Category: Save Our Super Articles

The 2016-2017 adverse superannuation changes; a Grattan Institute/Turnbull Government recipe for loss of trust and increased uncertainty?

Address by Jack Hammond QC, founder of Save Our Super.

Tuesday, 18 September 2018 at La Trobe University Law School, City Campus, 360 Collins Street, Melbourne, lunch-time seminar, “Australian Superannuation: Fixing the Problems”.


In 2016-17, the Turnbull Government made a number of superannuation policy and legislative changes which adversely affected many Australians. Those changes were made without appropriate ‘grandfathering’ provisions even though they amounted to ‘effective retrospectivity’ (a term coined in February 2016 by the then Treasurer, Scott Morrison). ‘Grandfathering’ provisions continue to apply an old rule to certain existing situations, while a new rule will apply to all future cases.

I am a retired barrister and am adversely affected by those 2016-17 superannuation changes. That, in turn, has led me to form the superannuation community action group, Save Our Super.

The Turnbull Government, assisted and encouraged by the Grattan Institute in Melbourne has, without notice and at a single stroke, changed the superannuation rules and the rules for making those rules. They have turned superannuation from a long-term, multi-decades, retirement income system into, at best, an annual federal budget-to-budget saving proposition. That is a contradiction in terms . It is unsustainable.

Further, it is a recipe for a loss of trust and increased uncertainty for all those already in the superannuation system and those yet to start.

Save Our Super has three proposals which we believe will redress the 2016-17 superannuation policy and legislative changes and prevent a recurrence.

But first, how did we get here and in particular, without appropriate ‘grandfathering ‘ provisions? Those type of provisions have accompanied all significant adverse superannuation changes over the past 40 years.1


29 November 2012 Lucy Turnbull appointed a director of the Grattan Institute, Melbourne.2
May to June  2015 Scott Morrison, whilst Minister for Social Services in Abbott Government, makes 12 ‘tax-free superannuation’ promises.3
2014 to 2015 Malcolm and Lucy Turnbull donate funds to Grattan Institute.4
15 September 2015 Malcolm Turnbull replaced Abbott as Prime Minister. Scott Morrison becomes Treasurer.5
24 November 2015 Grattan Institute publishes Report ”Super Tax Targeting” by Grattan Institute CEO John Daley and others. Dismisses need for ‘grandfathering’ provisions6 and observes ‘…that taxing earnings for those in the benefits stage may raise concerns about the government retrospectively changing the rules’. 7

No mention of the possible consequential of loss of trust and uncertainty that retrospective changes may bring.

Note that the Grattan Institute material shows, on its front page, an image of three of the bronze pigs on display in the Rundle Street Mall, Adelaide.8

We, and other self-funded superannuants, believe that the Grattan Institute’s prominent use of that image of those bronze pigs was not merely a juvenile attempt at humour.

It was a none-to-subtle insulting implication that Australians whom had faithfully conformed with successive governments’ superannuation rules and had substantial superannuation savings were, nonetheless, greedy pigs with their ‘snouts in the trough’.

See also 9 November 2016 entry below.

2015-2016 Malcolm and Lucy Turnbull donate further funds to Grattan Institute.9
18 February 2016 Scott Morrison, as Treasurer, gave an address to the Self Managed Superannuation Funds 2016 National Conference in Adelaide.

Draws attention to ‘effective retrospectivity’ and its ‘great risk’ in relation to super changes.

“Our opponents stated policy is to tax superannuation earnings in the retirement phase. I just want to make a reference less about our opponents on this I suppose but more to highlight the Government’s own  view, about our great sensitivity to changing arrangements in the retirement phase.

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. But when you just look at it that is the great risk.”10

3 May 2016 Scott Morrison, as Treasurer, announces in his Budget 2016-17 Speech to Parliament a number of adverse ‘changes to better target superannuation tax concessions’ .

No ‘grandfathering’ provisions announced.11

See also, Budget Measures, Budget Paper No 2, 2016-17, 3 May 2016, Part 1, Revenue Measures, pp 24-30.12

5 September 2016 John Daley, CEO Grattan Institute, said:
“Winding back superannuation tax breaks will be an acid test of our political system. If we cannot get reform in this situation, then there is little hope for either budget repair or economic reform” (AFR 5/9/16)13
9 November 2016 To give effect to the Budget 2016-17 superannuation changes, Scott Morrison presented the Turnbull Government’s package of 3 superannuation Bills to Parliament.

To publicly explain and justify those superannuation changes to Parliament, Scott Morrison and Kelly O’Dwyer circulated and relied in Parliament upon a 364 page “Explanatory Memorandum”.

The Explanatory Memorandum states on its front page “Circulated by the authority of the Treasurer, the Hon Scott Morrison MP and Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP.

In turn, the Explanatory Memorandum expressly refers to, and provides links to, the Grattan Institute’s 24 November 2015 Media Release and Report (see 24 November 2015 entry, above).

As noted above, that Grattan Institute material shows, on its cover, an image of three of the bronze pigs on display in the Rundle Street Mall, Adelaide.14

Bronze pigs in Rundle Street Mall, Adelaide 

23 November 2016 The Turnbull Government, with the support of Labor, rushed through Parliament two of its three superannuation Bills.
29 November 2016 Those two Bills were assented to on 29 November 2016 and are now law:

Superannuation ( Excess Transfer Balance Tax) Imposition Act 2016 (C’th) (No 80 of 2016);15

Treasury Laws  Amendment (Fair and Sustainable Superannuation) Act 2016 ) (C’th) (No 81 of 2016)16

The third superannuation Bill, the Superannuation (Objective) Bill, remains stalled in the Senate.17

1 December 2016 Lucy Turnbull retired as a director of the Grattan Institute.18
24  August 2018 Malcolm Turnbull resigns as Prime Minister.19
Scott Morrison becomes Prime Minister.20

Save Our Super has three proposals which we believe could redress the 2016-17 superannuation policy and legislative changes and prevent a recurrence.

