having a very direct and significant impact on those people who are doing the right thing—trying to save for their future and be self-reliant. It is critical that people have confidence in our superannuation system and, when people invest their hard earned money, they need certainty—certainty around how that money will be taxed going in and how it will be taxed coming out. They need certainty around the contributions that they can make. They need to know that there will not be continued fiddles with the superannuation system.

This government has in fact made more than 23 fiddles with the superannuation system. That is almost four changes every year, and that is the very opposite of certainty. Some of those changes include: the reduction of the rate at which the government superannuation co-contribution is paid from 1 July 2009 and 30 June 2014; a limit on concessional contributions, reduced from $50,000 per annum to $25,000 per annum; matching the rate for government superannuation co-contributions to be reduced from $1 to 50c, with the maximum benefit also to be reduced from $1,000 to $500; the maximum incomes threshold also proposed to fall from $61,920 to $46,920; and the indexation of concessional contribution caps proposed to be paused for one year in 2013-14 at $25,000 for individuals under the age of 50 and $50,000 for individuals aged 50 and over. That is not to mention, of course, the penalties that have been applied to those people who many have inadvertently breached the ever-moving caps that the government seems to change at every opportunity.

There are significant penalties that go towards ensuring that those people will not see the benefit of the hard earned money they have contributed to their superannuation savings to ensure that they can live the life that they would like to live in retirement. How does the provision to introduce another levy on self-managed super funds incentivise investment in our superannuation system? How does this provide more certainty? The answer is that it does not, and we have already heard from the Prime Minister that she intends to make yet further changes to superannuation. In her Press Club address earlier in the year she flagged that there will be more changes in the budget around the tax arrangements to do with superannuation.

I hear the very deep and real concerns from constituents, who raise this matter with me in a very heartfelt way and who are desperate to know what faces them in retirement. Let me read into Hansard the letter that I received from Glen. He says this:

I am writing—desperately—about the noise on taxation of Superannuation/ Pensions. My wife and I are just recently retired. I am 67 and have worked to the end. We had planned for retirement—foregoing much else to fund our superannuation. And we are totally self-funded. This was long term planning and was done deliberately not to be a burden on the Government and to enjoy some financial freedom. Although the amount we have accumulated in Super may look large, it is frightening to watch how long it is going to have to last while supporting our planned lifestyle. To be candid, the current ‘noise’ is terrifying us.—

And this noise is of course coming from the government.

We had planned everything a long time ago based on Peter Costello’s initiatives and have taken advantage of every new government adjustment while relying on the promises. We are asking you — maybe that should be pleading — to lend you weight to preventing changes for those of us who are now self-funded in retirement without any possibility of re-entering the workforce.

Let me read from what Angela sent me:

As I am facing retirement myself in the not too distant future I am deeply concerned about the proposal to tax the income of self-funded retirees in the name of addressing structural problems within the budget. The only structural problem that I can identify is the reckless and wasteful spending that has occurred over the last six years. Like many self-funded retirees, I have worked, saved and salary sacrificed in order to build-up enough superannuation to ensure that I could enjoy a reasonably comfortable retirement for as long as possible. With the exception of a small minority of wealthy people most self-funded retirees are not ‘wealthy’ and should not be the subject of an unfair tax impost. Apart from the activities of this government, inflation and rises in the cost of living pose the greatest threat to the financial security of self-funded retirees who are living on a fixed income. Many of them run out of money after a short period of time and qualify for a pension. For example, 10 years ago $500,000 was considered adequate for a couple to retire on. Today, financial advisers are recommending that a couple would require at least $1 million in superannuation in order to retire comfortably. It has been estimated that $1 million in superannuation will deliver an annual income of approximately $55,000-$65,000. This might seem to be a reasonable income today however in ten years time an annual income of $55,000-$65,000 may be insufficient. To give you an example, when I started working 40 years ago, I earned the grand total of $35.00 per week. Today, $35.00 might buy you a weekly zone 1 train ticket, if you are lucky.
I am concerned that self-funded retirees are viewed as a soft target by this government and their hard-earned superannuation savings are considered to be a honey-pot ripe for the picking. Any adverse changes will make superannuation an unattractive investment option for working people with the result that fewer people will be motivated to work and save towards independence in retirement. That defeats the purpose of having a superannuation scheme in the first place.

