Tag: superannuation pillars of principle

[Superannuation] money matters top of mind as Peter Costello contemplates 60

The Age Businessday

27 July 2017

CBD – Colin Kruger

He may be just weeks away from his 60th birthday, but our former treasurer and Nine Entertainment chairman, Peter Costello, showed he still knows how to play an audience at the Financial Services Council Leaders Summit in Sydney.

Actor Rob Carlton joked in his introduction for Costello that our former treasurer is not an Australian citizen. Costello replied that he had always thought he was an Australian citizen, but he looked into it this morning and discovered he was in fact the son of Bill Gates, and he was going to send him a bill.

Gates turns 62 in October and may be better with his arithmetic than the Future Fund chairman. And if he isn’t, well, he better beware given Costello managed to blow our once-in-a-lifetime mining boom with very little to show for it.

Digging into his trove of political anecdotes, Costello mentioned that the bureaucrats originally proposed to call our bank regulator, APRA, the Australian Prudential Regulation Insurance Commission or APRIC.

He asked them how you’d pronounce it, and they said “a prick”. Costello said he didn’t think that was a good idea.

“I don’t miss politics,” Costello said. “The bad thing about politics is you have to spend a lot of time in Canberra and I don’t miss Canberra. Since I’ve left politics, I think I’ve been back to Canberra three times.”

That may explain why the television networks are having so much trouble getting rid of the licence fees. Honestly, what is Nine paying him $425,000 a year for?

And Costello could not resist a swipe at Malcolm Turnbull’s government and its miserly attitude to superannuation reforms, which kicked in from July 1 this year.

“I don’t see what’s wrong with giving people a tax break to put money into super,” he said. “The government gets it back eventually when you take them off the pension, but that theory seems to have fallen out of favour.”

Is the thought of retirement a little closer to home now that someone is about to turn 60?

(Emphasis added by Save Our Super)

Tax experts blast super changes

The Australian

8 August 2017

Pia Akerman | Reporter | Melbourne | @pia_akerman


Psychologist Maureen Burke is one of thousands of Australians upset by changes to the superannuation system. Picture: Lyndon Mechielsen

Tax lawyers, accountants and fin­ancial planners have attacked the government’s changes to superannuation regulations, declaring it a “shemozzle” with widespread confusion about details affecting thousands of people.

Under changes that came into effect on July 1, a $1.6 million transfer cap has been imposed on the total amount of superannuation that can be put into a tax-free retirement phase account.

Any excess funds now need to be put into an accumulation phase fund — where earnings are taxed at 15 per cent — or withdrawn from the super system.

Despite being a key part of the government’s superannuation reforms, details about the balance transfer cap’s application were still being finalised in June, with industry experts voicing frustration about the uncertainty.

The Tax Institute, representing tax professionals, has warned that further sticking points are likely to emerge as a result of the rush to implement the reforms, which were first announced in last year’s federal budget. “Since May 2016, this has been a real debacle,” institute superannuation committee chairman Daniel Butler said.

“The industry is just up in arms about it. It’s proving to be an absolute disaster in practice.”

The government was forced to backflip on its initial plan for a $500,000 “lifetime cap” on non-concessional contributions following uproar from backbench MPs, parts of the super industry and many conservative voters, instead reducing existing annual non-concessional contributions cap from $180,000 a year to $100,000 a year.

Industry bodies told The Australian that although Treasury and the Australian Taxation Office had worked diligently to confer about how the changes would apply, too much reform was implemented too fast.

While the balance transfer cap is the main issue, there is also some confusion around eligibility for one-off capital gains tax relief available for self-managed super funds to partially offset capital gains arising from complying with the $1.6m cap.

Financial Planning Association policy head Ben Marshan described the reforms as “a bit of a shemozzle” with elements of the transfer balance cap still being legislated in the month before it was due to take effect.

“Consumers need to take a good look at their superannuation and make sure it’s in order to make sure they’re not breaching any of these new laws,” he said.

Brisbane psychologist Maureen Burke had to set up a new superannuation accumulation fund because she hit the $1.6m cap after selling her family home and putting the proceeds into super.

Dr Burke, who had planned to retire at the time of the global fin­ancial crisis but kept working part-time to maintain financial security, said she was angry at the cost of seeking financial advice and maintaining another superannuation account.

“Superannuation was to help Australians work towards a self-funded retirement,” she said. “Now they are pulling the rug from under us and accusing us of being tax dodgers. It has eroded any trust and certainty in the system.”

A spokesman for Revenue and Financial Services Minister Kelly O’Dwyer said industry bodies had been regularly consulted since late last year and SMSFs had received some administrative concessions while they adapted to more onerous reporting requirements.

