Tony Abbott’s super plan

That fine custodian of moral journalistic virtue, Dennis Shanahan, in his article titled Labor fails super test with voters he gleefully tells us that:

Most people do not trust the Labor Party on superannuation and are overwhelmingly opposed to it being subjected to any tax increases after the Gillard government announced pre-budget cuts to retirement concessions for the wealthiest.

Only one in four voters believes the ALP, the party that introduced the modern superannuation system and compulsory employer payments to workers, is best able to handle superannuation. According to a Newspoll survey conducted exclusively for The Australian on the weekend after Wayne Swan announced superannuation changes aimed at saving $1 billion over four years, 55 per cent said they did not “currently” trust Labor on superannuation and 31 per cent said they did.

It’s all over Labor taxing the rich.

I’ll admit that I don’t like to see anyone’s superannuation savings diminished in any way, but given the choice between the rich and the poor being adversely affected, I’d happily settle on the rich. Tony Abbott – who I now introduce to the discussion – sees it differently to me. We need to talk a little about how Tony Abbott sees things. So do journalists like Dennis Shanahan.

Following the Treasurer’s announcement that super pension and annuity earnings greater than $100,000 would be taxed at 15 per cent, instead of being tax free – a move that would affect an estimated 16,000 people – Mr Abbott, in his role as the defender of all affluent Australians, said he:

. . . would “fight ferociously” changes that would play havoc with people’s retirement plans.

That would be admirable, if it weren’t for this:

Mr Abbott repeatedly refused to guarantee to wind back the government’s proposed changes, saying only that the Coalition would not make matters worse.

”We aren’t going to do any more damage,” he said.

That comment certainly makes his threat to fight ferociously appear rather shallow. All bark, no bite. I find it odd that he thinks repealing this would cause further damage. How?

Nonetheless, his opposition to the move has been most vociferous. No doubt you’ve see it headlined – nay, bashed to death – in the Murdoch media. Here’s an example:

Opposition Leader Tony Abbott has taken his “hands-off superannuation” message directly to those most worried by reported government changes – older Australians.

He rammed home the message to retirees on Sydney’s northern beaches on Tuesday that superannuation “piggy banks” were not government money but people’s money.

Raiding their piggy banks to fund the government’s “out-of-control” spending was a breach of faith and a betrayal of trust, he told the grey heads at the Dee Why RSL club.

He continues his attack on the LNP website:

The Prime Minister should end the class war and the latest escalation on the class war is the Prime Minister and the Treasurer’s coming attack on your superannuation. I want to say to the Australian people – your superannuation is safe under the Coalition. Your superannuation should be sacrosanct. There is no way that your superannuation should be raided by a bad government to get itself out of a hole. The Government should not be damaging your future to secure its future. The Government should not be raiding your money to get money for itself. It is a sign of just how debauched this Government has got that when it is in a hole, a hole of its own making, it should be seeking to trash your superannuation – trash, in fact, Labor’s historic legacy – to try to fix up a problem which it has caused.

But to Mr Abbott it’s more than just a fiddle with people’s retirement plans; it’s also a cash-grab from the Government:

“On balance, this is a $1 billion hit on people’s retirement savings,” he told the media in Melbourne.

“It is a $1 billion hit on savings that belong to the people, not the Government, and it shows that this is a government which is prepared to tax the people to fund its own spending.”

And it will only get worse, he warns:

If they get away with attacking the so-called rich today, they’re going to come for you tomorrow. That’s the truth about this government. If they get away with this, they’ll think they can get away with anything.

The man must be an emotional wreck; all that caring, all those concerns. Well, yes, he certainly has put on a sad face. He bleeds for those poor people raking in over $100,000 a year. The whole 16,000 of them.

And thanks to people like Dennis Shanahan we’ll always get to hear Tony’s side of the story.

Have a look at the Newspoll that Shanahan gloats about. What do you see? I see questions that are designed to elicit as much negativity about the Government possible.

Now let’s have a look at what Tony Abbott really thinks about superannuation.

It’s a con job, he once said, while on another occasion he savaged it as nothing but a gravy train for union officials. He even opposed an increase in the Super Guarantee – changes that would see 8.4 million Australians receive an increase in their retirement incomes. In effect, he opposed:

  • An additional $108,000 in the retirement income of a 30-year-old on average weekly earnings.
  • An additional $78,000 in superannuation for a women aged 30 on average weekly earnings, who has had an interrupted work pattern.
  • Australians who are over 50 and have low super balances, the opportunity to contribute up to $50,000 a year into superannuation at a concessional tax rate.