I say to Angela: I could not have put it any better myself. Finally, let me tell you what Daryl has said:

Why is it that in this country we continue to penalise hard work, sacrifice and the occasional success?
…   …   …
I am in my late 50s and therefore approaching retirement age. I have planned for my retirement, sacrificed and worked hard to save for my retirement so I will not have to rely on government handouts. I am therefore increasingly concerned that the incumbent government … continues to covet superannuation with growing evidence that superannuation and superannuation savings could be targeted as soon as the May budget. This is of immense concern for those who have planned carefully, been thrifty and worked damn hard to build a reasonable fund balance. In some respects, one must question whether it was all worth it, or whether sacrifice, responsible savings and thrift should have given way to a more extravagant lifestyle in years past.

We on this side have given an undertaking not to muck around with superannuation, as this government continues to do. We understand the importance of certainty when people are sacrificing and saving for their retirement. We understand the importance of good and responsible economic management so that the government does not have to put its hand in the pockets of the retirement savings of Australians. It is quite, quite wrong. That is why we will stand up for all Australians who want to work hard, create opportunities for their families and be rewarded for their efforts. They should not be penalised.

This government has an awful lot to learn, and, come 14 September, the voices of those people who have been penalised will be heard.

Draft super laws to be released before parliament sits

The Australian

July 22 2016

David Crowe Political Correspondent

The federal government will fast-track its $6 billion superannuation reforms by releasing draft legislation within weeks to clear the way for talks with industry and the wider community over changes that might calm the storm over the controversial tax hikes.

Malcolm Turnbull and his ministers will outline the first draft of the tax proposals well before parliament resumes on August 30 in a bid to ensure weeks of consultation on the detail of the changes before they have to run the gauntlet of the Coalition partyroom.

The draft will stick to the broad plan set out in the federal budget on May 3 but will leave time for critics of the proposals to push for changes, mapping out a strategy to negotiate amendments in the new Senate as soon as possible.

The Prime Minister is insisting on the need for the overall package while Scott Morrison has warned against sacrificing $550 million in revenue by scrapping the most contentious change, a $500,000 lifetime cap on non-concessional contributions that is meant to take effect from July 2007 and has sparked claims of “retrospective” taxation.

The Australian has learned that super industry experts, including financial planners who are at the “coalface” advising retirees, will be consulted throughout next month in order to ensure the details are canvassed before the Coalition partyroom rules on the reforms.

While there is speculation about exemptions being granted to the $500,000 lifetime cap — such as allowing people with inheritances or divorce settlements to exceed the limit — the advice from Treasury is that these would be difficult to stipulate in black-­letter law because every circumstance would be different.

One option to resolve the issue is to give the Commissioner of Taxation the discretion to let indiv­iduals exceed the cap, but this would be on a case-by-case basis and would be hard to quant­ify in terms of the tax revenue forgone.

The fast-track plan is being aided by the work done by Treas­ury during the election campaign, when the government was in caretaker mode but officials had time to draft legislation to put into effect budget measures announced before parliament was dissolved.

Coalition MPs are hoping to press for changes in the first partyroom meetings after parliament resumes, but the government is also preparing for negotiations with powerbrokers in the Senate including Derryn Hinch, Pauline Hanson and Nick Xenophon.

Mr Hinch wants Mr Turnbull to introduce the super package in the form outlined in the budget so that parliament, rather than the Coalition partyroom, could make any changes. “He can’t amend it now for his backbench and fiddle with it and say ‘That’s not what I was elected for’ — he can’t have it both ways,” he said on Tuesday.