Self-managed Independent Superannuation Funds Association director Duncan Fairw­eather said Ms O’Dwyer had rejected the association’s earlier request for an amnesty period to the end of 2017.

Superannuation excerpt from the Australian Conservatives’ Policies

 Our Policies

Our policies are framed by our principles and developed in consultation with Australian Conservatives members.

We will update policies as they are developed and announced, and our latest policy-based initiatives can be seen in our News section.


Lower, simpler, fairer taxes and deregulation

We will restore confidence and certainty in the superannuation system to ensure those who have worked hard to achieve financial self-sufficiency will not be disadvantaged by government decisions.

Source (click on link): https://www.conservatives.org.au/our_policies

Make Future Fund the default superannuation fund

The Australian

19 August 2017

Alan Kohler

The government is thinking about whether, and how, to turn the Future Fund into a national default superannuation fund. They should get on with it — it’s a good idea. Not that it would be simple, or uncontroversial.

For a start the Future Fund doesn’t want to become a national super fund and accept retail money, for fear of losing its status as a sovereign wealth fund and all the immunities that go with that, although it is interested in managing the money.

And the nationalisation of the juiciest part of the superannuation industry (default) would be furiously resisted by all sides, with the semi-socialists in the unions and ALP resisting no less furiously than the finance sector capitalists and the political right.

And yet … Australia’s superannuation system is a gravy train for an army of rent-seekers and a dreadful mess for those it is supposed to serve.

We have a choice of funds, but in reality two-thirds of employees are herded into industry and bank-owned funds based purely on deals between employers and their unions and banks, deals that have nothing to do with the retirement needs of employees.

If it’s a unionised business, the union’s industry fund will usually be mandated in the enterprise bargaining agreement as part of the workplace conditions and therefore compulsory for the workers. If it’s not a unionised workplace, the fund will probably be the bank, using the leverage of the overdraft.

What’s more, every time workers change jobs, they end up in another default fund unless they take action to sidestep the new employer’s union or bank deal and assert super fund choice. Most don’t bother and end up with multiple funds — and fees. The employee gets to find out in 40 years whether the result of a succession of employers’ cosy deals with unions and banks were good ones.

The Productivity Commission recognised in its draft report into the super industry in May that there is “market failure”, caused by “paternalism … and historical overhang”, and proposed four options, all designed to improve transparency and competition. The final report is due soon and presumably will repeat the options.

As I understand it, the government is reluctant to go down this path, either because it fears the hated industry funds will end up winning since their performance is better than the bank-owned ones or, worse still, the banks end up winning because their sales culture is more aggressive, or both.

The fundamental problem is there is too much variety and choice in a service paid for now but delivered in decades. More information and competition won’t help because it is impossible to make any kind of choice about a fund when the funds themselves say that past performance is not a guide to future performance.

Retirement saving is not a financial service like banking, which is paid for and delivered concurrently: you can see immediately whether you are getting a competitive interest rate or good service. With super you don’t know for decades.

In the absence of any basis for making an informed choice on behalf of their workers, employers naturally go with convenience — they slide super into the industrial arrangements or the banking relationship. The question is how to fix this when the usual solution to everything — competition and choice — won’t work. Increasingly, it’s clear the answer might lie with the Future Fund, which   was set up by the Coalition government and is beloved by it. In fact it’s probably the only fund the Coalition does like. It is also one of the nation’s best-performing funds, returning 7.8 per cent a year over the past 10 years, including the global financial crisis. The average balanced superannuation fund return, according to ChantWest, has been 4.8 per cent over the same period. The difference in retirement outcomes is staggering. Someone saving $500 a month for 40 years and earning a return of 4.8 per cent would end up   with $724,360. At a return of 7.8 per cent, the same savings plan delivers $1.6 million.

In other words, as things stand, the average super fund member in Australia still has to rely on the age pension when they retire; if the Future Fund were used instead, and going by past performances, the pension would hardly be needed at all, by anyone. Most peoples’ lives, not to mention the federal budget, would be transformed.

So the urgent question is: how can the Future Fund be used for default superannuation?

Easy. The government should create an agency to collect the money and employ the Future Fund to manage it. The National Superannuation Fund would manage member services, payments and liquidity risk and the Future Fund would be required to manage this money in the same way it manages the government’s money now. The Future Fund itself would retain its all-important    sovereign immunities.

The bigger, more difficult, question is whether the NSF would be the only default fund — a quasi-nationalisation of the default sector — or just another option, a sort of default fund.

I think it would be far better if it were the former. Inserting the Future Fund into the system as yet another choice would just make things worse, and employers under pressure from unions and banks would ignore it. But of course, the outcry if that happened would be something to behold.

