Tax raid in store on super earnings?

Experts tell how government may seek to ease the financial burden of COVID-19.

Tax raid in store on super earnings?

Worthless interest rates on cash in the bank, plummeting superannuation balances and dividend catastrophes on many stocks that were previously gold plated – that’s the nightmare for many retirees and pre-retirees. Is there more bad news in store? Perhaps.

While many analysts are highlighting the often baffling, secretive and excessive fees charged by some superannuation funds, Rice Warner founder and executive director Michael Rice points out another area that he says the federal government may harness to repay the massive debt created by COVID-19.

Superannuation will no longer be as sacred as it was in the past, he says in a report, referring to the tax advantages delivered by the current super system and regularly criticised by economists such as The Australia Institute’s Matt Grudnoff as concessions that help the rich get richer and do nothing to dent the number of older Australians living in poverty.

“When it comes to super tax concessions and excess franking credits, we’re handing out the most to those who already have the most,” he told YourLifeChoices. “Super tax concessions are worth $41 billion per year. The richest 20 per cent of retirees, who are not on an Age Pension or part pension, get 60 per cent of super tax concessions. The bottom half, those most likely to need help in retirement, get just 11 per cent of super tax concessions.”

Mr Warner says all Australians will need to pay their share of taxes to help repay “our bloated national debt” but that superannuation is a “relatively soft target” and that associated tax concessions are likely to be reviewed by the government.

He warns that while our ‘elephantine’ system works well in aggregate, accumulation and pension earnings could be taxed at the same rate to raise revenue, predicting that would increase taxes from the superannuation funds collectively by “close to 50 per cent” as well as simplifying the system by removing the need for a pension transfer balance. Super earnings incur a 15 per cent tax while earnings in the pension phase are tax free

“Before the government does make a tax grab, it should look at the existing inequities in the system,” he says. “The top 100 SMSFs collectively hold about $8.7 billion. Many appear to be run as businesses – according to the ATO (Australian Tax Office), one even has a loan of $168 million against property holdings.

“Taxing the wealthy first always makes good political sense.”

Mr Warner says superannuation should pay its share of the burden, but adds: “Let’s hope anychanges are well targeted, don’t make the system even more complicated, and still allow the system to do its job, which is to provide better retirement outcomes.”

Mercer’s David Knox says there are two ways the government could tackle the debt – through increased taxation of super and reduced benefits. He predicts the federal government will opt for “a bit of both” in respect of the retirement system and older people, generally.

The retirement specialist says the government may increase the tax on the investment income for pensioners and that it may make the Age Pension harder to get.

“We must also realise that investment returns are likely to be lower in the future, compared to recent years,” he says in Investment Magazine.

“Hence, in my view, for all these reasons we need to encourage greater self-sufficiency in retirement, rather than less. However, we also need to make the total system much simpler.”

The government’s Retirement Income Review is set to report on 24 July.

What is your view on increased taxation on super pension earnings?

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    COMMENTS

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    Buggsie
    28th May 2020
    10:29am
    Just looking at tax on super is not fair and may even be counter productive in the longer term. The whole tax system should be examined for fairness and equity for all. While the current super rules advantage the wealthy, so do most other forms of taxation, State and Federal alike. In addition, the more wealth you have, the more able you are to pay for professional advice that enables you to minimise or avoid taxes. Reference overseas tax havens - our previous PM Malcolm Turnbull and his wife have most of their millions overseas and only pay tax on the little that they bring into Australia. Progressive taxes like the GST are more effective than regressive taxes like stamp duty in that they target the wealthy who consume most. However don't expect too much from the current LNP government, as their benefactors are the wealthy and must be protected at all costs.
    Travellersjoy
    28th May 2020
    10:39am
    Agree Buggsy, but GST is a regressive tax because the poor pay 10% on almost their whole income because they must spend it, whereas the wealthy pay it on a small fraction of their income because they can and do save it in tax effective vehicles.

    Much of the conspicuous consumption apparently done by wealthy people is paid for by companies, trust funds, etc often as debt which is tax effective - meaning ripping off tax payers legally.
    Arvo
    28th May 2020
    4:23pm
    It doesn't matter who pays more or less. Increase Medicare by 1.0%, increase the GST by 1.0% Everyone has to pay...We're all in this health crisis together.
    Youngagain
    28th May 2020
    6:13pm
    No, we are NOT all in this together, Arvo. Some are laughing all the way to the bank. Others are really struggling. Some have lost their jobs. Others have total security. Pensioners who have secure incomes, and health care card holders, got handouts. Self-funded retirees who may have suffered huge loss and have no security got nothing. We are definitely NOT all in this together.
    Travellersjoy
    28th May 2020
    10:34am
    Superannuation was meant to be a source of income in retirement.

    Successive governments from Howard onwards have made it a tax shelter for the very well off. I have no problem with removing those elements, and returning the super system to its intended purpose.