The latest ‘policy’ of Abbott’s confirms his apathy towards superannuation. Here it is in a nutshell:

Opposition leader Tony Abbott confirmed plans to axe a super tax break worth up to $500 a year for 3.6 million low-income earners.

And significantly:

. . . his plan to axe the $500 superannuation benefit for low-income workers will hit more than two million women, including 11,000 female voters in Tony Abbott’s own electorate.

It’s safe to say that in total, more people in his electorate will be effected by this measure than the number of people effected Australia wide by Labor’s plan. In total, it will effect 3.6 million Australians.

Wouldn’t it be good to have a Newspoll that asked questions about Tony Abbott’s super plan?

Perhaps they could try asking the very people who will be affected, such as the grey army.

Fair

37 comments on “Tony Abbott’s super plan

  1. Again, Labor hs failed to ‘sell’ this policy because they haven’t prepared the ground. They haven’t ‘defined’ the problem (again and again and again they fail this political test) before they’ve delivered the ‘solution’. The very idea that anyone’s superannuation retirement account could earn, let’s say $1million, and do so without paying any tax is simply unsustainable. And obscene.

    Let’s imagine that my retirement super account earns $100 000 in any particular year, my tax under this proposal would be zero. (In my view that’s disgraceful). Howerful if my super account earned $200 000, then I would be taxed $15 000. So instead of my ‘in retirement’ super account being increased by $200 000 it would only be increased by $185 000.. Big deal.

    Get a life.

    I know my wife and i can live quite comfortably on a retirement income of at least $120 000 a year without paying any tax. It’s a disgraceful, unsustainable state of affairs.

  2. Scenario: Retiree with $400K invested via her super fund in Australian shares. September 2013 Tony Abbott is elected Prime Minister. Due to the economic incompetence of these dinosaurs, our retiree’s super halves in value.

    Due to the number of stuff ups and scandals, the Governor General dismisses the government and calls a double dissolution election for September 2014, which Labor wins in a landslide. Due to the superior economic nous of the new government, our retiree’s super units regain their previous value.

    So in year one, our retiree has had paper loss of $200K. In year two, she has “earnings” of $200K, which would be subject to the proposed tax of $15K.

    It’s “unforeseen” consequences like this that has the “grey army” taking up “arms”

  3. Bacchus – if your super assets double in value no tax is payable. I assume your example is using capital gains which is levied on ‘actual’ gains ie on sale or disposal of the assets. Anyone with substantial assets in super seeks advice before contemplating major disposals to manage tax outcome, I can only see it being an issue if you held real property – even then it’s only 15% for ?!?sake! and as things stand at present there is a 1/3 discount for assets held for greater than 12 months which reduces the tax to 10% on the gain.

  4. Wrong horatio. What you say holds IF you have a SMSF where you hold assets yourself. When you invest in units of Australian shares (or any investment actually) via a super fund, the capital gains are counted as “earnings.” You’re not actually disposing of any assets, but the fund is trading in the shares. Hence, in the scenario above, in two years the retiree has effectively lost $15K entirely due to an anomaly in the tax. I have verified this with my financial advisor btw…

  5. Having said that, the thrust of the new tax is spot on. It’s aim is to close the loopholes created by Mr Hammock Costello allowing the super rich to squirrel away their wealth in a tax-free environment. They just need to ensure the “details” are right…

    The idea of taking away the small concessions from 3.6 million low income earners is obscene!

  6. They just need to ensure the “details” are right

    Sure do. Swan speaks of those who have $2 million with a return of 5% giving an increase of $100 000. No tax to be paid. But 5% is way too low. For example, those in Q Super Australian Shares are facing a current return of 29.46%. So an individual with a balance of $500 000 is likely to earn about $147 000 for the year. The first $100 000 will be tax free but there will be a tax bill of $7 500 (approx) (15% of $47 000). This will cause some perturbation.

    The other ‘lurk’ that need to be addressed is the senior Australians tax offset which allows a couple to earn more than $55 000 without paying any tax and this calculation does not include money received from super.

    Then there are ‘family trusts’. It’s a form of ‘class warfare’ waged (and won) by the ‘well off’. And the really sad thing is that most of the punters know nothing about it.

  7. They haven’t ‘defined’ the problem

    How exactly are Labor supposed to ‘define’ the problem when the media continually distort their message?