First,  Scott Morrison, in his new capacity as Prime Minister, should request the Treasurer, Josh Frydenberg and/or through him, the Assistant Treasurer, Stuart Robert, to revisit the Turnbull Government’s 2016-17 superannuation changes.

A discussion paper and advice from Treasury should be requested. It should include the effect of the Turnbull Government’s 2016-17 superannuation changes on superannuation fund taxes in 2017-18 and over the forward estimates.

To restore trust and reduce uncertainty in the superannuation system, the Morrison Government should introduce into Parliament legislation which will retrospectively provide appropriate ‘grandfathering’ provisions in relation to the Turnbull Government’s 2016-17 adverse superannuation changes.

Those ‘grandfathering’ provisions to be available to those significantly adversely affected and whom wish to claim that relief. 

Secondly, Save Our Super proposes to create a Superannuation and Retirement Income  Policy Institute, independent of government , funded, at least initially, by private donations/subscriptions.

Its role will be to advocate on behalf of those millions of superannuants and retirees whose collective voice needs to be heard.

Thirdly, Save Our Super will advocate for an amendment to the Australian Constitution, to have a similar effect in relation to superannuation and other retirement income, as does section 51 (xxxi) has in relation to the compulsory acquisition of property.

That section empowers the federal Parliament to make laws with respect to the acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws (emphasis added).

Thus Parliament’s power to make laws in relation to superannuation and other retirement income should not be affected. However, any significant adverse change to existing situations will need to be on just terms, for example, by providing appropriate ‘grandfathering’ provisions as part of that federal law.

1. []
2. [ (pp 2-3)]
3. []
4. [ (p 19)]
5. []
6. [ (p 7)]
7. [ (pp 68-9, para 6.5)]
8. [ (front page)]
9. [ (p 24)]
10. [Scott Morrison, Address to the SMSF 2016 National Conference, Adelaide]
11. []
12. []
13. [ (p 6)]
14. [The Explanatory Memorandum refers to the Grattan Institute’s 24 November 2015 report “Super tax targeting” by John Daley and Brendan Coates: (see page 275, paragraph 14.12, footnote 2). Click on the link on footnote 2, 2 Grattan Institute, media release, ‘For fairness and a stronger Budget, it is time to target super tax breaks’, 24 November 2015,”.
Click on the link at foot of that page Read the report“. That link will take you to the Grattan Institute report “Super tax targeting “ dated 24 November 2015 by John Daley and others. The report’s front page shows the image of those bronze pigs in the Rundle Street Mall, Adelaide. Note: The Grattan Institute’s website has been updated since the publication of that document. However, the article itself and the image of the 3 pigs remain.]

15. [Superannuation ( Excess Transfer Balance Tax) Imposition Act 2016 (C’th) (No 80 of 2016)]
16. [Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 ) (C’th) (No 81 of 2016)]
17. [Superannuation (Objective) Bill]
18. [ (p 3)]
19. []
20. []

Response to Treasury Discussion Paper: Three-yearly audit cycle for some self-managed superannuation funds

Copyright © Jim Bonham 2018

1 Summary

As an SMSF trustee, I am concerned about the proposal to introduce three-year audits for some SMSFs, primarily for the following reasons:

  • None of the three benefits claimed for the proposal (reduction of compliance burden, reduction in audit cost, and rewarding the timely submission of SARs) withstands examination.
  • Audit management will become more complex for the trustee, increasing the risk of inadvertent rule breaches.

I would not opt for a three year audit of my SMSF if this proposal becomes law.

2 Introduction

My wife and I have an SMSF under a corporate trustee structure. The fund was started in 2003 and has been totally in pension mode for several years. The SMSF and some investments outside superannuation will be our only sources of income for the rest of our lives, and this does tend to focus the mind.

Each year, we provide the fund’s financial and share-trading data to our accountant who prepares the tax return etc, sends us a draft for checking and then forwards everything to the auditor. Following satisfactory audit (we have never had a problem), the SAR is then forwarded to the ATO without further intervention by us.

Given the complexity and instability of superannuation rules, we feel the multiple checkpoints in this process provide good protection against unintentional infringements which could see us in trouble with the ATO – a potentially costly and stressful outcome we are very keen to avoid. They can also help protect us against unwittingly increasing our investment risks.

The proposal to introduce an optional three year audit cycle for some SMSFs (which would include our fund) is therefore of considerable concern to us. We see heightened risk with no material compensatory benefit. Given the choice, we would not opt for three-yearly audits.

Below I provide more detailed comments in response to the specific Consultation Questions raised in the Discussion Paper

On 26 July, I had the opportunity to participate in a Treasury round-table discussion about this proposal, which I appreciated very much. I was there to present a trustee’s view point, not that of any organisation, and I made some of the following comments at that meeting.

3 Consultation questions

3.1 How are audit costs and fees expected to change for SMSF trustees that move to three-year cycles?

This is a critical question, there being no point going ahead with the proposal if costs are to rise, so I would like to discuss it in detail with reference to each of the three benefits claimed and the two concerns mentioned on Page 3 of the Discussion Paper.

