Comment: Are deeming rates the ultimate retiree tax?

Deeming rate cuts don’t go far enough, writes Kaye Fallick.

Comment: Are deeming rates the ultimate retiree tax?

Today, seniors around Australia woke up to the awful truth about their retirement income.

Not only are they expected to largely fund themselves, but there is little hope they will get a fair slice of the pie under current arrangements.

On Sunday, the long-awaited adjustment to deeming rates was announced by Social Services Minister Anne Ruston.

There are many problems with this change, but here are my top five.

1. Deeming rates changes are arbitrary
Changes to deeming rates are made on the whim of the minister. Seriously. Where is the independent and transparent process that takes into account the way such income is earned and the appropriate rate to reflect increases or falls? Under the Howard Government, the rate remained below the Reserve Bank cash rate. For years now, it has been many percentage points above. Why? There is no science to this and no explanation. This needs to change.

2. The cut is too low
The cut to rates is from 1.75 to one per cent for less than $51,800 (singles) or $86,200 (couples), and from 3.25 to three per cent as an upper deeming rate for money invested above those limits. Given how likely it is that the Reserve Bank will cut rates by 0.25 percentage points in the near future, this makes a mockery of this long-needed cut for those with higher investments. Within a couple of months, it will have simply disappeared.

3. An increase to the base rate is long overdue
What is really needed is an increase in the base rate of the Age Pension. YourLifeChoices has called for this for a long time and continues to believe this is critical to ensure many age pensioners do not live in poverty, particularly those who are renting. The base rate of the pension has not increased since 2008. By any indication, Australian pension rates are the meanest in the developed world, so it is critical that the base rate be reviewed. This then takes away the arbitrary nature of deeming increases and gives those with the least a real and lasting boost in their income.

4. The Newstart allowance is an insult
It is not just age pensioners who are suffering. Those who don’t have a job are worse off. The Government’s response to calls for an increase is that such people are on Newstart for a short time while they find another job. That would be laughable if it wasn’t so dangerously misleading. Young and old alike can be on Newstart allowances for months and years. Those aged over 55 typically spend more than 12 months seeking a new job. The $40 a day allowance is simply not enough to pay for board and food while trying to present at interviews to secure ongoing employment. The measure of employment is more than one hour a fortnight. So even if you do get a job, who is to say you will earn enough to cover your costs anyway? This is the situation for many Australians who continue to eke out a massively constrained existence under the radar of politicians and the media.

5. Actual benefits are far lower than quoted
The numbers shared by the Government of amounts that might flow back are misleading. In the first instance, as noted by Senator Ruston, “75 per cent of aged pensioners are not affected by deeming”. Additionally, while the highest amounts likely to be received are quoted as $1053 for couples and $804 for singles, per year, this is for those with the most invested. The regular Johns and Joans will have far less invested and may receive about $200 or $120 per annum. The vast majority of retirees are sitting well below the quoted ‘headline’ amounts.

In summary…
There is no security of retirement income for pensioners affected by these deeming rate cuts. There was a huge scare campaign by the Morrison Government warning pensioners that Labor would introduce a retiree tax by removing cash rebates for dividend imputation. And because this affected the retirees with the most, this campaign bit hard, and was amplified. The real retiree tax has been bubbling along nicely with no cuts to deeming rates since 2015 – and now we have a cut that promises a lot, delivers little and will soon be wiped out by another Reserve Bank decision. Many retirees are saying they will remember this at the next election.

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    COMMENTS

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    LiveItUp
    15th Jul 2019
    11:04am
    Deeming rates have nothing to do with the cash rate at all. With our stock market earning in excess of 11% last financial year a 3% deeming rate is actually very generous.
    AutumnOz
    15th Jul 2019
    11:15am
    It is only generous if people own stocks and shares. Most people of pension age do not as they have had to cash in many of them to provide money to live on.
    Kaye Fallick
    15th Jul 2019
    11:48am
    Agreeing with AutumnOZ - it would be nice if all pensioners had stock portfolios but many do not even have much spare cash, let alone decent returns on shares. These are the people I believe to be under the radar. Warmest, Kaye
    Rosret
    15th Jul 2019
    11:50am
    LiveItUp the stock market fluctuates. The best indicator is bank term deposit rates. They are so low its not worth making any bank investment.