    It is very simple, very rich people are using Superannuation as a tax shield. Swan has stated this, as has Gillard, as has many in Labor. However, it is reported as ‘class war’, and out come the pens to defend the poor millionaires (and, of course, the ‘aspirational’)

    In the current media quagmire, there is no hope at all for Labor to ‘define’ anything. Which is why it ends up looking so shambolic. But, looks are more often than not deceiving in this day and age.

  8. How exactly are Labor supposed to ‘define’ the problem when the media continually distort their message

    There are a number of ways that might be employed to try and address that problem. As Mr Denmore points out they seem to have no strategy. It’s all ‘tactics’ (to get today’s or tormorrow’s headline) but they never seem to take the time to generate a ‘groundswell’ of voters demanding that action be taken to address the problem. Take the mining tax as an example. Now most people see that the miners dudded the government. Rudd should have spent weeks pointing out how the super profits were being exported. There should have been ant number of questions in parliament.

    Take Gonski as another example. Howard introduced a completely unfair system but the punters didn’t understand it and why it was so unfair. Even now, I suspect that the vast majority still don’t understand what Gonski was trying to do. Where were the P&Cs calling for change? Where were the academic articles. Where were the Unions? And so on.

  9. the punters didn’t understand it and why it was so unfair

    And whose fault is that? Who is supposed to ‘inform’ the punter?

    Gillard did a speech a while ago in regards to Gonski at the press club, and laid out it’s aims, and the Governments repsonse to those aims, and the inadequacies we presently face that it addressed. It was a very informative speech. Yet what did we hear from the media. “Show us the money”, no real reporting of what was said, just a great whinge about paying for it.

    That is a clear case of Labor attempting to ‘define’ a problem, only to get shouted down by the media, instead of the media informing us of the intentions. The money issue was addressed at the time by Gillard as being disclosed closer to budget time, she wanted to concentrate on the actual reform. The media would have none of it.

    The same with Carbon Price. People don’t understand it, because the media have been so misleading with their reporting of what it is, and allowing detractors to say what they want without correcting them, no wonder the average punter doesn’t have a clue.

    Our political debate has been hi-jacked by vested interests who worked out that the best way to control the debate is to control the media.

    They now do. And we are just sitting on the sidelines going WTF was that all about?

  10. good message Migs but its convincing the easiliy conned that will be the trick… those who adhere to the slogans…. they took our jooobbbs, it will be the end of the world as we know it…..poor mining giants… stop the boats… you know them… the blind being led by the clueless.

  11. re the class war I mentioned above

    Somehow, in the heat and hyperbole of what passes for political debate in Australia these days, “class war” has shifted from meaning a struggle between socio-economic groupings to become a catch-all charge used to describe any move to recalibrate spending and taxation to the maximum social and economic benefit, rather than subsidising those who really do not need the extra assistance.

    http://www.couriermail.com.au/news/opinion/use-of-the-term-class-war-has-become-no-more-than-convenient-political-hyperbole/story-e6frerdf-1226620986218

    And Bernard Keane highlights just one example of why Labor cannot ‘define’ an issue

    “But more to the point, it delegitimises any debate about government policies when the benefits disproportionately flow to the powerful and wealthy …”

    http://www.crikey.com.au/2013/04/16/keane-the-slippery-and-convenient-concept-of-class-warfare/

  12. One thing that erks me somewhat, and I am about as far removed from any understanding of tax and super that you can get..but *how come* my elderly pensioner mum has to worry about how much she can “give away” each year in birthday and Xmas presents while others far more well off seem to be raking it in.

  13. Have just tweeted the billboard at the bottom of your post, Migs.

    I suggest this is would be an ideal full page ad for the government to take out on tv & in the dead tree msm.

    Accompanied by what the Liars have in store for the 3.6m they intend to dud while protecting the uber rich.

    It’s short, eye catching, succinct and demonstrates class warfare, Liars style

    Naturally the government would have to say they don’t think it’s fair that the poorest should be penalised, while the rich are handed tax free gifts. Or wtte.

    Needless to say, great post Migs.

  14. Most millionaires have their own self managed super schemes that avoid taxation anyway. Mine was off shored before the GST came in so no tax will be paid by me.

    You people realise that the increase in super to 12% will come out of peoples’ wages in the main?

    Wouldn’t brag too much about interest rates being lower…bordering on emergency rates because the economy has stalled and will continue this way until the election is over.

    Gee, the way you people talk one would think that every Australian has a mortgage.