Default superannuation is Australia’s great gravy train, one of the greatest in the world, probably in history, at least since the East India Company’s government concession was dissolved in 1874.

And that’s the heart of the problem: it’s a 9.5 per cent personal income tax that’s handed over each month to the private sector. It is time the government kept that money, instead of handing it over to the private sector to be fought over.

Alan Kohler is publisher of The Constant Investor

Comment by Save Our Super:

We wonder how long such a fund would withstand political meddling for ‘visionary’ objectives yielding “inestimable benefits” (Stephen Conroy on the NBN).

Tax system geared against rewarding hard work

The Australian

8 August 2017

Judith Sloan

From the point of view of the economy, there is no doubt that hard work is a good thing. Encouraging work effort means there are more people prepared to take jobs and more people willing to put in and work long hours.

Of course, from the point of view of the individual and family, it is a balancing act: achieving the appropriate work-life balance as well as being rewarded (or not penalised) for working extra hours. But here is the nub of our problem: our income tax system is designed to discourage hard work. In combination with the welfare system and the withdrawal of benefits at certain income points, we have the worst of both worlds: people are discouraged from working harder and/or moving into the next income tax bracket.

It comes as no surprise that the proportion of workers working very long hours, defined as 45 hours or more, has fallen in the past 15 or so years. In 2002, 37 per cent of male workers reported working very long hours; last year, the proportion had fallen to 30 per   cent. (Women workers are much less likely to work very long hours, with the latest recorded proportion being fewer than 10 per cent.)

It should also come as no surprise that people of all political persuasions recognise the strong disincentives in the system. When your pay moves from $18,200 to $18,201 you are up for 19c tax in the extra dollar, although just to complicate matters, if you earn less than $20,542, you are entitled to the Low Income Tax Offset.

Arguably, the worst trap in the system is at annual income of $87,000 when a dollar more leads to 32.5c tax on the extra dollar compared with the previous marginal tax rate of 19c.

And if Labor has its way and the additional Medicare Levy of 0.5 percentage points applies to only those earning more than $87,000, this will add an extra $435 for that extra dollar of earnings. This will set a world-record in term of an effective marginal tax rate.

But it’s not just the tax system that is deterring work effort, it is also the withdrawal of family benefits and, from next July, of childcare fee subsidies as family income rises. And then there are those hardworking small businesses that organise their affairs around a discretionary trust.

Labor wants to increase the tax on the beneficiaries of the trust by at least 50 per cent by imposing a minimum 30 per cent tax on trust distributions. The bottom line is that whoever is the government, there is an urgent need to reconsider the tax and welfare system and the disincentives it throws up for hard work.

The tax-free threshold is too high, the marginal tax rates are too high and the interaction with the welfare system discourages participation of the secondary worker within families. Throw in changed taxation on trusts, a distorted implementation of a higher Medicare Levy under Labor (and don’t even get me on to super) and you have recipe for lower workforce participation, reduced working hours and shorter working lives.

(Emphasis added by Save Our Super)

APRA crackdown on super spending, governance

The  Australian

14 August 2017

Andrew White

The financial watchdog has written to the boards of the nation’s superannuation funds, outlining a range of tough new proposals aimed at lifting governance across the $2.3 trillion sector, including stamping out wasteful spending of members’ retirement savings.

Under the plan — which would become part of the licence condition of the funds — boards may have to demonstrate value for money in sponsorship arrangements, and quasi-political spending by funds has been put into question.

At the same time the new proposals could make it tougher to offer life insurance inside super funds if there is no clear benefit for a fund member.

The Australian Prudential Regulation Authority will also force super funds to bolster strategic objectives and undertake better business planning.

The latest in a series of super fund reforms comes as Industry Funds criticised proposed legislation to improve the accountability and member outcomes of super funds, saying they left out large parts of the industry.

Industry Super Australia said the legislation left the “vast majority” of retail superannuation assets outside a new outcomes test because 83 per cent of that sector’s asset were held outside the low-cost default MySuper fund.

“This is the case notwithstanding that such products on average underperform MySuper products, where the majority of industry fund assets are held,” ISA said in the submission, a copy of which has been obtained by The Australian.

ISA also said new powers for APRA to administer super funds would not apply to bank-owned retail funds, while the power to revoke licences would apply only to MySuper products, rather than all funds.

It also said the reporting requirements for operating expenses had been modelled on “look through” requirements for investment fees that had allowed two-thirds of the funds to disclose “absolutely zero investment fees”.

“The reform package would increase the regulatory burden on industry and other not-for-profit super funds, yet allow bank-owned and other retail funds to resist scrutiny and reform,” ISA said.

“The reform package is an example of both the government’s inability to impose real reform on the big banks, and its determination to shoulder industry and other not-for-profit funds out of their way.