    If the deeming rate was so insignificant to the government they would have no trouble keeping it in line with the reserve bank rates. However it will cost the tax payer millions in revenue so its not that insignificant

    As for the last quip in the summary about not voting for Labor because of franking credits. You still don't get it. It was this small group and that small group until the accumulation of the groups right across the entire community said, "No thank you." Labor has to get out of the habit of wanting to dip into the cookie jar.
    LiveItUp
    15th Jul 2019
    11:59am
    I certainly get why people don't vote for Labor due to the unfair nature of their franking credit policy. The current policy is fair Labor's was anything but fair.
    LiveItUp
    15th Jul 2019
    12:00pm
    I agree with the government pensioners need to invest their money not have it earning next to nothing in bank accounts.
    TREBOR
    15th Jul 2019
    12:05pm
    Franking is part of shareholder gross income - it should make no difference if franking was abolished entirely... unless someone is diverting money along the way and not paying tax.

    Franking should never have been introduced, given that it has created such confusion and trouble.
    LiveItUp
    15th Jul 2019
    12:50pm
    If you abolish franking credit offsets and refund then the rich will be the ones to benefit.
    Aussiefrog
    15th Jul 2019
    3:01pm
    Live it up you're right. I suggest that for people who earn 11% interest have their deeming rates adjusted to 9% and for those that are not that fortunate at 1.5%.
    That would be fair then
    LiveItUp
    15th Jul 2019
    3:55pm
    The idea of deeming is so that people get the best return for their assets not the worst.
    Greg
    16th Jul 2019
    3:11pm
    Actually deeming was brought in to make it easy to calculate how much pension (or whatever) you're entitled to. Previously revaluation of stock portfolios, investment properties or whatever had to be done regularly to work out the pension, now they just use an assumed rate (deeming rate) and obviously some people are better off and some are worse off.
    Bulla
    23rd Jul 2019
    10:09am
    There would always be pests around who feed human flesh and at least some are here with their generous shit on which they are fed and desperately want others also feed on shit. Good for you!
    Bulla
    23rd Jul 2019
    10:09am
    There would always be pests around who feed human flesh and at least some are here with their generous shit on which they are fed and desperately want others also feed on shit. Good for you!
    Colours
    15th Jul 2019
    11:10am
    The Treasurer thinks we should all have a flutter on the stock market, even though all indications are that it's due for a crash. When it does, we can all go on full pension!
    ozirules
    15th Jul 2019
    11:25am
    The stock market is a long term investment strategy enabling you to ride out the highs and lows. Ideal for younger people with time on their side. I for one see this as too risky a strategy at my age. Why cant pensioners be assessed on actual earnings at the end of tax year as wage earners do and have the pension adjusted up or down for the following year. Surely this is the only fair way to treat pensioner income.
    Misty
    15th Jul 2019
    12:27pm
    Yes stock market down today, not what economists predicted or wanted.
    LiveItUp
    15th Jul 2019
    12:52pm
    Many retires will like 30 plus years in retirement if that aint long term then I have no idea what is. Your money must atleast keep up with inflation or you will be doing yourself and in justice.
    rtrish
    15th Jul 2019
    2:04pm
    Colours, totally agree.
    Farside
    15th Jul 2019
    3:28pm
    don't assume the means test thresholds will be untouched in the event of a stock market decline ... you can still miss out on a full pension.
    AutumnOz
    15th Jul 2019
    11:12am
    The only people who benefit from lowering the deeming rate are those with shares including those with shares in superannuation.
    Anyone with money in term deposits will not benefit and worse they will lose some much needed interest on those term deposits.
    Most banks have now dropped the interest rate for term deposits and pensioner (deeming) accounts to below 1.9%.
    Farside
    15th Jul 2019
    3:34pm
    "The only people who benefit from lowering the deeming rate are those with shares including those with shares in superannuation. " ... in other words, most of us. Pensioners are still doing better than those on Newstart regardless what the government does with deeming.