“He’s going to lose the fight, ­especially over the $500,000. He’ll lose the fight but he has to present it as it is and I think he intends to do that.”

Ms Hanson said on Monday night that the government should “leave the superannuation alone”, in a comment that could force the Coalition into dealing with Labor and the Greens to get around the Senate crossbench.

Financial Services Minister Kelly O’Dwyer argued yesterday that some of the benefits of the changes had been overlooked during the election campaign. While the tax increases raise $6bn over four years, about half this amount is used to pay for offsets for workers on low incomes and more flexible rules for women re-entering work. Once these bene­fits are taken out, the package adds $3bn to the budget bottom line.

“We expect to begin consult­ation on exposure draft legislation shortly and, consistent with usual practice, will listen carefully to ­advice on the design of the legislation,” Ms O’Dwyer told the Fin­ancial Services Council’s annual forum in Melbourne yesterday.

The Treasurer said yesterday he expected Labor would support the reforms. “We took that policy to the election and that is the policy we continue to work through now on its implementation,” Mr Morrison said. “There is no retrospective element in our super­annuation policy, therefore I would presume that the Labor Party would wish to support it.”

He was firm that there could be no change to any budget policy that produced an increase in the deficit, with any reduction in savings needing to be offset. “There are no exceptions to those fiscal rules,” the Treasurer said.

He said Australians had put their trust in the Coalition to manage the budget. “We have an oblig­ation to the Australian people to ensure that we hold to that task, and we hold firmly to that task.”

Opposition superannuation spokesman Jim Chalmers said the government had made a mess of the reforms but it could talk to Labor about “workable and fair” changes — once a review had been done of the budget plan.

“We said during the campaign that we would support changes which are workable and fair and consider any alternative measures which yield similar savings,” Mr Chalmers told The Australian.

Greens Treasury spokesman Adam Bandt also warned that there could be no deal until Mr Turnbull and Mr Morrison resolved the divisions within the Coal­ition and calls for changes from the Institute of Public Affairs.

LNP warns Turnbull over super “madness”

The Australian

26 July 2016

Michael McKenna

Malcolm Turnbull’s superannuation changes have been branded as “madness’’ by the Liberal National Party’s small business policy committee.

In a motion to be debated at the LNP’s state convention next month, the committee said the Turnbull government had “broken faith’’ with the Australian people in the changes announced in the May budget.

Aspects of the superannuation overhaul — particularly plans to implement a $500,000 cap on non-concessional contributions back to 2007 — has caused division within the Coalition and are openly opposed by some incoming Senate crossbenchers.

While the Prime Minister has indicated the changes could be subject to “fine-tuning” , he last week insisted the $500,000 cap was “absolutely right’’ .

Mr Turnbull is expected to outline the first draft of the proposals before federal parliament resumes on August 30 — just days after the LNP state convention.

The policy committee, headed by Queensland businessman Paul Smith, has called on the government to change the cap and that any changes to the treatment of superannuation should not be retrospective.

The committee accused the government, which hopes to raise $550 million from the $500,000 cap, of breaking assurances not to target superannuation.

“On budget night 2016, the government broke faith with the Australian people and undermined their trust in the superannuation system,’’ the motion reads.

“Although there were positive changes, several measures broke repeated assurances that there would be no additional taxes on superannuation and that ‘the government is not coming after your superannuation’ .’’

The move comes just days after a push by some in the LNP to consider setting-up a separate partyroom in Canberra.

The LNP state executive narrowly defeated a motion to formally assess the proposal amid anger over the make-up of the Turnbull frontbench.

LNP president Gary Spence last night said he was unaware of the small business committee’s superannuation motion, which still has to be vetted before it is put on the agenda of the three-day state convention from August 26.

The committee was scathing of the proposed “$500,000 contribution cap’’ and the government backdating the measures to 2007.

“Australians have planned for their retirement in good faith and have foregone alternative investment or lifestyle opportunities to save enough for their retirement so they would not be a burden on the taxpayers,’’ the motion reads.