“It is unfathomable why the reform package has disregard for improving member outcomes in the poorest performing parts of the industry administered by bank-owned super funds, while imposing further scrutiny largely on not-for profit funds.

“Members are entitled to expect their super savings are being managed transparently and in their best interests regardless of whether they are a MySuper or Choice member.”

The federal government has a suite of reforms for super, including a review by the Productivity Commission into the default system for super fund selection, and governance reforms requiring industry funds to appoint more independent directors.

In a letter to super boards, APRA deputy chairman Helen Rowell said business planning processes of some funds “are based on unrealistic assumptions and lack adequate rigour, including use of poorly constructed indicators or key performance metrics”.

In addition, APRA plans to force funds to act in the “best interest” of members.

“The superannuation industry is going through a period of significant evolution and it is incumbent on licensees to be focused on meeting the best interests of members through delivering high-quality, value for money member outcomes,” Mrs Rowell said.

“This extends to licensees making decisions about the use of members’ money in a manner that provides appropriate transparency and accountability, and is demonstrably in the best interests of members,” she added.

While she declined to be specific, she said some funds were making payments to related parties which had questionable outcomes for members.

“APRA continues to observe instances of poor governance practices by some RSE licensees in relation to decisions regarding the use of member money and fund expenditure, particularly where payments are made to related parties.

“The combination of poor processes and oversight, and failure to take action when issues are identified, can lead to inappropriate costs being incurred that ultimately negatively affect outcomes for beneficiaries.”

In the letter, she also took aim at “business initiatives” where the link to the delivery of quality, value-for-money outcomes for beneficiaries appears limited or is not adequately demonstrated.

She set out plans that would require super funds to regularly assess whether they have provided quality, value-for-money outcomes for all fund members. “The proposed assessment would include consideration of net investment returns, expenses and costs, insurance, and other benefits and services provided,” the letter said.

She said super funds would have until the middle of next month to provide feedback on the planned prudential measures.

While APRA did not name any funds or provide further details in its letter, The Australian revealed in June the regulator had asked the boards of all 15 industry super fund members of peak body Industry Super Australia to explain how the “fox and henhouse” ad campaign was funded.

The employee-and-union-backed super fund group Industry Super Australia launched the TV ad in March to coincide with a Productivity Commission review that is examining breaking open the default model for super, which favours the industry fund sector.

According to a recent report by Rainmaker Information, Australians are charged about $31 billion in fees for the annual management of their super.

Bill Shorten’s same-sex marriage stance is hypocrisy writ large

The Australian

7 August 2017

Tony Abbott

The real villain in the same-sex marriage imbroglio is Bill Shorten. He is the one who’s playing politics with this issue and stopping it from being resolved in this term of parliament via the plebiscite that people want. It’s Shorten who told church leaders before the 2013 election that a plebiscite would be a good way to resolve this issue and it is Shorten who last week backed a plebiscite to resolve the republican issue, but it is Shorten whose cynical hypocrisy has been ignored because Coalition MPs insist on having public second thoughts about our own policy.

If there is one lesson that MPs and political parties should surely have learnt over the past few years it is that you don’t break promises.

“Say what you mean and do what you say” has to be the cardinal rule and is the only way to keep faith with the electorate. Before last year’s election, the Liberal-National coalition was absolutely crystal clear: there would be no change to marriage laws without asking the people their view at a plebiscite.

This issue, the Coalition said, was too important to be decided just by MPs; all of us would have our say. Prime Minister Malcolm Turnbull never liked the plebiscite policy but fully grasps the importance of keeping commitments and, to his credit, is now resolute that nothing can change without a plebiscite first.

That’s why the determination of a handful of Liberal MPs to substitute a free vote in the parliament for the promised plebiscite is so fraught. Instead of pointing out to the gay community that it’s Shorten who’s blocking the possibility of change, they want the government to break its solemn pledge to ask the people before changing the law. It’s bad enough that the opposition-controlled senate has stopped the plebiscite from happening. But it would be even worse if government backbenchers used the senate’s intransigence as an excuse to drop the plebiscite altogether. It would dramatically deepen the trust deficit that plagues our public life.

Of course, some Liberals sincerely support same-sex marriage and want it to be available as soon as possible. That’s a respectable minority view inside the Coalition party room.

To accommodate it, after a marathon debate in August 2015, the joint party room decided that MPs would no longer be bound to oppose same-sex marriage — but were certainly bound not to make change without putting it to the people first, preferably through a compulsory attendance ballot that would authoritatively settle the matter.