    Sometimes I wonder what the world would look like if there was a single level of social security with the pension equal to Newstart; on the plus side it is one step nearer adoption of universal basic income.
    TREBOR
    15th Jul 2019
    11:17am
    As I've said several times before - in this day and age where Colonel C'Link and the Ass Taker Organisation (ATO) have full access to your bank details - there is ZERO reason for there to be any problem about an automatic periodic adjustment based on your real income from cash in bank.

    It's done with tax returns - as in my last two jobs.... and thus there is no argument here, but instead only the laziness and self-interest of government organisations.
    ozirules
    15th Jul 2019
    11:27am
    fully agree Trebor
    Baz
    15th Jul 2019
    11:27am
    Information only. There are are at least 2 banks whose deeming rate accounts were actually the 1% and 3.25% last week. Presumably these will drop to the new rates now. try Teachers' Mutual or Unibank.
    mIKER
    15th Jul 2019
    11:30am
    How come Labor let the Deeming Rate slip under the radar? It demonstrates two things at least. One that they are so out of touch with the electorate that they ignored Deeming in favour of Franking Credits. Secondly, despite widespread concern about the Retiree tax, smart ass Shorten & Whats'his name wouldn't modify their policy with say a limit on the returns from Dividend Imputation or even some grandfathering of existing arrangements.

    Now the LNP has them hogtied. If they argue the rate is too high they will be asked why they ignored it, before now; and no one will be surprised if Scomo waits till the next election to deliver a better deal for pensioners and increases the deeming rate. We will never get rid of him till Labor gets smart.
    Rosret
    15th Jul 2019
    11:54am
    Labor party are intent on accessing our superannuation fund cache. There is no where they would be adjusting the deeming rates in retirees favour.
    I think it should most definitely be run by an independent body.
    TREBOR
    15th Jul 2019
    12:07pm
    Just like all superannuation, Rosret.... should be run by a fully independent body.
    libsareliars
    15th Jul 2019
    12:52pm
    Of course, why didn't i realise it before mIKER - it's all Labor's fault! Even though they haven't been in government for 6 years....
    Sundays
    15th Jul 2019
    2:46pm
    I think the fact that the Reserve Bank has dropped interest twice since the election has something to do with it
    Seenitall
    15th Jul 2019
    11:40am
    Totally agree with every point you've made Kaye. Although Labor don't exactly have a pensioner friendly recent history I cannot understand why anyone on any form of govt. age pension would have voted for the return of the Morrison government - even those with existing negative gearing or those receiving franking credits would not have been affected and Shorten was offering $1000 p.a. towards dental costs. What proportion of pensioners affected by deeming rates are going to get that amount from these miserable changes? I really think this could swing round and bite Morrison and Co. on the bum next election.
    Rosret
    15th Jul 2019
    11:57am
    Seenitall - you can't even smile at a dentist for $1000 these days. - and then its only for pensioners and not the majority of the retirees now and in the future.
    Sconny
    15th Jul 2019
    12:07pm
    Typical of a bloody Liberal Government looking after those that are already reasonably well off...they try to make Australians believe that all age pensioners have multi assets and investments...not so Mr Frydenberg
    libsareliars
    15th Jul 2019
    12:53pm
    Spot on Sconny.
    LiveItUp
    15th Jul 2019
    12:54pm
    Many age pensioners are wealthy.
    Farside
    15th Jul 2019
    3:55pm
    nobody should be surprised the LNP looks after those that already reasonably well enough, it is one of their core constituencies afterall. It matters little that not all age pensioners have multi assets and investments, for the most part Australians will vote for self-interest. Frydenburg does not need the support of all age pensioners while aspirational pensioners still think of themselves as looked after and remain firmly in the LNP camp.
    inextratime
    15th Jul 2019
    4:24pm
    And many are not Liveitup so what's your point ?
    inextratime
    15th Jul 2019
    4:24pm
    And many are not Liveitup so what's your point ?
    LiveItUp
    15th Jul 2019
    4:31pm
    OAP is only for the basics so if you wanted more then it was up to you to save it. Nothing to do with the government at all.
    Tricky
    15th Jul 2019
    12:24pm
    When Paul Keating set 'Deeming Rates it was to be in line with Reserve Bank cash interest rate. Well in good if the stock market is performing at the moment at 11%, what has that got to do with the current cash rate where the Deeming Rate should be set for Term Deposits. Not every one plays in the stock market, but invest in less risk.
    Farside
    15th Jul 2019
    3:57pm
    Tricky observes "Not every one plays in the stock market, but invest in less risk." ... that is an investment choice and choices have consequences.
    GeorgeM
    18th Jul 2019
    9:38pm
    Just another stuff-up (among many) by Keating - introducing Deeming, and also not linking it to anything! Brainless, and much appreciated by the Libs who are using this to their advantage!
    adbob
    15th Jul 2019
    12:30pm
    Certainly a burning issue for me.