3.1.1 Benefit 1: “A reduction in the compliance burden …”

I cannot see the basis for this claim, given the following comments from other parts of the discussion paper:

  • “It is proposed that eligibility … will be based on self-assessment” (Page 4)
  • “If the ATO becomes aware that a SMSF trustee has incorrectly assessed their eligibility for a three-yearly audit cycle, … the ATO will notify the trustee that an audit is required and consider further action if necessary” (Page 4)
  • “ .. a number of events can represent a material change to the situation of the fund and may increase the risk of a breach …” (Page 5)
  • “If a key event falls in a year when an SMSF is not otherwise to be audited, the SMSF will be required to obtain an audit … required to cover all financial years since the SMSF’s last audit” (Page 5)
  • Eight “possible key events” are listed on Page 5, with a request for suggestions.

It is crystal clear that moving some SMSFs to a three-year audit cycle will create a more complex compliance landscape.

This must increase the risk of inadvertent breaches. Trustees who opt for three-yearly audits will have to become aware of a greater number of rules, and be vigilant that they do not inadvertently fail to report a key event.

Both these aspects of three-year audits increase the compliance burden, rather than decreasing it.

In addition, the appalling instability of superannuation legislation suggests there is a very high likelihood that, if three-year audits are introduced, the list of key events will change and be extended over time – further exacerbating compliance worry and risk.

It is unlikely that the trustee or accountant will be spared any administrative effort by moving to a three-year audit cycle, because exactly the same set of transactions will eventually have to be presented for audit as with annual audits.

The second part of the first claimed benefit “… while maintaining appropriate visibility of errors in financial statements and regulatory breaches” just does not make sense. How can visibility be maintained if a transaction is not audited for two or three years?

3.1.2 Benefit 2: “A potential reduction in administrative costs due to less frequent audits…”

It is very hard to see where significant savings could come from:

  • Auditing 3 years’ data at once requires examining exactly the same set of transactions as for three one-year audits. The fact that the audit frequency has changed just means that SMSFs will receive one bill instead of three, but the total cost over three years must be at least as high.
  • Audit fees are themselves not a major cost for most SMSFs. Even if some cost saving were to be achieved, its magnitude could only be trivial.
  • There are some obvious ways in which audit costs must increase under this proposal:
    • Both accountants and auditors will find it more difficult to manage a mixture of clients on 1-year, 2-year and 3-year audits, rather than having everyone on a 1-year cycle. This must push costs up for all clients, not just those who opt for three-year audits.
    • Resolving errors, or even simple ambiguities, in data which is 2 or 3 years old will be more difficult, and therefore more costly, than when all data is no more than a year old and issues are still top-of-mind.

3.1.3 Benefit 3: “An incentive for SMSF trustees to submit SARs in a timelier manner”

The only benefit offered is the unsubstantiated hope that some cost savings will result, but even if that turns out to be true the savings will be small.

Such a nebulous offer is most unlikely to influence the trustee who has already indicated a disdain for fulfilling obligations on time and an indifference to potential penalties.

Late submission is really an administrative issue for the ATO, and it is something the ATO must face with every function it supervises. Complicating the audit cycle for SMSFs is not the way to deal with it.

3.1.4 Concern 1: “… increased non-compliance …”

Certainly the risk of inadvertent non-compliance is increased as discussed above.

The risk of deliberate non-compliance may also increase, because a more complex operating environment creates opportunities.

3.1.5 Concern 2: “… alter the workflow of the SMSF audit industry … lead[ing] to a reduction in the number of businesses specialising in SMSF audits”

That certainly seems likely, and if it occurs the reduced competitive forces will probably push audit costs up further across the market.

3.1.6 Mitigation: “… concerns will be mitigated by appropriate eligibility criteria and, if necessary, transitional arrangements”

I doubt that either eligibility criteria or transitional arrangements will address concerns about cost increases and complexity.

3.2 Do you consider an alternative definition of ‘clear audit reports’ should be adopted? Why?

Clear audits and timeliness are proposed as the criteria by which SMSFs would qualify for a three-year audit cycle.

There is an implied assumption here that SMSFs with a history of clear audit reports and timely submissions are more likely than not to continue that behaviour. Intuitively that seems likely, until one considers the very high number (40%) of SMSFs that the ATO says reported late in a three year period. The assumption ought to be tested, and I assume that ATO has the data to do so.

If one were approaching this problem for the first time, without preconceptions, one might expect that the simplicity of an SMSF’s structure and its transaction history would be a far better predictor of whether or not it routinely submits on time and receives clear audits.

However, simple SMSFs are cheaper to audit, reducing the potential (if any) for cost savings.


3.3 What is the most appropriate definition of timely submission of a SAR? Why?

I think it is consistent with the spirit of this proposal to require “timely submission” to mean three consecutive years without a late submission.

3.4 What should be considered a key event for a SMSF that would trigger the need for an audit report in that year? Which events present the most significant compliance risk?

I don’t have a view on what should constitute key events, as I think that requires a professional opinion, but the following principles are critical from a trustee’s point of view:

  • The list of key events should be confined to items which, if not audited promptly, may cause serious problems later.
  • Procedures should be put in place to ensure that the list of key events is kept as stable as possible, and is not allowed to grow unnecessarily.
  • If trustees are to be responsible for self-assessment of their eligibility for 3-year audits, then it is essential that
    • key events do not include events which are outside the trustee’s control
    • key events do not include events of which the trustee may be unaware
    • key events are easily understood by trustees
    • it is easy for trustees to keep up to date with the list of key events

3.5 Should arrangements be put in place to manage transition to three-yearly audits for some SMSFs? If so, what metric should be used to stagger the introduction to the measure?