    Superannuation was not intended to preserve inheritances for retirees children and grandchildren. I have no problem with regulatory changes that force wealthy retirees to sell down capital to afford the lifestyle they want, rather than expecting tax payers to cough up compensation when their portfolios turn to junk. Uncle John and Uncle Peter were seriously generous to these people and allowed them to accumulate the assets. Time to give some back instead of always taking and then crying poor - while sitting on millions.

    Age pensioners with little bits of super have done least well and unless they were able to own a home, have done very poorly while the others have prospered. Either there should be more limits on how much people can have in the bank before they demand pension concessions, or everyone should get a pension and the well off pay tax. I am offended when people with very large sums in super can get a pension and concessions so they don't have to spend down the capital in their lifetimes, while age pensioners have to budget carefully to have a basic survival life.

    Home ownership is often the only barrier to abject poverty for millions of women who never had access to superannuation for long enough to make much difference. Governments mess with home ownership by pensioners at their peril.
    Sceptic
    28th May 2020
    2:05pm
    And people on this site have repeatedly said that they treat it as an inheritance for their offspring and not funding their retirement.
    Youngagain
    28th May 2020
    6:17pm
    Why does everyone assume that if someone has savings they put aside to leave to their kids, it must be 'super'. Most of my generation had very little super. I had NONE. But now I have to sacrifice my savings while people who didn't bother to save get handouts.

    Personally I've never seen anyone claim their employer funded super should be preserved to pass to their offspring, but definitely people should be allowed to choose to preserve their personal savings for their offspring. If the choice to enjoy lavish holidays, nice cars and clothes, and restaurant dinners entitles people to a pension, so should the choice to put money aside to leave to children and grandchildren.
    Rae
    29th May 2020
    9:08am
    Sceptic that is not true. The ones gifting it to kids well before pension age do so to access the Old Age Pension and all it's concessions. I can't blame them either. Savers are excessively punished under our current system.

    In fact the defined benefit income streams that have been highly taxed and still have taxes on the employer portion require handing over all the superannuation lump sum to buy the income stream.

    Aged pensioners don't realise how lucky they are to get a fortnightly income they didn't have to buy.

    Taxes don't fund much of anything Federal. States may need taxes or to sell bonds but the Federal Government in spending within Australia can borrow from itself by way of the RBA.

    There aren't very many really rich people and nobody gets at their money anyway.

    This is a desperate plea from fund managers out of the money unfortunately. They should just take the income cuts like the rest of us have to.

    I agree with Youngagain. And lets not forget better houses every 15 years or so and private schools and expensive sport for some kids. People squander money like there is no tomorrow and then expect savers to give them more. It's not right.
    Karl Marx
    28th May 2020
    11:08am
    There is only 1 solution & 1 only.
    A universal pension paid to ALL from 65 or 67 years of age. Only qualification is age. Less rorting the system. The only contact with Centrelink will be initial application. Savings will be in the billions as no more asset or income testing.
    All income will then incur tax as per normal. Superfunds will no longer pay 15% or zero tax as all income generated will be combined with all other income & taxed at the appropriate rates. Discontinue franking credits, negative gearing & trust funds.
    Review the tax laws to make it extremely difficult & costly to dodge paying tax & make companies & the rich pay their fair share as the tax system now allows these companies & rich pay nothing in tax.
    A fairer system for all.
    AutumnOz
    28th May 2020
    11:33am
    Yes Karl it is a much fairer system for all but it is a solution our current government will not agree to because they save so much money by cheating on paying the current aged pensioners the amount they should be receiving.
    Lescol
    28th May 2020
    12:14pm
    Karl I too have advocated such an appoach for more than 10 years now. Sadly I have yet to hear of any politican calling for it as they realise their good times would come to an end as ALL income would become taxable.
    ollie
    28th May 2020
    1:15pm
    Yes Karl I agree with everything your saying the only problem is if this dishonest mob get control of the senate the pension age will be 70. And you can bet on one thing if we go into a recession which more than likely we are already in some say it started before this pandemic hit franking credits and negative gearing are gone .
    Youngagain
    28th May 2020
    6:20pm
    Ollie, I agree with Karl also, but get it straight. LABOR introduced both the income and the assets test. And Labor threatened to wipe out self-funded retirees unfairly and cruelly. And asked if they would reverse the unfair assets test changes, Labor said a clear NO. Don't make this political.