The careers of both the Prime Minister and the Deputy Prime Minister demonstrate that Coalition MPs do not and should not face punishment for crossing the floor when they honestly and deeply disagree with the party position. On this matter, though, the cohesion of the government and keeping faith with the electorate should weigh just as heavily as deeply-held personal belief. I respectfully suggest that the commitment that all Liberal MPs made to their electorates should tip the balance in favour of a position that they might not personally support but took to the election as part of a team.

At least for this term of parliament, Coalition MPs must remain committed to the position that they collectively and individually took to the election last year.

I don’t underestimate how torn some of my colleagues are, but ask them to consider how unconvincing it sounds to say that you supported a plebiscite before an election but not afterwards because of circumstances beyond your control. Even worse is the proposition that it would be OK to support a suspension of standing orders moved by a dissident Liberal because that, somehow, wouldn’t constitute losing control of the parliament. Like it or not, Coalition MPs are honour-bound to oppose same-sex marriage in the absence of a plebiscite that’s supported it; and we’re equally bound to oppose any move to bring the matter into the parliament without a plebiscite first. That’s what this week’s party meetings should confirm.

What we might do about same- sex marriage beyond this term of parliament is the outstanding question. But it would be odd, when you think about it, to go to one election saying that this is too personal and too deeply felt to be left to the politicians — and to go to the next election saying it should henceforth be a matter for the parliament only. That would make our current position look mere expedience rather than a principled way to treat a concept of marriage that’s stood from time immemorial and long predates the legislation that gives it expression.

The last thing Australia needs is government by opinion poll. But neither do we need political parties that believe one thing one minute and the opposite the next. No one would be shocked should a government hold a plebiscite on compulsory military service. That, after all, is what we did during the Great War. And I don’t recall same-sex marriage advocates objecting to a plebiscite in Ireland in 2015 that went their way.

The Australian people should be heard and respected on this. If nothing else, a plebiscite would force the advocates of change to lobby the public as whole rather than focus on just 226 MPs. If that means any change is further delayed, people know who to blame. It’s Shorten and the Labor-Green left for obstructing a fair decision.

(Emphasis added by Save Our Super)

Transcript of the Hon. Tony Abbott MP, Address to the Institute of Public Affairs, Hilton Brisbane, Elizabeth Street, Brisbane

27 June 2017


Wherever the Abbott government didn’t need to pass legislation through an intractable senate, decisions were made and decisions were put into practice: the boats were stopped; national security was strengthened; and a big project in limbo for decades, the Western Sydney airport, got underway.

Right now, for too many good people, there’s a pall of despondency over the future of our country and the wider world.

These are vexing times.

The world is less stable and the future less certain.

And yes, many people feel let down and ripped off.

As we have seen, in America, all parties are vulnerable to populists, and the Democratic Party to socialists; in Britain, the Conservatives have been humiliated and the Labor Party captured by extremists; and here the whole political spectrum seems to have moved to the left.

So what are sensible reformers to do: despair of the countries, the parties and the values that have made the modern world; retreat into surly resentment; blame voters for not understanding their own best interests? Of course not!

Our challenge is to stay the course, to keep the faith and to fight the good fight because to do anything else would only make a bad situation worse.

Effort doesn’t guarantee success but lack of effort guarantees failure.

We might have to take what we can get today; but we should always seek what we want tomorrow.

Because the fundamentals of government and economics have not changed; the values and aspirations of the conservative side of politics have not lost their appeal.

It makes sense to be economically liberal because markets maximise prosperity; and it makes sense to be socially conservative because respect for values and institutions that have stood the test of time keeps the social fabric strong.

It always has and it always will.

Our task, now, as always, is to build the case for good policy based on mainstream values and common sense: because the instincts and the ideas that imbued Menzies’ Forgotten People speech; that shaped John Howard’s public life; and that gave the Coalition a thumping victory just four years ago are never out of date.

Australians want a fair go for all – but we understand that to get a fair go, you’ve got to give one too.

Governments have to be fair – but there’s only so much fairness that you can pay for with other people’s money.

And standing up for the country, its interests and its values – not apologising for it – is what nearly all citizens expect of their leaders.

It’s as true today as it’s always been that no country has ever taxed its way to prosperity.

It’s people and businesses that create wealth, not governments.

And government can’t spend a dollar that it hasn’t taken from you, the citizen, either in taxes today, taxes tomorrow – or wealth eroded through the ravages of inflation.

Of course, people want their leaders to keep commitments and to be principled but most of all they want us to be competent and to get things done.

It’s not their fault that they’re disillusioned with leaders, parties and even systems when the people in charge don’t face their pressures, don’t seem to share their values and often hardly even seem to speak their language.

Once shaken, trust has to be re-earned by consistently saying what you mean and doing what you say.

But provided we try harder to understand people’s worries, propose down-to-earth measures that might actually address them, explain clearly what we want to do – and why – and then move competently and methodically to get things done, there’s no reason why reform should be beyond us, even in the age of populism.