Although I do not support the proposal, if it does become law then the method of introduction of the process should be a business decision for accountants and auditors.

Trying to impose some system (like odd and even number plates in a fuel shortage?) seems likely to make a complex issue even more so.

3.6 Are there any other issues that should be considered in policy development?

The superannuation regulatory environment is excessively complicated and has become severely unstable: grandfathering has been virtually abandoned and frequent changes have become the order of the day, in an area that is supposed to guide investment and income provision on a generational timescale. Such instability is not in the national interest.

In this environment the only way to avoid serious unintended consequences of proposed changes is to engage in a thorough process of socialization before they are introduced. To that end, discussion papers such as the present one are very valuable, and I appreciate having had the opportunity to contribute.

The rider I would add to that, though, is that it would have been far better – from both a political and a process point of view – to have had this public discussion before the Budget announcement, rather than after it.

4 About the author

Jim Bonham is a retired scientist and manager. He is deeply concerned about the way retirement funding has developed in recent years, particularly with respect to frequent changes in superannuation legislation made with inadequate consultation and no respect for grandfathering.

An open letter to Kelly O’Dwyer, MP – the Member for Hypocrisy

22 April 2018

Dear Kelly,

It is with sorrow rather than anger that John McMurrick and I write this open letter to you.

On 4 April 2018 you circulated to “higginsliberals” an email regarding superannuation. It was headed “The choice could not be clearer”.

That email included a link to a speech about superannuation, which you said you gave on that day to the Australian Financial Review’s Banking and Wealth Summit (see attached copy [at bottom of this page]; addressee redacted).

When John and I read your email we were gobsmacked! What you now say sits in marked contrast to your past acts.

In our opinion, for the reasons that follow and for so long as you remain in Parliament, you no longer deserve to be known as the Member for Higgins; you should be known as the Member for Hypocrisy.

Your email and our response

Your email begins: “Fundamentally, the Liberal Party stands for those Australians who work hard to build a better future for themselves and their families. Our superannuation system must reward those who save for their future….”.

Later you say: “ [In my speech] I spoke about the Turnbull Government’s plans to make sure our superannuation system… delivers certainty and stability so Australians can plan for their retirement in confidence”.

However, as you are well aware, in May 2016, by the Turnbull/Morrison Budget, many Australians who had worked hard to build a better future for themselves and their families and who had saved in accordance with successive governments’ superannuation rules (including those made by Coalition governments) were not to be rewarded but were to be punished by the Liberal Party.

You were instrumental in effecting those changes to the superannuation system.

Those changes delivered uncertainty and instability.

Australians can no longer plan for their retirement in confidence.

You have turned superannuation from a long-term, multi-decades, retirement income system into, at best, an annual Federal Budget-to-Budget saving proposition.

That is a contradiction in terms.

It is unsustainable.

Background to Turnbull/Morrison Budget 2016

In February 2016, Scott Morrison rightly cautioned against what he called the ‘effective retrospectivity’ of raising taxes or restrictions on the pension phase of superannuation after attracting and trapping savings in superannuation for some 40 years under the earlier legislated tax rules.

Then, in May 2016, Scott Morrison and you did just that.

Both of you failed to include in the Turnbull/Morrison Budget 2016 appropriate ‘grandfathering’ provisions which have accompanied every major adverse change in pensions and superannuation tax for the last 40 years.

Scott Morrison and you, with the support of the Coalition, destroyed many Australians’ confidence and trust in the superannuation system.

But that’s not all.

By what follows, Scott Morrison and you gratuitously insulted every Australian that had faithfully conformed with the previous superannuation rules and had, in the process, lawfully saved a substantial amount for their retirement.

Explanatory Memorandum for 3 Superannuation Bills, November 2016

On 9 November 2016, to give effect to those superannuation changes, Scott Morrison presented the Coalition’s superannuation package to Parliament. The changes wrought by that package came into practical operation on 1 July 2017.

To publicly explain and justify those superannuation changes to Parliament, Scott Morrison and you circulated and relied in Parliament upon a 364 page “Explanatory Memorandum”.

The Explanatory Memorandum states on its cover page “Circulated by the authority of the Treasurer, the Hon Scott Morrison MP and Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP”.

In turn, the Explanatory Memorandum expressly refers to, and provides links to, a Grattan Institute media release and report (see attached extract [at bottom of this page]).

That Grattan Institute material shows, on its cover, an image of three of the bronze pigs on display in the Rundle Street Mall, Adelaide [1].

Bronze pigs in Rundle Street Mall, Adelaide

We, and other self-funded superannuants, believe that The Grattan Institute’s prominent use of that image of those bronze pigs was not merely a juvenile attempt at humour.

It was a none-to-subtle insulting implication that Australians that had faithfully conformed with successive governments’ superannuation rules and had substantial superannuation savings were, nonetheless,  greedy pigs with their ‘snouts in the trough’.

Yet there it is in Scott Morrison’s and your Explanatory Memorandum to Parliament which you used to justify and explain your superannuation changes.

Your comment in your email regarding Labor’s proposed changes and our response

In your email you say: “In contrast, Labor plans to make changes that will make it harder for people to be self-reliant in their retirement,….”(emphasis in original).

In our opinion, it is Scott Morrison and you, supported by the Coalition who have made it harder for people to be self-reliant in their retirement, principally by the adverse superannuation changes announced in the Turnbull/Morrison Budget 2016 and its subsequent legislation.