“They now find that there is no traditional ‘grandfathering’ of these changes.

“Instead they are told that they are not retrospective. Whilst this is correct in a technical sense, they are retrospective in effect and to say otherwise is perceived as arrogant and out of touch.’’

The motion calls for the government to further consult on superannuation changes, to recalculate any proposed cap and not backdate the changes.

“The total funds allowed in superannuation accounts should be capped by actuarial formula related to the value of the government benefits to be forgone,’’ the motion said.

Outspoken Queensland MP George Christensen last week warned he would cross the floor if the “bad’’ superannuation policy wasn’t changed, calling the changes “Labor-style policies’ ’ that hurt people who had worked hard all their lives.

Memo Liberals: Making enemies of friends is deeply foolish

The Australian

July 26 2016

Grace Collier Columnist @MsGraceCollier

Before the recent federal election, those campaigning against the government’s superannuation policy were begged by the party ­hierarchy to back off, to keep a lid on it all, until the election was won.

Well the election is won, the lid is off and the pot is boiling over. In Queensland, there is open revolt. The anger is palpable and Liberal National Party members are organising a campaign against the changes, beginning with a formal motion to demand their demise.

“The Labor Party wouldn’t even do this,” says my long-time friend Graham Haycroft, a party policy committee chairman in the Queensland LNP.

“With what they have done, people’s superannuation is now just like fish in the barrel; any future government can come along and shoot whatever they like. The Liberals have broken the seal; after this, it will just be open slather.”

Haycroft is not speaking as a party spokesman, merely passing on the sentiment among the 15,000 party members. “The anger is palpable” he says.

With its foolish superannuation changes, the Liberal Party is hitting the people who do everything for them; it is taking money out of the pockets of its own support base.

Small business people, the wealthy and the non-wealthy but aspirational are all going to be unfairly penalised by the nonsensical changes the Turnbull government has planned.

The government is hopelessly addicted to spending, and when a government addicted to spending can’t break its habit, it robs the piggy banks of those closest.

It abuses the rights of those within the family; it takes advantage of the close relationship, banking on the hope there will be reluctance to retaliate.

In Queensland, though, things are different. Here, the structure of conservative politics differs to all the other states. The Liberal party is the Liberal National Party, with a different constitution. This party is run from the middle, not from the top, and individual leaders do not have the power they have in the other states.

All decisions are subject to ratification by state council and at the next state council, next month, a motion is being put up to quash the superannuation policy. Party insiders expect it to pass, easily. Even if it does, and the policy is dumped, or significantly amended, the Liberals have already paid a terrible price for their folly.

“The way the decision was made leads you to think, how can you trust these people?” says Haycroft. “Even if they fix this, it will take at least a decade to get that back.”

At the weekend, various MPs and party insiders rang to chat. Many are livid at the changes. The policy is seen as an injudicious move. The view is Treasury has had the policy, in some form or other, in the bottom drawer for many years, and has just been waiting for a treasurer mug enough to swallow it.

It is not just Scott Morrison in the firing line — the guns are out for the small clique around him, too. The attitude coming from this group is that superannuation tax treatment is a form of middle-class welfare. It was put to me that it makes no sense to tax people less just because they are older.

The attitude coming from the Liberals is that retirees should be grateful the government lets them keep some of their own money, and should not begrudge the end of the government’s generosity, because after all they need the money to pay for everything else, including the incredible cost of saving Christopher Pyne’s seat.

We remind Malcolm Turnbull and all Lib/NP politicians of Scott Morrison’s broken “tax-free super” promises

Email dated 15 July 2016 from Save Our Super to Prime Minister Malcolm Turnbull and all the Liberal/National Party politicians in lead up to the Liberal Federal Parliamentary Party meeting to be held on Monday 18 July 2016:

Dear Mr Turnbull,

I write to you in your capacity as a Senator/Member, or a Senator-elect/Member-elect, of the Liberal/National Party Federal Parliamentary Coalition in the second Turnbull L/NP Coalition Government.