  15. Most millionaires have their own self managed super schemes that avoid taxation anyway

    Not any more. That’s why they are squealing so loud. Haven’t you noticed?

    As for:

    Mine was off shored before the GST came in so no tax will be paid by me.

    The mind boggles. Offshored to avoid the GST? Perhaps it’s safely stored in Cyprus?

    realise that the increase in super to 12% will come out of peoples’ (sic) wages in the main?

    Really? I thought that ‘super’ was a ‘magic pudding’ and it simply came out of ‘thin air’. You ought to post more often so we can all learn something. Or more about somebody at least.

  16. Bacchus, will they bung it on tv & dead tree media? Might start some brains functioning. All three will make great election ads-short, sharp and to the point.

  17. Tom R from your link to Paul Syvret :

    LANGUAGE evolves. Meanings and subtexts of words change

    Syvret (who btw worked for David Hamill when he was QLD Treasurer) misses the point. Words don’t have a life of their own. They don’t evolve. Humans create ‘words’ and in doing so give particular and peculiar meanings to same. They don’t have a life. Over time, different humans with different histories, backgrounds and the like come into existence and give different ‘meanings’ to those words. Who would have thought that the word ‘haircuts’ (when created) would ever be applied to the international banking system? The word ‘haircuts’ had no say in its creation and certainly has no control over its usage.

    To suggest that the word ‘haircuts’ by itself changes its ‘meaning’ is laughable.

    He goes on:

    It is this process that has … seen “gay” mutate over the years from meaning happy and carefree to a word that describes sexual preference and

    Paul the word ‘gay’ has not ‘mutated’. It’s the same set of symbols, twisty shapes or whatever. What has changed is the meaning(s) given to the word by humans from a different socio/historical context.

    Having said that the article has a great deal of merit.

    ‘Class’ is an abstract concept and is therefore difficult to define in terms of necessary and sufficient conditions if one is looking for any form of ‘absolute’. Nevertheless, it’s a very useful concept because it explains much. That ‘classes’ strive to take advantage of other ‘classes’ is the basis of capitalism. Whether one wants to call it ‘warfare’ or not is up to you. But for me, it ain’t peace. That view would be laughable.

  18. I’m sure at this moment Tony is having a closer look at his own super plan….. seeing as he is moments away from ‘retirement’……and/or gaol… 😛

  19. Paul the word ‘gay’ has not ‘mutated’. It’s the same set of symbols, twisty shapes or whatever. What has changed is the meaning(s) given to the word by humans from a different socio/historical context.

    Actually, that is what I understood Paul to be saying Col. Words change their meaning (although, it is also true that they do change their shape, ye olde for example 😉 )

    What is fascinating, is that our entire countries journalistic orchestra had not been far enough advanced in the literary stakes to understand that the meaning of the word ‘misogyny’ had changed, and changed so much that many dictionaries had already updated their content. It just shows how far removed from reality our ‘journalists’ actually are. And in turn, how poorly served by them we really are. Imagine the laughter from outside, as the rest of the world celebrates a strong, independent woman calling out the misogynist bullies in her work place, only to watch our local scripts bicker over a bloody word. And get it so wrong.

  20. Scaper

    Please explain how you arrive at the statement

    “realise that the increase in super to 12% will come out of peoples’ (sic) wages in the main?”

    Super is paid by the EMPLOYER not the employee so how will this come out of their wages?

    I assume from your statement re

    Mine was off shored before the GST came in so no tax will be paid by me.

    that you are one of these millionaires who doesn’t want to pay 15% tax on any superannuatioin earnings OVER $100,000.

    If I was in your shoes I would rather pay the 15% tax than risk losing it all in some overseas “tax haven”.

  21. Hi ridgiesrule (yes, they do, only after Rotties though )

    Super is paid by the EMPLOYER not the employee so how will this come out of their wages?

    When the compulsory super was first introduced, it was paid into accounts by the employer in place of passing on annual pay rises into the employees wages. So, while it looked from the outside that the employer was paying it, it was actually employees wages it was coming from. I’m not sure if the new system is working the same way or not?

  22. Tom,

    You can bet that as Enterprise Agreements come up for negotiation, employers will be using increased super contributions as a bargaining chip to lower wage increases that would otherwise be paid 😉

  23. Tom R, I’m certain what passes for journalists these days are very well aware that the definition of misogyny has altered, but it suits their purposes to be obtuse, like some commenters.

    WRT super contributions, you’re correct. If an employee was paid $22/hr, for example, $1.98 would be paid into the super fund of their choice by the employer.