    This will take my Age Pension from $0 to $0 - obviously if the rate
    were cut further I might end up getting as much as $0.

    I'm so glad I worked and saved to supplement (as we were told at the time)
    my age pension. The supplement, which is all I now live on, is of course
    less than what I would have got buckshee if I had neither worked nor saved
    - or maybe worked and spent the lot like a drunken sailor.

    Funny how Shorten copped the opprobrium for his ridiculously unfair attack on small
    shareholders (re franking credits) and ScoMo got the benefit, when it was only slightly earlier that ScoMo (although without so much as a squeak from knee-jerk Shorten) robbed a great many part-pensioners of their part-pension altogether - a much greater thing than this minor adjustment which seems to be grabbing the headlines.

    Also interesting how kind the media were to Shorten after he lost the unlosable election.
    A donkey (or a tub of lard) would have won for Labor - they were a shoo-in - only Shorten managed to wreck it for them - a bit like Hillary for the Dems in the US).

    Albo's biggest problem now - what to do with Shorten.

    He needs to be cast into outer darkness and Labor re-invented.

    Otherwise we remain a nation of political orphans.
    Misty
    15th Jul 2019
    12:38pm
    Wasn't Shorten who was the cause of Labor losing the election, many different factors contributed to this defeat, Clive Palmer and his ads, LNP ad,"The Bill we can't afford", negative, hostile press, radio and Tv info, but labor's own inability to explain properly their Electric Car Policy, Negative Gearing and Franking Credit Policies. The LNP scare campaign, calling it the Retiree Tax also didn't help Labor. I wonder if Gallop and all the other Poll companies will go broke now becaused who will do a poll and who will ever believe the results after the Federal Election Poll debacle, I know I won't.
    Sconny
    15th Jul 2019
    12:44pm
    Mate I don't know what your politics are but me I'm a lifetime Labour voter and I shake my head at the complete lack of talent in Labour ranks. I mean poor old Albo he's been hanging around for years like a bad smell and has the personality of a cricket ball...looks to me like the Libs and those they run with are going to be in charge of our lives for a long time to come...I am considering becoming a political refugee and buggering off to Sudan or Somalia there's plenty of room there now as they're all coming here...no bloody public housing for white Australians and if you open your gob to say anything then you get labelled racist or bigot or homophobe...pissed off with it all mate
    adbob
    15th Jul 2019
    12:47pm
    @MIsty

    You say it wasn't down to Shorten - and then you mention franking credits.

    The franking credits policy was entirely a "captain's call" by Shorten and the rest of Labor had to go along with it because they were scared stiff of disunity being a vote-loser - as they presumed it had been during the Gillard/Rudd battles.