So that’s our challenge: to identify problems and their potential solutions in ways that people can understand and eventually accept.

It can be done.

In two elections, 2010 and 2013, the Liberal National coalition made big gains promising spending cuts, tax cuts, and regulation cuts.

It wasn’t easy once in government – but in just two years two big new taxes were scrapped, three stalled free trade deals were finalised, about 300,000 new jobs were created in the economy while 14,000 public servants were shed, business handouts were stopped, and $50 billion was cut from the forward estimates.

As John Howard recently observed, while compromise is necessary in politics, conviction is the foundation of success.

The risk with compromises designed to end policy “wars” is that the war doesn’t actually end, the battleground just shifts; and in the meantime, principles have become negotiable, and the whole political spectrum has moved in the wrong direction.

What’s needed now is a clear sense of what the conservative side of politics stands for and a clear understanding in the community of what we’re trying to do.

Delivering prosperity and security: that’s the core business of government.

Making it easier for people to get ahead and doing everything reasonably possible to keep people safe: that’s what voters expect of us.

As a party room colleague put it the other day, people who-have-it-all worry about emissions; but people doing-it-tough worry much more about paying their bills.

That’s why any credible plan to win the next election has to start with keeping power prices down.

Among much else, the Finkel report noted that power bills could cost low income households up to a tenth of their income.

Power prices are going through the roof and widespread blackouts are looming this summer because green politics have trumped sensible economics for more than a decade.

It’s the renewable energy target that’s doing the damage because subsidised unreliable and intermittent power is making base load coal and gas power uneconomic.

Trying to fix the problems caused by too much wind and solar power with yet more wind and solar power is perverse; the last thing we need is a clean energy target grafted onto a renewable energy target.

For months now, quite rightly, the government has been attacking the Labor Party’s 50 per cent renewable energy target for de-industrialising South Australia.

But maintaining that Labor will put power prices up and that the Coalition will put power prices down will be much harder, though, if our renewable energy target goes from 23 per cent to 42 per cent, as flagged in Finkel.

Indeed, the only way to take the pressure off prices now is to have a moratorium on new windfarms at least until the problem of intermittency is addressed.

We should stop any further subsidised renewable power and freeze the Renewable Energy Target at the current level of about 15 per cent.

This shouldn’t be a problem for emissions reduction because renewables’ boosters insist that it’s cheaper than coal anyway.

And if this causes a fight in the senate, at least it will demonstrate exactly who wants lower power prices and who doesn’t.

Allowing Hazelwood to close, actually blowing-up South Australia’s Northern Power Station and the bans on gas in Victoria and NSW mean that some blackouts might be unavoidable in the near term.

That’s why a government that’s serious about keeping the lights on should get another big coal-fired power station into action as soon as possible; and be prepared to “go it alone” if political risk means the market won’t do it.

The market is the best possible means of maximising wealth but where government has ruined the market that we had 15 years ago, as it has, government must make things good.

A good start would be a “jobs first” power policy – a declaration that energy policy aims to reduce cost of living pressures, preserve jobs and keep industries competitive – and that these objectives have priority over reducing emissions.

All recent governments have deferred too much to political correctness (my own included) while the public have become impatient for robust common sense.

That’s what they remember from the early years of the Howard government: policies designed to solve problems coupled with explanations of what the policy was and why it might be expected to work.

In its early years, the Howard government deliberately reduced immigration to well under 100,000 a year.

Right now, a big slowdown in immigration would take the downward pressure off wages and the upward pressure off house prices.

One of the reasons why statistical growth is not translating into higher living standards is that high immigration means that GDP per head is hardly growing at all.

Newcomers in hard-to-fill, high wage, high skill jobs make very good migrants (and should be encouraged) but they’re not the only ones coming.

A big slowdown in immigration would allow housing starts and infrastructure to catch up with population.

It would give harder-to-assimilate recent migrants more time to integrate with the wider Australian community before many more came in.

It would reassure Australians that our country is in our own hands and is being run in our best interests.

It would complement the government’s correct insistence that to become a citizen you must be able to speak the national language.

And, of course, it would provoke a fierce fight with Labor – that, again, would just emphasise who’s on Australians’ side and who’s not.

That’s one of the lessons from the 2014 budget: even people who accept that the government is spending too much don’t want the government to improve its position by hurting theirs.

Addressing Europe’s economic stagnation, one leader recently observed that “we all know what to do, but we don’t know how to get elected after doing it”.

Absent an acute crisis, to get elected with an economic reform programme, it’s probably necessary to guarantee that existing beneficiaries will keep their benefits.