I apologise for not sending you an individually composed letter, but time and the nature of the issue compels a more generic type of communication. However, I trust you will give it your personal and individual consideration and a personal and individual response.

This email relates to the superannuation issue. Therefore, if possible, would you please read it before the Liberal Federal Parliamentary Party meeting to be held in Parliament House, Canberra next Monday 18 July 2016. It may go a long way to explain the anger and dismay felt by many Liberal Party/National Party members and conservative supporters of the L/NP Coalition. I am one of many.

I am a Melbourne QC. I live in Kelly O’Dwyer’s electorate of Higgins in Victoria.

Also, I am the founder of Save Our Super; see: http://saveoursuper.org.au . A brief biography of my background can be found on that website under “Our People”.

Save Our Super is an organisation I formed as a consequence of the Government’s current superannuation policies. Those policies were announced by Treasurer Scott Morrison on 3 May 2016, when he delivered Budget 2016 on behalf of the first Turnbull L/NP Coalition Government.

It is no understatement to say that those policies were sprung on the Australian public without notice or any real consultation. They were not “evidence-based” public policies by any reasonable use of that term.

Moreover, they were, and remain, in direct contradiction to that which Scott Morrison had told the Australian public on many occasions prior to him delivering Budget 2016.

Scott Morrison made at least 12 “tax-free superannuation” promises in May-June 2015, and in his Address on 18 February 2016 to the Self-Managed Superannuation Funds National Conference in Adelaide. He gave that Address  less than three months before he delivered Budget 2016 on behalf of the L/NP Coalition Government.

We have posted them on Save Our Super’s website; (see under the tab “Scott Morrison’s tax-free super” for the source; and see under the category  “Quotes” for the full Address and source).

I have set them out below for your convenience.

As you know, Scott Morrison is the current caretaker Treasurer. His is the one most likely to be accepted by the Governor-General as the Treasurer in the second L/NP Coalition Turnbull Government in about a week’s time.

We believe you should be made aware of his broken promises, at least for the purpose of the forthcoming Liberal Federal Parliamentary Party meeting to be held in Parliament House, Canberra next Monday 18 July 2016.

Scott Morrison’s 12 tax-free superannuation promises : May to June 2015

3AW – 19 June 2015

MINISTER MORRISON: Well we do want to encourage everyone … to be saving for their retirement and particularly when you are drawing down on that when you are retired we don’t want to tax you like Chris Bowen does.

2GB – 25 May 2015

My own view is that the superannuation system, for example, meant I don’t want to tax people more when they’re basically investing for their own future… That’s why I think Chris Bowen’s idea, …of …taxing superannuation incomes, is a bad idea, I don’t support it…

Question Time – 25 May 2015

And when they get into their retirement, we are going to make sure that their hard-earned savings in their superannuation will not be the subject of the tax slug that those opposite want to impose, … Those opposite see it as a tax nest—a tax nest for those to plunder.

The shadow minister earlier referred to ‘trousering’. The ‘trouser bandit’ sits over there because he, together with the shadow Treasurer, wants to come after the hard-earned superannuation savings…

What we will do for them is: we will not tax them like the ‘trouser bandit’ opposite.

3AW – 18 May 2015

It’s the Labor Party who wants to tax superannuation, not the Liberal Party, particularly the incomes of superannuants and I think that’s a fairly stark contrast that’s emerging.

Doorstop – 8 May 2015

The Government has made it crystal clear that we have no interest in increasing taxes on superannuation either now or in the future.

… unlike Labor, we are not coming after people’s superannuation…

Press Conference – 7 May 2015

MINISTER MORRISON: What we are not going to do is we are not going to tax those savings, like Bill Shorten wants to do. That is the difference, we will not tax your super, Bill Shorten will.

MINISTER MORRISON: Yes, and there are other taxation arrangements that apply to superannuation already and we are not going to increase those taxes as the Labor Party does and nothing we have done with the Greens has in any way changed the Government’s position on not taxing your super. We will not tax your super.