    It didn't get the media coverage it warranted in the lead-up - but on election night they were talking about it all right - that's after previously rusted-on Labor voters leaving the polls told interviewers why they had departed form their usual habit.
    LiveItUp
    15th Jul 2019
    12:58pm
    Labor just lose the unlosable election which was no surprise to me t all.
    arbee
    15th Jul 2019
    1:12pm
    Can everyone please put in a donation for Misty to purchase a huge supply of tissues, because it seems the tears will be flowing strongly until the next election at the very least. Negative campaigns, well labour invented them to start with, have you already forgotten Medi-scare and a host of other outright lies over the years. Hostile press, well the ABC and the Canberra press gallery as well as several major Australian newspapers are as left wing as they come. Hell even the The Australian, which is probably more of a right wing publication also employs left wing journo's, which is more than you can say for the ABC. Get over it Misty, you lost the unlosable and will be in opposition for at least another term. Possibly even longer, as long as shorty is on the front bench to undermine Albo. Shorty is very similar to Rudd, Abbott and Turnbull, as they all thought it was their divine right to be PM for life.
    LiveItUp
    15th Jul 2019
    1:16pm
    I can't see Labor winning the next election either as the current government is doing so well.
    Farside
    15th Jul 2019
    4:00pm
    tip my hat to AdBob for using the word "opprobrium" ... word of the day.
    roy
    15th Jul 2019
    8:37pm
    arbee, I will happily give a donation to buy tissues for Musty, preferably bright red with a hammer and sickle motif.
    Young
    15th Jul 2019
    12:32pm
    If you get a part pension decided by the assets test will you get an increase???
    Poppa
    15th Jul 2019
    1:28pm
    When the deeming rates come down in September some people who were thrown off the Pension as at 1/1/17 may now qualify for a part pension.??
    Poppa
    15th Jul 2019
    1:28pm
    When the deeming rates come down in September some people who were thrown off the Pension as at 1/1/17 may now qualify for a part pension.??
    Karl Marx
    15th Jul 2019
    4:55pm
    I suspect it wouldn't even be 1% as those who lost their pensions on the 1/1/17 lost them under the assets test not the deeming rate.
    maelcolium
    15th Jul 2019
    1:54pm
    I would add a sixth point which is the taper rate being doubled by Morrison in the dodgy deal with ACOSS and COTA which effectively knocked many people on the margins out of a pension altogether at worst and at best reduced the pensions of others.

    When the Treasurer was being interviewed, he should have been reminded of the increase to the taper rate being a real retiree tax and not the confected one allegedly proposed by the ALP. I noticed also that when he spoke about the deeming rate, he confused this with returns of super funds which are not assessed in the same way at all, so he is totally confused. Keep the L plates on!

    Sadly the pensioners won't remember at the next election. They are creatures of habit and continually put this rotten Government back in power.
    Fredklaus
    15th Jul 2019
    2:08pm
    Pensioners forgot what Abbot/Morrison did to them 6 years ago, and Morrison doesn't,t care about older people, he didn't,t care about the surplus when they got a huge increase recently.The new minister is just a puppet
    cupoftea
    15th Jul 2019
    2:54pm
    MC I stand corrected
    cupoftea
    15th Jul 2019
    2:54pm
    MC I stand corrected
    adbob
    15th Jul 2019
    4:11pm
    That's exactly right.

    ACOSS and COTA are both campaigners for the claimant end of town - their "clients".

    Normal hard-working Australians on modest incomes have nobody batting for them - the young snowflakes like to virtue-signal their concern for "the poor'. The only poor we have in this country are those who fall through the net completely.

    At the very least working hard and saving should give you at least some edge over those in the safety net - at the moment it doesn't. An article elsewhere on this site shows that you are better off in retirement with a $400,000 pension pot than with an $800,000 one.

    Before the envious claimanty types claim that oanyone with that amount of money is stinking rich and deserves to be taxed to the hilt, try calculating the current capital value of alifetime annuity of $23,000 (CPI-ed every year) - that's what they effectively have - and yet they whinge and want more and don't care tuppence for those who have worked and saved - in fact they despise you.

    It's bound to change in the future. At the moment, unless you can see your way to a pension pot of well over $1m, the smart thing to do is to retire early and target a pension pot of around $400,000 at retirement age time - whatever that is set at. That will leave the government of the day paying a shedload of people the full age pension - precisely what they don't want.
    GeorgeM
    18th Jul 2019
    9:43pm
    maelcolium, you are right. Unfortunately retirees including pensioners let them get away with murder and elected them back in.