Labor gratefully supported that legislation in which you failed to include appropriate ‘grandfathering’ provisions.

Labor could not believe its luck!

True it is, that Labor plans to make it even harder, than the Coalition has, for people to be self-reliant in their retirement. But surely it is hypocritical to draw attention to Labor’s proposed adverse superannuation changes whilst studiously ignoring those in which you played a major part.

The choice could not be clearer

Finally, the heading of your email, namely “The choice could not be clearer”, may well prove to be true.  But, because of your past actions and that of Scott Morrison and the Coalition, not in a way that you and many of the recipient “higginsliberals” would prefer to see happen.


Jack Hammond and John McMurrick

On behalf of themselves and Save Our Super (

Attachments to the open letter:
The choice could not be clearer

Explanatory memo superannuation bills 2016 extract – p 275

Footnote to the open letter:
[1] The Explanatory Memorandum refers to The Grattan Institute’s 24 November 2015 report, “Super tax targeting” by John Daley and Brendan Coates: see page 275, paragraph 14.12, footnote 2.
Click on the link on footnote 2, “2 Grattan Institute, media release, ‘For fairness and a stronger Budget, it is time to target super tax breaks’, 24 November 2015,”
Click on the link at foot of that page “Read the report“.
That link will take you to The Grattan Institute report “Super tax targeting “ dated 24 November 2015 by John Daley and Brendan Coates.
The report’s cover page shows the image of those bronze pigs in the Rundle Street Mall, Adelaide.
Note: The Grattan Institute’s website has been updated since the publication of that document. However, the article itself and the image of the 3 pigs remain.

Labor’s Pensioner Guarantee for dividend imputation credits

27 March 2018

Sourced from:
– (no longer available)

High taxes, more regulation? Sounds like Turnbull’s Coalition

The Australian

26 August 2017

Judith Sloan

Picture the scene. It was this year’s budget lockup and I was trying to keep my head down. I made the mistake of reading the speech that would be delivered in a few hours. Now these speeches are generally vacuous drivel, but this year’s really set the bar at a new low. Scott Morrison would be speaking as if he were a Labor politician.

“We must choose to guarantee the essential services that Australians rely on. We cannot underestimate just how important these services are to people. We must tackle cost-of-living pressures for Australians and their families. We cannot agree with those who say there is nothing that the government can do.”

My god, I thought; the Treasurer is our father in Canberra and he is here to look after us. His likely defence is that the focus groups made him say this.

If that weren’t bad enough, the next instalment came after the entrance of the Treasurer to our room in the lockup. When confronted by some awkward questions about the case for the major bank levy, he quoted the title of the song: Cry Me a River.

In other words, he simply didn’t care that the new impost was ill-considered and economically damaging. He couldn’t even outline a sensible rationale for seeking to rake in more than $6 billion in four years from the four big banks and the Macquarie Group. That the burden of the tax would be borne by customers, shareholders and workers was but a passing consideration for our caring father. But his flock — again thanks to those focus groups — was telling him they didn’t like the banks. The logic is that if you don’t like them, he will impose a whopping new tax on them.

The only way I could get the Treasurer’s preferred song out of my head was to impose another one. And it went like this: you’ve lost that liberal feeling / bring back that liberal feeling.

To my mind, this aptly sums up what has happened to the Turnbull government. It has abandoned support for liberal ideas; for the centrality of individual responsibility. Malcolm Turnbull and other senior ministers increasingly reject the importance of competition and choice as the means of ensuring consumers get the best deal. Instead, they (erroneously) think more government regulation, aggressive bully­ing of businesses and trammelling on legitimate commercial arrangements are the way forward.

There are many — too many — examples and I will go through some of them. But here’s an important general point: if the Liberal Party wants to turn its back on its principles — and I haven’t even mentioned its general embrace of higher taxes and its botched superannuation initiatives — then voters are likely to turn to the real deal when it comes to the rejection of free market economics and install Labor.

Labor’s embrace of big government, high taxes and more regulation is also a repudiation of the Hawke-Keating legacy. But, let’s face it, Labor can concoct a form of words that goes with its retreat from those halcyon days; think fairness, inequality, helping minority groups and the like.

These slogans play less well in the hands of members of the Coalition government even though some of them, including the Prime Minister, laughably think they can lay claim to that much-distorted adjective, fair.

So let’s go through some of the anti-Liberal policy initiatives the Turnbull government has implemented or is proposing to implement. Of course, the major bank levy is right up there as one of the most preposterous.

That the Treasurer could keep a straight face telling us that he was instructing the Australian Competition & Consumer Commission to ensure that the banks didn’t pass the levy on to their customers was a truly amazing sight. What does he thinks happen to taxes? Does he think that businesses absorb the GST?

And how does Morrison’s dub­ious intervention square with the Treasury’s modelling on the revenue that will be gained from the levy, firmly assuming it will be passed on to customers and therefore not affect the banks’ profits? Otherwise, the revenue from the normal company tax paid by the banks would be reduced, and we couldn’t have that.

It is almost impossible to list the new regulatory interventions affecting the banking sector, most of them simply costly and likely to prove ineffective. There are regulators falling over themselves to impose higher costs on the banks.

Arguably, the cost of all these new, ongoing intrusions — think, in particular, the absurd banking executive accountability regime — will be higher than the alternative of having a royal commission into banking, which for political reasons the Liberal Party has done everything to avoid.