    I think that’s possibly a reason why lots of small employers like their employees to have ABNs. That way, both tax & super become the responsibility of the employee. Saves a lot of bookwork & headaches at the end of the year.

  24. bargaining chip to lower wage increases that would otherwise be paid

    I have just read about the new plan, it appears that the bill will be lumped with the employers in this case, so I suspect that you will be right in this summation Bacchus.

  25. Hi Tom R
    blockquote>Hi ridgiesrule (yes, they do, only after Rotties though )
    I guess we will just have to agree to disagree LOL

    Tom R, Bacchus and Jane,

    I am talking here specifically from a Queensland point of view re wage increases being used as a bargaining chip. I think you will find that most Awards over the past 10 years or so, have set an amount as a minimum wage for a particular job in a particular industry, with set wage increases for each year of service or each increase in skill level or responsibility, plus the award also states that the superannuation guarantee levy is to be paid in addition to these hourly rates.

    These awards cover every imaginable type of employment in every type of industry, so I don’t believe that employers have the option of reducing the hourly rate without getting into a great deal of hot water with FWA.

    As far as employers liking their employees to have an ABN. If the employee receives the majority of his/her earnings from the one employer he/she will be deemed an employee by the ATO irrespective of whether the employee has an ABN or not and deems himself/herself to be a sub contractor.

  26. I guess we will just have to agree to disagree LOL

    I AGREE!

    If the employee receives the majority of his/her earnings from the one employer he/she will be deemed an employee by the ATO irrespective of whether the employee has an ABN or not and deems himself/herself to be a sub contractor.

    I wasn’t aware of that. Thanks ridgiesrule. I know a of a few cleaning companies that are/were (?) setting it up so that their employees all had ABN’s. I wonder if that means that they are not actually falling in line with their requirements in regards to their employees standards, all so, as Jane points out, they can pass on external costs to the workers?

    I know that they don’t pay any extra per hour, and it is basically the last thing they do when signing on. Many working there will definitely not understand the consequences of having their own ABN rather than being a wage.

  27. The employers aren’t “reducing the hourly rate” ridgiesrule – when the agreements come up for negotiation, they take the bargaining position of offering reduced rates of increase payable by the amount of super they have to pay.

    Say for example, the unions are asking for increases over the three years (the usual timeframe for an EA) of %5, 4% & 4%. The employers offer 3%, 2% & 2%. This is negotiated, along with working conditions, until a new agreement is reached. This then goes to FWA for ratification. As a reason for offering reduced pay increases, employers cite the extra they need to pay as super contributions…

  28. Sorry Bacchus, I thought you were referring to employers having the option to offer potential employees a reduced hourly rate themselves.

    I know when I was working in payroll I spent a good percentage of my time having to get my head around changes to the various awards. Wage increases always happened on 1st September each year, but other changes to conditions or hours during which penalties were to be paid could be brought in more often, so it was necessary to keep up to date to avoid falling foul of FWA.

    Tom R: Re the cleaning companies. The “contractor” would need to pay for all their own cleaning equipment, materials and products used, public liability insurance, transport costs, accountant or bookkeeper fees, submit a quarterly BAS statement to the ATO and be able to show that they received income from multiple sources before they would be deemed a contractor.

    If the contractor billed each person whose property they cleaned and collected payment from that person that would pass muster with the ATO.

    If the cleaning companies class themselves as “agencies” the actual person doing the cleaning needs to bill the agency for all the various cleaning jobs they have done and then pay the agency a set percentage as commission for taking bookings.

    This would also be acceptable to the ATO as the contractor can show they have received payments from multiple people and only used the agency to take bookings and collect money which would then be classed as an expense.

    The hourly rate would need to be at least double the award rate to cover all the extra cost of being a “contractor” and to allow for the contractor to put aside superannuation for him/herself.

    Lots of bookkeeping and record keeping required by said subcontractor.

  29. and RSPCA mongrels rule. OK? 😆

    Yes, there are some fantastic animals to be found there, to be sure.

  30. Lots of bookkeeping for a contract cleaner? Doubt it.

    Doing my BAS this Sunday…should take less than two hours for the whole quarter. Must admit that the Perth contract has shortened the time by one hour but hardly lots if it wasn’t.

    When in Brisbane and operating I use accounts which reduces monthly entries into the ledger to less than a page.

    Darwin this winter.

  31. Now you’ve done done it Col…. his ire is probably raised now ( eewww)…….how well you must know that 😉

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