    I have not heard anyone especially in the media reporting the breath-taking hypocrisy of offering UP TO $1,053 p.a. stolen "deeming" money back as a good deed, after they cut part-pensions by up to $14,000 p.a. with the Jan 2017 Asset Test changes. That effectively is a 7.8% Deeming Rate which affects far more people than the Income Test.
    No mention from hypocritical Labor either.
    DaveL
    15th Jul 2019
    2:04pm
    If the government has any money, they should increase the rental allowance for full Pensioners. Also make 25% of the family home assessable.
    Sundays
    15th Jul 2019
    2:59pm
    A non home owner is allowed $605,000 in Assets before the pension is cut while a home owner is only allowed $394,500 and you also want 25% of the family home assessable? Someone with a modest home would be much better off
    Aviatorman
    15th Jul 2019
    3:35pm
    WHY...Why 25%.? you cant sell 25% of the home... reduces your pension for what.? Silly idea...leave the home alone. Just because the Govt induced population increase bumps up the value of your property at a great location, shouldn't be a reason for penalising you as a home owner.. leave it off the agenda thanks.
    optimist
    15th Jul 2019
    3:23pm
    My first comment ever. I always try to believe the best but if there is concern then I try to put up a fight. Whether we vote Liberal or Labour is not important. We need to remember we are a rather large voting group and if we pulled together to lobby the current government then they may listen. Their main concern is to keep voters on their side and not to have the aged vote would be very detrimental. I think we have a lot of power. Certainly in the 60's and 70's we made a ruckus and caused many changes as a result. Surely we could do that again and be heard. If there is some forum where we could be a thorn in the side of politicians then I am all for it. I dont think we will see meaningful change to pensions, deeming or any other benefits unless we fight for them and show we are not clapped out and beyond protest or power.
    Nice to read all your comments.
    adbob
    15th Jul 2019
    4:26pm
    That's exactly right Optimist. Unfortunately there's nobody batting for ordinary responsible hard-working people. The campaigners who emerged to fight the franking credits issue were primarily doing it for the big money SMSF people - not for the ordinary Australians with a small investment outside of super.

    Obviously it was these latter that Shorten needed to target; they may be retirees but they are also some of the wealthiest people in the country.

    So why not tax them?

    Presumably Shorten was in thrall to the legacy of Paul er y'know Keating - the neocon who hi-jacked the Labor party and set up this mess - a gift to a future LNP governement.

    To be effective you have to have an organisation - at the moment we don't have one.
    Farside
    15th Jul 2019
    5:18pm
    retirees don't need to lobby nationally to get the government to listen. There are two Liberal seats held by margins less than 1% –Bass and Chisholm. Persuade fewer than 1,000 retirees to swing their LNP votes in these seats, all else maintains the status quo, then the government loses it's two seat majority and there is an electorally vulnerable ALP in office.
    rob101
    15th Jul 2019
    3:31pm
    The new Social Services Minister said on Melbourne Radio today that Pensions are Generous!



    rob101
    Farside
    15th Jul 2019
    5:31pm
    Pensions are modest by OECD standards when expressed as a % of GDP and % of average wage, however pensions are indeed generous when compared with Newstart, especially if you consider pensioners unlike the unemployed have had a lifetime to accumulate savings for a rainy day.
    Aviatorman
    15th Jul 2019
    3:47pm
    The Govt has made a reasonable attempt at fixing deeming rates. But what I would like to see is a change to the way Shares are assessed. Suddenly, if your dividend paying shares are revalued at Sept 20 (or Mar 20) in an upwards direction, you lose pension. But then if you sold some shares, you lose some dividend (a catch 22 situation). IF the shares are sold, in part or fully the TAX man gets his cut thru CGT. Isn't this latter point enough for the Govt.??
    LiveItUp
    15th Jul 2019
    3:52pm
    Just buy and sell your shares to suit.
    Aviatorman
    15th Jul 2019
    4:51pm
    ..?? You must be some sort of day trader. Not for me. Anyway, you sell the shares, then what.? Earn 1%. ? Earning a dividend around 8% 'saves' the Govt money indirectly. The reason you only get a 'part pension'.
    Farside
    15th Jul 2019
    5:33pm
    earning higher dividends is laudable however investors cannot ignore the risk of capital losses ... ask anyone who went through the GFC holding shares
    LiveItUp
    16th Jul 2019
    10:05am
    You should be selling when shares go up not down so it's the best time to sell.