Then we go to the energy space. Here the government makes the mistake of openly expressing its reservations for undertaking a series of extraordinary anti-market interventions but proceeding notwithstanding.

Consider the decision to restrict the export of gas for which there had been previous government approval. Or consider the government’s determination to remove the right of the transmission companies to appeal the decisions of the regulator, overriding the basis of good governance of regulated industries.

And then, willy-nilly, the government agreed to 49 of the 50 recommendations of the Finkel review on energy security, even though many of them are ill-conceived and add up to a new layer of costly regulation on a sector that is already overwhelmed by a labyrinth of complex and inconsistent rules and regulations.

And because we don’t have enough energy agencies — there are dozens if you add in the state-based ones — another will be added: the Energy Security Board.

There is also the truly bizarre decision of the Coalition government to support the entreaties of the Nationals to re-regulate the sugar industry in Queensland, turning its back on the previous difficult and expensive decision to remove the single desk selling arrangement in that industry.

And what about the Treasurer’s decision to refuse to lower the prohibitive tariff on imported second-hand cars even though there will be no local manufacturing in this country from the end of the year?

Evidently, regional car dealers and parts suppliers were able to pressure the government to reject this clearly pro-consumer decision. Note that the importation of relatively new second-hand cars is commonplace in New Zealand and other countries, and causes no problems at all. Instead, the Turnbull government’s motto is: rent-seekers, come on down.

During the week, a senior member of the Turnbull government texted me to ask why I was so angry about the government. I’m not angry; I’m just bitterly disappointed. If the Turnbull government ever had a chance of convincing the electorate that it could govern well, it needed to stick with the principles it inherited from the Howard years. And those principles involved commitment to individual responsibility, competition, choice, low taxation and getting government out of the way as much as possible. On all scores, this government has been a complete flop.

Let’s face it, telling the voters that the government is here to look after us will always end in tears. Disappointment, frustration, enfeeblement — these are the likeliest outcomes.

Emphasis added by Save Our Super

Most superannuation nest eggs won’t save you from a pension

The Australian

25 July 2017

Judith Sloan

It won’t surprise anyone that I don’t regard myself as a victim — never have, never will. Can I also point out that one of the greatest
joys of my life has been bringing up children? I was lucky to be able to drive a balance between family and work.

So when I read the latest treatise bemoaning the shabby treatment of women in the workforce, I am generally uninclined to accept
the message or the recommendations at face value.

The recent topic has been superannuation and women. A study was conducted by think tank Per Capita and was funded by the
Australian Services Union. Note that the motto of Per Capita is Fighting Inequality in Australia. You get the drift.

It turns out that women’s superannuation balances are systematically lower than men’s, that the gap increases across the course of
working lives and that, at the age of 65, the average difference between men’s and women’s superannuation accounts is $70,000.

The median women’s balance immediately before retirement is less than $80,000. Mind you, the median men’s balance is only
$150,000. Anyone with these sorts of balances, and assuming a lack of other substantial assets (apart perhaps from a home), will
qualify for the full age pension and its associated benefits.

The authors of the study incorrectly describe the state of women’s superannuation as a wicked problem. A wicked problem is one
with inconsistent objectives and a lack of agreed information. This is simply not the case when it comes to women and

If there is a problem, it is the broader one related to the real purpose of compulsory superannuation. And this applies to both women
and men. For anyone on relatively low wages, all superannuation does is force them to accept reduced wages during their working
lives in exchange for possibly knocking off their full entitlement to the age pension. It’s a very bad deal.

Year after year these workers must forgo current consumption, which may now include buying a house but also help with the costs
of rearing children, meeting daily expenses and the occasional holiday, to be slightly better off when they retire. It really is a diabolic
trade-off for these workers, but from which they cannot escape.

So let’s return to the study. The reasons for women’s lower superannuation balances are obvious: on average, they earn less during
their working lives and they work less. This doesn’t mean that all women have low superannuation balances, just as this doesn’t
mean that all men have high superannuation balances.

Let’s take the working less bit first. Women are much likelier to work part time than men. In the most recent figures, women make
up 47 per cent of the workforce, a historical high. But almost half of women work part time, defined as those working 35 hours a
week or less, while only 18 per cent of men work part time.

Note, however, that the proportion of men who work part time has also been rising.

On this basis, it is hardly surprising that women’s superannuation balances are lower. They work fewer hours than men and hence
the wage on which their superannuation contribution (currently 9.5 per cent) is based is also lower.

But we shouldn’t forget that most women who work part time are doing so to balance their family and work responsibilities. And
many of these women quite rightly regard earnings and superannuation as a joint family product with both partners contributing to
the common pool.

It also should be noted that in the event of divorce, superannuation is regarded as an asset of the marriage to be divided up as part of
the financial settlement.

So what is the impact of the gender pay gap, an issue that attracts a lot of attention, most of it ill-informed?

At present, the difference between male and female earnings is about 16 per cent. It has fallen slightly as the mining investment
boom has come off and men have lost their high-paid jobs in that sector.

But the gross pay gap doesn’t tell us much about the explanations. After controlling for the many variables that affect earnings, such
as occupation, education, training, job tenure and the like, the pay gap narrows significantly, although it doesn’t reduce to zero.

But here’s the rub, at least for the Per Capita study and its sponsor, the Australian Services Union: the gender pay gap for low-paid
workers is explained entirely by wage-related characteristics. Moreover, the impact of minimum wages is to increase women’s
earnings relative to men’s.

So what should you make of the recommendations of this dubious study? In a word, they are ridiculous.