ABC AM – 5 May 2015

…what is not fair is if you save for your retirement and you create yourself a superannuation nest egg and the Government then comes along and taxes that income; which is what Labor are proposing to do.

ABC RN – 5 May 2015

We don’t think that people who have done that should be punished with higher taxes, Bill Shorten does, and so does Chris Bowen and I think that’s a stark difference between the Government and the Opposition on these issues.

3AW – 1 May 2015

The Government does not support Labor’s proposal to tax superannuants more on the income they have generated for their retirement.”

Australians “… spooked out of… their [superannuation] investment” – Scott Morrison

Treasurer Scott Morrison, 18 February 2016

“One of our key drivers when contemplating potential superannuation reforms is stability and certainty, especially in the retirement phase. That is good for people who are looking 30 years down the track and saying is superannuation a good idea for me? If they are going to change the rules at the other end when you are going to be living off it then it is understandable that they might get spooked out of that as an appropriate channel for their investment. That is why I fear that the approach of taxing in that retirement phase penalises Australians who have put money into superannuation under the current rules – under the deal that they thought was there. It may not be technical retrospectivity but it certainly feels that way. It is effective retrospectivity, the tax technicians and superannuation tax technicians may say differently.”

In light of the above, how can the public trust anything Scott Morrison says in future, let alone superannuants and those who advise others regarding superannuation?

As to the latter, see Jim Brownlee’s letter set out below; (see under “Letters to Save Our Super”, and Save Our Super’s Disclosure).

“Government Destroys Financial Adviser’s Trust in Superannuation

26 June 2016

I have been an ASIC-registered Financial Adviser for more than three decades. Over that time, I have provided my clients with retirement-planning advice. I have promoted the Government’s (both Liberal and Labor) carrot and stick message of (1), the increased long-term vulnerability of the aged-pension and, (2), tax concessions specifically structured to encourage self-funding superannuation retirement savings.

ASIC requires me to give my clients a Statement of Advice (“SoA”). It sets out the Government’s superannuation tax incentives. Those tax incentives underpin my SoA’s recommendations. They are crucial to the client’s decision. I am invariably asked “What happens if the Government changes things?”. UntiI now, I have always answered: “In my long-term experience, Governments have always ‘grandfathered-in’ protection for existing arrangements.”  

But Treasurer Scott Morrison, in his May 2016 Budget, changed all that.

Last year, before that Budget, he said to the Australian people:

“The Government has made it crystal clear that we have no interest in increasing taxes on superannuation either now or in the future.

… unlike Labor, we are not coming after people’s superannuation…”

Not only did the Government not do what the Treasurer promised, they did precisely what the Treasurer promised that the Government would not do.

The Government came after people’s superannuation and announced proposed increased taxes on superannuation.

Furthermore, the Treasurer added insult to injury. He announced those increased taxes without also announcing that Australians who had acted in good faith and saved for their retirement under the then existing rules, would have their superannuation savings protected by grandfathering.

What am I supposed to tell my clients now, when they ask me, as they will, “What happens if the Government changes things?

Am I now to say, “Well, I remember the Liberal Government’s May 2016 Budget. I wouldn’t put my savings into superannuation because you can’t trust the Government not to change the rules, and not protect your savings by grandfathering the existing rules”.

Jim Brownlee

Authorised Financial Adviser Representative.

Berwick, Victoria”

Please let me know your view of the Government’s current superannuation policies and the outcome of the meeting next Monday, 18 July 2016. I intend to publish this email and any replies I receive on Save Our Super’s website.

If you wish to raise with me any aspects of the Government’s current superannuation policies, or any suggested changes to those policies, I am only too happy to discuss them with you.