    Also anyone who didn't sell during the GFC is doing very well now too.
    Farside
    16th Jul 2019
    11:40am
    buy low, sell high is a great investment strategy however sometimes life gets in the way and that is not always an option. There are many who lost money in the GFC with shares that never recovered for one reason or another but nobody will argue against taking profits and selling while the market is around post GFC highs. But as for doing very well for not selling during the GFC, it depends on what shares you might be holding as the index shows:

    ASX All Ords 31 Oct 2007 6873
    ASX All Ords 16 Jul 2019 6753

    The ASX 200 shows similar results.
    LiveItUp
    16th Jul 2019
    1:32pm
    Means nothing as it fails to take into account dividends for a start.

    15th Jul 2019
    4:00pm
    Stinginess is precisely what one would expect from a bungling LNP government.
    LiveItUp
    15th Jul 2019
    4:34pm
    Rubbish. All the pension should provide for is the basics not the luxuries.
    Karl Marx
    15th Jul 2019
    5:04pm
    LiveOtUp so we go back to using newspaper instead of toilet paper, powdered milk instead of fresh, eating only offal instead of steak, etc etc. Don't know what you call a luxury. People use the pension to buy all there basics then use their savings for a few luxuries so going by your comment ALL pensions having a few so called luxuries would be in breach of your rule. Me thinks you need to put a little more thought into your comments.
    Farside
    15th Jul 2019
    5:36pm
    I have seen plenty of pensioners playing pokies, definitely not a necessity.
    KSS
    15th Jul 2019
    5:39pm
    Nothing wrong with powdered milk and offal is some of the most nutritious meat you can buy. The fact it is cheaper than steak is a bonus olderandwiser.
    LiveItUp
    16th Jul 2019
    10:02am
    Powdered milk and offal now more expensive than fresh milk and steak so pensioners certainly live beyond their means. Also just use rags instead of toilet paper and wash them.
    adbob
    15th Jul 2019
    5:05pm
    The last paragraph of the original article is complete nonsense - but it does reveal the writer to be a Shorten loyalist. A Labor loyalist, on the other hand would want Shorten to be cast into outer darkenss for the future of the party - and for the party to get back to its roots.

    It says that the Shorten franking credit proposals would have "affected the retirees with the most"

    Not so - they would have moved their exposure to Australian shares into a super fund (and avoided it altogether) and increased their exposure to overseas shares - any financial type will tell you (if they're honest) that most Australian super holdings (whether in public funds or SMSFs) are overexposed to Australian shares - too much money looking for a home and only a limited amount of "second-hand shares" (as super fund CEO called them) for them to hide in - somehting overlooked by St Paul of er y'know Keating.

    In fact Labor needs to ditch its allegiance to Shorten - also Hawke and Keating who are credited (by both sides???) with having 'modernised' the Australian economy. You may remember the slogan that we were once the 'Lucky country" - we had to become the "clever country" (even though we have a concept called "skills shortage' which is used to justify an endless intake of immigrants in order primarily to pump up the population rather than make any real economic progress.

    Clever than whom exactly. Papua New Guinea maybe. China has >10,000km of high speed railway - Shorten was thinking of buying the land for a bit of one if he'd got in. India has a space program.

    The snowflakes dream of some sort of world environmental industry leadership - dream on - it ain't gonna happen. China is already targetting the electric car and battery market. I know which horse I would back in that race.
    Farside
    15th Jul 2019
    5:42pm
    adbob says "China is already targetting the electric car and battery market. I know which horse I would back in that race." ... Michaelia Cash, the LNP and about half the population may disagree with you
    Poppa
    15th Jul 2019
    5:19pm
    Thanks older and wiser
    Poppa
    15th Jul 2019
    5:22pm
    Just trying to fix up my comments fields as previously all comments were going in twice
    Poppa
    15th Jul 2019
    5:30pm
    Olderand Wiser The cut to rates is from 1.75 to one per cent for less than $51,800 (singles) or $86,200 (couples), and from 3.25 to three per cent as an upper deeming rate for money invested above those limits
    Triss
    15th Jul 2019
    8:31pm
    Don’t you just love our MPs rushing to get in front of the TV cameras, beaming with benevolence and bonhomie telling the world of the $800 they’ve given pensioner over a year...but forgetting to tell of the $8000 they’ve given themselves?
    roy
    15th Jul 2019
    8:40pm
    I hear Shorten and his mates have all given their rises to charity, any truth in that?
    sunnyOz
    15th Jul 2019
    11:23pm
    Roy, haha, haha, haha, haha, haha, haha, haha
    Farside
    15th Jul 2019
    11:28pm
    proportion of politicians to receive the $8000 increase = 100%
    proportion of pensioners to receive $800 increase = ?????
    LiveItUp
    16th Jul 2019
    10:00am
    Pollies get paid to work pensioners don't.
    adbob
    16th Jul 2019
    3:29pm
    In answer to the question posed in the headline:

    "Are deeming rates the ultimate retiree tax?"

    No.

    Excessive deeming rates are unfair but they don't have a very big effect - even on those people that they do effect.

    The ultimate retiree tax is the assets test clawback. Most part pensioners have their part pension limited by that (ie not the income test) and of course many lost theirs altogether as a result of ScoMo's changes (when he was treasurer) - Shorten didn't oppose this at the time and neither major party (the Greens are also complicit) indicated that they would alter this in their recent election manifestos.

    For those who worked and saved it represents a tax of more than 100% on their savings.

    That's the ultimate retiree tax.

    The ultimate retiree tax break is the almost total freedom from income tax for those with huge pension pots. ScoMo took a salami slice from them. Several so-called Labor governments let this ride for many years.

    Shorten's ludicrous franking credits debacle was caused by his clumsy attempt to hit those people without interfering with the notion of "tax-free in retirement" - even though in reality it would have taxed small shareholders who shouldn't really be paying any tax at all - ie on account of their low income - not on account of their retiree status.

    Keating's super system (that's what it is) is clearly sacrosanct. He comes out of the woodwork now and again to defend various elements of his record - not that one it appears. He must know where the bodies are buried - he should - he buried them - some even with toes intact.

    There is no real Labor party any more. Keating and Hawke did to Australia what Thatcher did to the UK - the difference being it didn't need doing here.

    I don't altogether excuse Thatcher but she had a problem to solve that had beaten her Labour predecessors - there was no parallel issue here.

    Governments here get away with a lot because of oudated national self-images which no longer hold true - fair go - lucky country - workers' paradise etc.

    The reality is that we now live in one of the most venal and selfish countries in the developed world - well of course it's not really a proper country - just a vassal state in the US empire. That's why Trump got cranky with Trunbull on the phone - he had a lot of world leaders to ring up and didn't want to have one of his middle managers tell him he *must* implement one o his predecessor's policies.

    I don't give NZ a blanket endorsement but at least they run their own country - one starting out fewer advantages than we have - independently,
    GeorgeM
    18th Jul 2019
    11:58pm
    Lots of good comments, adbob. I agree the Assets Test is the ultimate Retiree Tax with Deeming at 7.8%, higher than any sensible estimate of average earnings on assets, and a punishment for Savers.

    However, Deeming for Incomes (with both Income & Assets Tests exacerbated by Couple combined tests, whereas the payment may only be made to one out of a couple if the other is not yet eligible) and Age Tests are all instruments set in place by Labor and exploited by Liberals at will. Yes, we have disgusting Govts of BOTH sides regularly hitting retirees with these Retiree Taxes. Labor did not use this term when the Assets Test was changed as they had no plans to go against it - they lost the opportunity to win the election in 2016 as result.

    It is seriously time to scrap the Broken Age Pension system (consisting of multiple Retiree Taxes) and implement Universal Age Pension for all at Age 65 years and Residency of say 15 years. ALL Retirees need to fight for this now, especially with a Retirement Incomes Review coming up soon, and stop the nasty Liberal and Labor Govts continuing their destructive approach to retirees incomes.
    Fready
    19th Jul 2019
    3:55pm
    The Newstart allowance might be too low, but when I was made redundant Centrelink told me to sell my house and come back when I had spent the proceeds of the sale. I received nothing and my wife and I had to live for 6 months off our savings. Now retired we have never received a cent from Centrelink.


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