But even with grandfathered changes, a government that accepts we have a spending problem rather than a revenue one can make a big difference over time.

The best way to get federal spending under control, and to end the inter-generational theft of sustained deficits, is to avoid all new spending (other than on national security or economic infrastructure).

And getting spending down, at least as a percentage of GDP, is the only way responsibly to deliver the tax cuts that are necessary for jobs and growth.

Especially with the 2014 budget, the Abbott government probably exceeded the reform speed limit but there was never any confusion about the direction of travel.

Likewise on national security, there was never any doubt about the Abbott government’s determination to stand up for Australia.

We not only have a right but a duty to defend our values and our way of life against those who would destroy them.

This means banning organisations that make excuses for terrorists, removing terrorist propaganda from the internet, and ensuring that known jihadis aren’t free on our streets.

And it’s good that the Turnbull government is now moving on these issues.

But achieving reform in the age of populism will first require the “mother of all reforms”– indeed, it’s almost a precondition for any other big ones – and that’s reform of the senate.

The senate has become a house of rejection, not a house of review, as John Howard recognised when his government proposed senate reform back in 2003.

The problem is far worse now, with Labor habitually reversing its own previous positions in order to oppose the government on everything except national security.

To pass legislation, either the government has to strike a deal with the Greens, a far left party dedicated to higher spending and higher taxes; or it must corral ten of 12 unpredictable crossbenchers, all of whom will demand their price.

The only legislation that can expect swift passage is to spend more, to regulate more, and to put more tax on the so-called rich.

This is unlikely to change under business as usual, as getting four out of six senators in a half senate election requires a near impossible 58 per cent of the vote.

All that can readily be passed is legislation that a grab-bag of political competitors can be bought-off to support.

But this is a recipe for gridlock, not government, and it must end if Australia is to be capable of meeting the challenges of the future.

Back in 2003, the Howard government proposed an amendment to section 57 of the constitution so that legislation rejected twice in the senate three months apart could be put to a joint sitting of both houses of parliament without the need for a double dissolution election first.

It didn’t proceed after the then-government fluked four senators from Queensland and, for one term, had a majority in its own right.

Now, it needs to come back fast if the system is to avoid paralysis – hence the government should legislate swiftly for a referendum to be held concurrently with the next election.

The next election won’t be won by drawing closer to Labor.

Sure Bill Shorten can be painted as a union stooge who will put power prices through the roof, enshrine political correctness on steroids, and run the worst Labor government in our history.

But you don’t win elections by saying that the alternative would be worse; you win elections by being the best possible government.

The next election can only be won by drawing up new battlelines that give our people something to fight for; and the public something to hope for:

To take the pressure off cost of living, let’s stop subsidies for new wind power.

To take the pressure off housing, let’s scale back immigration.

To get the budget under control, let’s ban new spending.

To keep us safe, let’s make sure there are no known Jihadis loose on our streets.

And to get good government, not gridlock, let’s reform the senate as soon as we possibly can.

A decade back, after a generation of better-than-average government under Hawke and Howard, Australia was a global success story.

Now, we can’t even look across the Tasman without a twinge of acute embarrassment.

We have an abundance of energy – but the world’s highest power prices; an abundance of land – and property prices to rival Hong Kong’s; some of the world’s smartest people – yet with school rankings behind Kazakhstan.

We need to make Australia work again – because our country, plainly, is not working as it should.

We are letting ourselves down.

We are not what we should be; and we know it.

That’s why most of the attempted pep talks sound so hollow.

But I can assure you: I’m in no hurry to leave public life because we need strong liberal conservative voices now, more than ever.

I will do my best to be a standard bearer for the values and the policies that have made us strong.

(Emphasis added by Save Our Super)

Team Tim Wilson’s tiny parcel of trust is as good as gone

The Australian

2 August 2017

James Allan – Garrick professor of law at the University of Queensland

Liberal Party MP Tim Wilson tells us again that he wants to push for a conscience vote on same-sex marriage. And he’s clearly not the only Liberal MP who wants to do this. So what’s wrong with that?

Well, first there is the old-fashioned notion that a political party ought to honour its explicit campaign promises. The Liberals ran at the last election on a straight-out promise to hold a plebiscite on this issue before legislating for same-sex marriage. What does Wilson say about that? He says he has honoured this commitment by voting for the plebiscite and that with its having failed to get through the Senate we can move on to another way to bring in same-sex marriage.

But that is just sophistry, the worst sort of Jesuitical dissembling. No voter understood the Liberals to be promising some version of “‘we’ll try once or twice to have a plebiscite but if we can’t, heck, we’ll have a conscience vote”. That is nothing like what they promised and Wilson and Dean Smith and the other Liberal MPs pushing this know it. Indeed, had the Liberals gone to the election, or the one before it, with such a “we’ll try this for a bit and then go for a conscience vote” they would have lost those elections, and lost badly.