Please feel free to contact me on 0400 — — or by email on jack.hammond@saveoursuper.org.au

Regards,

Jack Hammond QC

http://saveoursuper.org.au

jack.hammond@saveoursuper.org.au

Malcolm Turnbull is set on making super another ETS moment for himself – John Roskam

Australian Financial Review

Home News Policy Opinion Jul 14 2016 at 3:19 PM Updated Jul 14 2016 at 5:34 PM

A quite retirement has become a turbulent political issue.
by John Roskam

In 2009 as the leader of the opposition Malcolm Turnbull supported the introduction of an emissions trading scheme. He maintained his support for an ETS in the face of overwhelming opposition from the grassroots members of his own party, and against the grave concerns of many of his parliamentary colleagues. It did not end well for Turnbull.

Seven years later, superannuation does not need to be, and should not be, another ETS-like moment for the Prime Minister. If he’s as determined as he says he is to increase taxes on superannuation and throw into disarray the retirement plans of hundreds of thousands of Australians, the least he can do is make a commitment to listen to their concerns.

The Coalition’s superannuation changes were made in the rush of a budget and an election campaign. Prior to budget night Coalition MPs, and for that matter the public, had no inkling the PM and his Treasurer were planning to break the Coalition’s 2013 election promise not to make any adverse changes to superannuation. It was a promise the Treasurer repeated almost up until the time he announced he was going to break it.

The Coalition has convinced itself superannuation played no role in the government’s near demise at the election – but three different polls and surveys say something different.

During the election campaign Turnbull was hamstrung from attacking Labor’s higher taxes on capital gains because he was proposing tax increases of his own.

There’s absolutely no reason why any final decision on the Coalition’s superannuation policies must be reached at Monday’s meeting of Coalition MPs. Given the PM has promised he won’t make any more changes to superannuation after these current changes, if the government is deciding on policy settings it hopes will last for years to come, the details of the policy should be the result of more than a five-minute discussion.

It is bizarre the Coalition is attempting to portray its imposition of higher taxes as “reform” and that a Liberal Party Prime Minister appears to want to make his desire to increase taxes a test of his authority as leader.

The government says higher taxes on superannuation are “broadly accepted by all sections of the community”. That’s debatable. In any case the policy elites of Greece, Italy and Spain all think higher taxes are a good idea too.

The government also claims its changes are necessary to repair the budget. But any administration that really wanted to achieve budget repair would focus on government spending.

Over the next four years, Commonwealth government revenue from taxes and other receipts will increase from 23.5 per cent of GDP to 25.1 per cent of GDP.

Meanwhile spending will only fall from 25.8 per cent of GDP to 25.2 per cent of GDP. No one can call that “budget repair”. And even if this small reduction in government spending is achieved, the government will still be substantially larger than it was prior to the GFC. The truth, which the government won’t admit, is that what little budget repair there is, will be accomplished by raising taxes, not cutting the size of government.

To get an indication of what real budget repair looks like we can go to the United Kingdom. In 2009 UK government spending as a share of GDP was 49.6 per cent. Last year that figure was 43.2 per cent.

Beyond the issue of superannuation, there’s a much bigger question – and it goes to trust.

When politicians break their promises they lose the trust of the public. First there was Julia Gillard’s carbon tax promise, then there was Tony Abbott’s “no cuts to education and health” promise. Now there’s superannuation.

Ian McAllister, a professor of political science at the Australian National University who operates an extensive program of surveys of voters, has argued convincingly that the electorate’s trust in politicians is collapsing. One manifestation of that collapsing trust is the growing vote for non-traditional political parties.

Labor’s claims during the election campaign about what Turnbull would do to Medicare were outrageous and wrong. But unfortunately they fell on fertile ground. The PM was asking the public to believe the Coalition’s promise on Medicare even though the Coalition had just broken its promise on superannuation.

As McAllister has said “Voters don’t forget these things. Labor’s success with the ‘Mediscare’ campaign has to be seen in context. People saw a history of broken promises.”

Broken trust risks feeding into a cynicism about the processes of democracy itself. Forty per cent of Australians think it makes no difference which party wins the federal election, and nearly half believe their vote doesn’t matter.