Let’s take the last one first — that the superannuation contribution be lifted immediately to 12 per cent. What the authors are saying
is that all workers must immediately forgo an additional 2.5 percentage points of their wage to augment their final superannuation
balance in several decades.

Then there are all sorts of silly suggestions for fleecing taxpayers some more to top up the superannuation balances that the authors
regard as inadequate.

But this makes no sense at all. After all, these low super balance workers will qualify for the full age pension, which in turn is fully
funded by taxpayers.

Why ask taxpayers to pay now when they will be forced to pay later?

Then there is the typical recommendation of these types of reports — add another government agency to the very long list of existing
agencies. In this case, the re-establishment of the largely pointless Office of the Status of Women is the suggestion.

For heaven’s sake, we already have the efficiency-sapping and senseless Workplace Gender Equality Agency whose work is of such
a poor standard that no one takes it seriously. But it doesn’t stop the agency from imposing more demands for information on
businesses every year.

In point of fact, there is a big issue here: what really is the justification for the system of compulsory superannuation? The central
rationale for superannuation was that it would replace the Age Pension and give workers a more comfortable retirement than might
have been the case.

Given the forecasts of the proportion of workers who will break free from the Age Pension during the next 40 years — it hardly
budges — the debate we should be having is whether we should ditch compulsory superannuation altogether.

Transcript of the ABC’s 7.30 Report interview of Save Our Super’s Jack Hammond QC and John McMurrick on Kelly O’Dwyer

Click here to view the ABC’s 7.30 Report interview of Save Our Super’s Jack Hammond QC and John McMurrick on Kelly O’Dwyer.

Following is the transcript of the interview:

ANDREW PROBYN, REPORTER: A little over a week into maternity leave for her second child, Kelly O’Dwyer’s enemies have struck and they are not afraid to spell out what they want.

JACK HAMMOND QC, ‘SAVE OUR SUPER’ FOUNDER: Kelly O’Dwyer, in my view, doesn’t deserve to be our local member.

ANDREW PROBYN: One of Malcolm Turnbull’s five women Cabinet ministers, Ms O’Dwyer, is being targeted by a group of rich and powerful constituents, still furious at the use of the Government’s changes to superannuation. They say the timing of their intervention is incidental.

JACK HAMMOND QC: It’s a complete, if you pardon the pun, misconception. It has got nothing to do with her being on maternity leave or otherwise. They gave birth to an appalling policy which is affecting thousands of Australians and not only now but in the future.

They are the people who they should be thinking about.

ANDREW PROBYN: The Government argued that only the very rich were affected and with Labor support, the changes passed Parliament last November, including a 15 per cent tax on earnings for super nest eggs worth more than $1.6 million.

KELLY O’DWYER, FINANCIAL SERVICES MINISTER: Superannuation isn’t simply a revenue grab. It is about making sure the system is sustainable. It is about making sure that it is fair and, above all, it is about making sure that it is flexible and it is about making sure that we look after all Australians, not just a few.

ANDREW PROBYN: One of those angered is Jack Hammond, a barrister who lives in Ms O’Dwyer’s leafy suburban seat of Higgins who quickly moved to set up the ‘Save our Super’ group. It held a rally during the election campaign that attracted a modest crowd but included some backers with deep pockets.

JACK HAMMOND QC: What may have been lacked in numbers, certainly made up in vehemence and anger.

JOHN MCMURRICK, FORMER LIBERAL MEMBER: No, it’s very unfair. It affects a lot of people. And they are crucifying not only those who made a bob, they’re crucifying hundreds of other people.

ANDREW PROBYN: John McMurrick, a former insurance broker, now property developer bristles at suggestions his opposition is out of self-interest.

JOHN MCMURRICK: We have got a campaign to try and help people who have planned for 30 and 40 and 50 years and their whole plans are thrown into complete confusion.

ANDREW PROBYN: Mr McMurrick a big party donor, quit as a Liberal Party member last year. But the push to unseat Ms O’Dwyer got new potency when Tony Abbott’s former Chief of Staff Peta Credlin, was mentioned in dispatches as a potential replacement.

JACK HAMMOND QC: She speaks very plainly. She is a very intelligent person and thus far she hasn’t broken any promises to this electorate and the Australian people.

ANDREW PROBYN: Ms Credlin, no ally of Ms O’Dwyer, was slow to dispel the story, saying at first she had not been formally approached to run in Higgins.

But by Sunday when the optics of moving on a Cabinet minister on maternity leave sunk in, she made it clear.

PETA CREDLIN, TONY ABBOTT’S FORMER CHIEF OF STAFF: Regardless of whether it is Kelly O’Dwyer or anyone else, I don’t think challenging sitting members is a good look. It certainly is not something that is rewarded in the Liberal Party.

ANDREW PROBYN: As the minister with responsibility for superannuation, Kelly O’Dwyer is feeling the heat for a collective Cabinet decision made almost a year ago, but the undermining of her just days after giving birth is very ordinary indeed.

And that’s only half of it. Ms O’Dwyer is at the pinch-point in an increasingly toxic Victorian Liberal Party division.

She’s caught up in a factional war, involving state party president Michael Kroger. It’s a split that could have implications beyond Victoria.

STEPHEN MAYNE, FORMER LIBERAL STAFFER: Michael Kroger is a very controversial figure. He is the President. There was a failed coup against him recently involving Peter Reith as an alternative candidate, which was backed by all of the old Peter Costello supporters like Kelly O’Dwyer and was also backed by the Victorian state Liberal Leader Matthew Guy. And obviously there is a state election in Victoria next year. So, it is the Kroger versus the rest forces at work.