This becomes even more obvious if you try a little thought experiment and imagine that come the next election we still have not held a plebiscite or legislated for same-sex marriage. At that point does anyone want to make a bet on what policy and promise the Liberals will take to that next election? Anyone?

I can tell you right now it will not be to hold a conscience vote. Anything like that would be political suicide for a right-of-centre party that has promised up and down that this would not happen. It would reek of disdain for the voters, and more particularly for the party’s base, and Wilson and Smith know it. That’s why they desperately want to run this backdoor option now while there just may be enough time to hope that right-of-centre voters will have the patience of Mother Teresa and forgive and forget yet another broken Liberal Party promise, joining other express or implied ones such as “we won’t touch superannuation”, “we won’t ever give up on fixing the deficit”, “we’re not for Gonski”, “only Labor would attack the banks” and so on.

Now to lay my cards on the table: I’ve always been sure I’d vote yes in any such same-sex plebiscite but I have to say that the level of Wilsonian casuistry and (best case view) self-delusion is such that I’m starting to have second thoughts. The political class in this country is shockingly out of touch, not just with the voters but with the core notion of “we promised that this is what we will strive to do, come what may”. Look, if the Liberals wanted to do so they could have a double dissolution on this issue, perhaps tied to emasculating section 18C of the Racial Discrimination Act. It would be a much more substantive double-dissolution call than the one Malcolm Turnbull made in 2016.

And a last point. This tactic by what we may think of as the black-hand wing of the Liberal Party can be stopped in its tracks today. All it takes is any two Liberal Party MPs in the house to hold a press conference and announce that if any such staged and bogus crossing-the-floor conscience vote goes ahead these two MPs will make it the cause of an immediate election as they will vote against the government on all votes, thereby causing an election. If Wilson and Smith want to break the clearest of clear promises to the voters then they can immediately face an election over it. Or if there aren’t two principled Liberal MPs left, which I can’t rule out completely, then the Nationals could make this threat and mean it. If it doesn’t go ahead we know it is because Barnaby Joyce decided it wouldn’t.

Look, the Liberal Party in this country desperately needs to re-establish at least a scintilla of trust with its long-time voting base. Wilson’s suggested dissembling to the voters — no, let’s call it what it is, which is a dressed-up form of lying to the voters — is an awful idea. So on their recent track record it’s got to be a 50-50 call on whether Team Turnbull will be dumb enough to let it happen.

Emphasis added by Save Our Super

Why super has lost its lustre

Sydney Morning Herald

30 July 2017

Daryl Dixon – Executive Chairman of Dixon Advisory

Recent Australian Services Union-sponsored research to address gender inequalities in the distribution of super account balances, especially of lower income women, does little if anything to improve the current or future financial situation for this group.

The proposal, including increasing compulsory super contributions to 12 per cent of salary and other government and employer top-ups, ignores the basic fact that many lower income taxpayers have an urgent need for more current income to pay their rent or service a mortgage and to fund living expenses.

Forcing them or their employers to pay more into super only increases their financial pressures, especially now that superannuation balances are tied up until at least age 60.

Having money in super provides cold comfort when there are pressing bills to pay or in the all too common event of redundancy or marriage breakdown.

The crucial importance of having money and assets outside super is highlighted in divorce settlements. Intact couples don’t have the option to split super balances between them but in divorce settlements this is an option.

This allows women to negotiate a settlement where they receive half the combined super balances. But in practice, women sensibly trade off super entitlements to obtain equity in the family home, especially when there are children.

For an affordable or comfortable retirement, owning a house places retirees in a much more favourable situation than having a large super balance. The home has no impact on the age pension or other income support entitlement while non-home owners are provided with only a $200,000 special exemption by the assets test, levied at 7.8 per cent.

To the extent that compulsory super reduces the ability to achieve home ownership in working life, the incentive in retirement will be to use all available super to acquire a property or to pay off a mortgage.

The Australian age pension system is unique in providing free to those with little super a generous indexed income stream with an actuarial value of at least $500,000 for single people and $800,000 for couples.

The more favourable asset test treatment for home owners is of vital significance as explained above.

Against this overall background, the benefits of superannuation for both younger and lower income people are greatly overstated at least until home ownership is achieved.

At a personal level, the crucial point to realise is that all super contributions are inaccessible for an extended time. Past government decisions suggest that further rule changes are likely in this area, making the availability of super balances even more distant in time.

The crucial importance of having money and assets outside super is highlighted in divorce settlements.

Daryl Dixon is the executive chairman of Dixon Advisory. You can email him at comments@dixon.com.au.

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