For reform to succeed there needs to be trust between the politicians and the people who elect them.

Reform inevitably takes the public into the unknown because reform is change. If you’re going to follow someone into the unknown you need to trust them.

If the Coalition goes ahead with its proposed tax increases on superannuation it risks destroying for a generation the opportunity for any real economic reform.

John Roskam is executive director of the Institute of Public Affairs

AFR Contributor

Concern rises over $500,000 super contribution cap

Australian Financial Review

Home Personal Finance Superannuation & SMSFs Jul 14 2016 at 6:25 PM Updated Jul 14 2016 at 6:25 PM

by Sally Patten Joanna Mather

Concern is growing in the superannuation industry that the federal government’s plan to introduce a lifetime $500,000 ceiling on after-tax super contributions may be hard to administer, adding to the pressure on the government from the revolt against the change from some backbenchers.

The Australian Institute of Superannuation Trustees said that while it supported the “intention” behind a plan to introduce the ceiling, it harboured concerns about the ability of super funds to implement the policy and the backdating of the cap to 2007.

“AIST is supportive of the intention behind the $500,000 cap but [we] do have concerns particularly around timelines and cost of implementation for funds,” a spokesperson said. The AIST said that replacing the lifetime cap with an annual $50,000 non-concessional contributions limit would be easier to administer.

“It’s easier to monitor the status of contributions made over the course of a year to a member’s fund, than over a lifetime,” the AIST spokesperson said. The lobby group representing not-for-profit schemes added that lowering the pre-tax contributions limit to $25,000, another key measure of the May budget, would hurt older savers.

The Financial Services Council, which represents bank-controlled super funds, also raised concerns over the implementation of the $500,000 lifetime cap.

“Any measure that is backdated by almost a decade will have issues with implementation and with information retrieval, especially as superannuation is currently transitioning from a paper-based system to a digital system,” FSC chief Sally Loane told The Australian Financial Review.

On Monday Ian Silk, chief executive of the $100 million AustralianSuper retirement fund, said the $500,000 cap was retrospective “to a degree” and predicted the government would come under pressure from its own backbenchers to modify the measure. Mr Silk, like many in the industry is supporting a $1.6 million on tax-free super pension transfers and the proposed tax offset for low income earners.

The Association of Superannuation Funds of Australia said it supported the $500,000 lifetime cap, adding that the start date was “a matter for the government”.

Industry Super Australia, which represents large industry super schemes, said it supported lifetime limit, as well as the start date.

“If the objective is to ensure the super settings deliver better sustainability, you do need a mechanism so that people don’t take advantage of a transition time to boost non-concessional contributions,” said ISA deputy chief executive Robbie Campo.

The government has received broad support for other proposed reforms, such as placing a ceiling on tax-free investment earnings in retirement.

But MPs claim to have received fewer donations and found it harder to find volunteers for polling booths during the election because of the proposed changes.

An MP group is set to take alternatives to a party room meeting on Monday but have been told any changes must be confined to super and garner the same level of savings.

The MPs are said to be trying to come up with other policies – and the requisite $2.5 billion in savings – so the most contentious elements of the plan can be dumped.

Former employment minister Eric Abetz and West Australian senator Chris Back publicly questioned the government’s approach in separate radio interviews on Thursday a day after Prime Minister Malcolm Turnbull reiterated his support for the budget measures..

“Dyed-in-the-wool Liberal voters said to me they were very, very upset by the suggestion that something backdated to 2007 was not retrospective. They felt insulted by that comment,” Senator Back told the ABC.

Senator Abetz, who left out of cabinet when Mr Turnbull became prime minister, said the retrospective nature of the $500,000 cap “hurt us within our base”.

The government insists the changes will only affect four per cent of superannuants.

Liberal Party members in Victoria are pushing for an extraordinary state meeting to air their grievances.

Save Our Super, established by Melbourne QC Jack Hammond, who is not a member of the Liberal Party, said the changes should at the very least be grandfathered.

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