MICHAEL KROGER, VICTORIAN LIBERAL PRESIDENT: I don’t comment on Liberal Party preselections. That is a matter for branch members. We had this trouble recently in the Victorian party, where various MP’s were commenting on the presidency. And that goes down extremely badly with branch members.

ANDREW PROBYN: Former Howard government member Peter Reith suffered a stroke in late March, forcing his withdrawal from his challenge for the presidency. Kroger loyalists say that their man would have won anyway. Perhaps by as many as 150 out of 1150 votes. The Reith camp says that’s rubbish and Stephen Maine, a former Liberal staffer, agrees.

STEPHEN MAYNE: Matthew Guy, coming out publicly and endorsing Peter Reith was the decisive factor in that contest and many believe that Reith would have won because Kroger was on the nose.

ANDREW PROBYN: Liberal insiders say there is a real prospect of tit for tat preselection challenges between the Conservative and moderate wings of the Liberal Party and not just in Victoria.

Tony Abbott is facing a possible challenge in Warringah and his staunch ally Kevin Andrews will likely face a fight for his safe seat of Menzies. Ironically was once touted as a seat fit for Peta Credlin.

STEPHEN MAYNE: It might be a case of leave Tony Abbott alone or we will proceed with this challenge against Kelly O’Dwyer and it might be that the Abbott forces are looking for a bit of peace based on “you wouldn’t want a war, would you?”

ANDREW PROBYN: Not that any of this would particularly perturb any of those who have their own personal beef with the Liberals.

JACK HAMMOND QC: It is not rich people intervening to protect themselves. It’s people who have relied on promises of government over decades, who have done nothing more than obey the law and then on budget night without any forewarning, you are suddenly sprung with a completely changed policy.

The way in which it is framed is, this will only affect a few wealthy people. How puerile, really.

JOHN MCMURRICK: They will never raise any money until they get the trust of the people back. They have lost the trust of their constituents and they will find this out at the next election. Now we have heard from some politicians, the way it is looking, we will lose 20 seats at the next election. What a mess.

Government push for income retirement products mired in division

Australian Financial Review

14 July 2017

Alice Uribe

The idea behind it is simple: Australia needs a way to ensure retirees do not outlive their savings. The solution sounds simple too: Create a suite of products that can provide a minimal additional level of income or a guaranteed level of income, with the expectation that it will stay constant (in real terms) for life.

But the path to creating the federal government’s Comprehensive Income Products for Retirement regime (also known as MyRetirement) is proving anything but smooth. Many believe what the government has come up with is at best unworkable and ineffective, and at worst unnecessary .

The peak body for the superannuation industry, the Association of Superannuation Funds of Australia, says in its 27-page submission to the inquiry into CIPRs that the framework “as currently designed … is neither necessary nor sufficient to achieve its stated objectives”.

KMPG’s superannuation director Katrina Bacon is blunt. She doesn’t believe many retirees will embrace the annuity-style products the regime envisages.

“I believe the launch of retirement products will continue to be a slow burn. From the individual’s point
of view, the framework does little to address the impediments to members taking them up,” she says.

Private pension
With the majority of super funds’ memberships soon to stop working, a so-called private pension product could well become their most important product offering.

This move towards the CIPRS framework stems from people’s uncertainty over how to make their retirement funds last across an impossible-to -predict lifespan.

Statistics show that 50 per cent of males currently aged 65 will die before 85, while 50 per cent will live longer and many will hit the ripe old age of 100.

“Because of the uncertainty, many retirees scrimp and save, and live on the minimum drawdown from their superannuation assets, driven by the fear of running out. As a consequence their lifestyle in retirement is curtailed and bequests are high,” Bacon says.

Those who are well-off can draw down the minimum amount from their super pension, keeping it in a tax-free environment.

“But for the population in between – who have a reasonable amount of super savings that can usefully supplement the age-pension and non-super assets – the challenge is how to spread this amount over retirement,” she says.

Super funds began thinking about the particular issues faced by retirees as far back as 2009, with ING becoming the first to market with a product that provided a guaranteed income for life. But these products have received a mixed reaction because of their cost and the challenge of explaining them.

Default offering
“The importance of this issue has increased as the number of retirees has grown. The concept of a MySuper-style default offering in retirement was contemplated as part of the Stronger Super reforms but was not implemented,” says Bacon.

“It was raised again as a recommendation of the 2014 Financial System Inquiry, eventually leading to the government’s release of the CIPRs framework for industry consultation.”

Treasury manager, retirement income policy division, Darren Kennedy told a Financial Services Council forum in May that the CIPRs framework aims to balance flexibility and risk by combining products like an annuity and an account-based pension.

Kennedy says the CIPRs framework is not intended to compel retirees to take up a certain retirement income product, to encourage annuities, to eliminate bequests for super or replace the need for financial advice.

Burden for retirees: Monitoring $1.6 million transfer balance cap

The linked article,, originally appeared at – a free Australian website for simple superannuation and retirement planning information. Trish Power is also the author of DIY Super for Dummies, Age Pension made simple, and many other books on retirement, and investing.

Burden for retirees: Monitoring $1.6 million transfer balance cap

 March 29, 2017 by Trish Power
The linked article reproduced with permission from Trish Power and Trish Power.The linked article,, originally appeared at – a free Australian website for simple superannuation and retirement planning information. Trish Power is also the author of DIY Super for Dummies, Age Pension made simple, and many other books on retirement, and investing.

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