    And BTW. Labor has had effective control of government for 122 years, via their agreements with the Greens and minor parties.
    Karl Marx
    28th May 2020
    9:57pm
    Youngagain, It doesn't matter who did what in the past. We have to move forward & the government of the day has to take responsibility for what happens moving forward. No point in blaming what governments did or didn't do no matter what side of politics they came from. Today's needs are different to yesterdays & Tomorrows will be different to the present. The current government has a great opportunity to make changes that will benefit not just today's issues but set firm foundations for our future generations long after we have become compost.
    Youngagain
    29th May 2020
    2:59pm
    I would agree, Karl Marx, except that Labor seeks minority party support to block everything the government does that might move us forward.
    tams
    28th May 2020
    11:14am
    Super was designed to give capital and income in retirement and basically fall to zero at the time of death. It was not designed to pass on as an inheritance
    Mariner
    28th May 2020
    12:39pm
    But it is exactly used for that purpose, tams. We should all pay in as a percentage of income and no extra, no early releases allowed and accessed on a monthly basis after age 65 (not 67 as that is just not right), no lump sums and at the end of life the fund expires and the longer you live the more you are getting out of it. That way the super funds are sustainable with lower contributions. Other countries are doing it that way but it would not be popular in Australia - but neither are ever changing rules.
    older&wiser
    28th May 2020
    1:04pm
    Nothing makes me angrier than hearing seniors talk about 'leaving something for the kids', while they live in penury, struggling to make ends meet. I personally know of one couple doing this, the 2 kids boast they don't need to work, or save to buy a house because they'll share their parent's inheritance. Both parents are in ill health, yet the kids still rarely visit.
    Mariner
    28th May 2020
    3:27pm
    Yes O&W - I am surrounded by them, for some reason it is not enough to leave them the principal home. They need a few extras to leave behind and some even buy concession stamps for the kids to use! What a hoot. No wonder we are becoming a divided society and maybe an inheritance tax is called for. Not flavour of the month either.
    Anonymous
    28th May 2020
    3:51pm
    Actually those concession stamps are a good idea but not from their value. I find that because they have no value on them I don't have to worry about if the postage has gone up like you do with normal stamps. I rarely use stamps but find them great as I can still use them and not risk a fine because I didn't put enough postage on my letter.
    Youngagain
    28th May 2020
    6:23pm
    Nothing makes me angrier than greedy people claiming spendthrifts should be given $1 mil of taxpayer money to fund retirement, but people who saved should get nothing. Why should the taxpayer subsidize a lavish lifestyle for spendthrifts but not help a saver ensure their grandkids get a good start in life?
    Farside
    1st Jun 2020
    6:28pm
    I have no issues with seniors "'leaving something for the kids', while they live in penury, struggling to make ends meet", until they complain about it. And then I am firmly in the camp of taking responsibility for your circumstances and appropriate action to improve them so life is less of a struggle.
    Youngagain
    3rd Jun 2020
    8:45am
    The problem with that, Farside, is that stinking unfair system denies people the right to make choices. Case in point: a hard worker (X) who lived frugally, saving to ensure he could meet anticipated health challenges and care needs in later life retires with $1 mil between himself and his wife. He also wants to leave a little to his grandchildren to them fund their education and get a good start in life. His less responsible brother (Y) retires with $400,000 after earlier retirement to take a few cruises around the world.

    X, at age 67, takes on the task of caring for his aging parents. Y buys a luxury caravan and tours Australia. Three years later, the parents die and leave X more than Y, believing (correctly) that X incurred a financial burden caring for them. But staying home meant X built his savings by $50,000. Now he and his wife want to take their turn to travel. But Y, having reduced his wealth further, challenges the 'unfair' will, and wins because he is poorer, takes yet another world cruise, and claims a generous part pension. X meanwhile has to manage on his savings and gets NOTHING either from the estate or from the government.

    Now, what choice does X have other than to give up his desire to preserve savings for health and care needs and his grandchildren and live on his savings? NONE. And because he is unfairly denied that choice, while Y is unfairly over-indulged, HE HAS EVERY DAMNED RIGHT TO COMPLAIN. The system stinks, and anyone who says the victims of this unfairness shouldn't complain is being very unreasonable and unfair.

    Most SFRs WANT to take responsibility for their circumstances, and do so. It's pensioners who DON'T take responsibility for their circumstances - instead leaning on taxpayers - and then they attack the SFRs who are taking responsibility. (And please don't interpret this as an attack on pensioners who GENUINELY couldn't save for their retirement. But vast numbers had more than ample opportunity and now bleed the taxpayer because they CHOSE to be irresponsible. Meanwhile they make nasty proclamations about SFRs who chose to be responsible and are suffering unfairly for that choice.)
    Farside
    3rd Jun 2020
    3:13pm
    I sympathise with your example Youngagain but life is not abour fair. Policy is not made for individual cases and people like Y will game the system but then X should not be jealous of Y, especially if he looks down on Y's actions.

    In your example, X has to take his bumps ... X made fully informed choices to not take money from his parents for their care and to delay his travel knowing the circumstances and nature of Y. At the end of the day X is still financially comfortable living off his savings and wealthier than Y so it no surprise the courts may uphold Y's appeal but they are not going to make it so Y is better off than X. Fwiw, in the not too distant future one of brothers are X and Z, while other brother Y will inherit a house and cash leaving scraps for X and myself. We accept that is going to be the outcome as he is the most precarious financial circumstance despite being a dropkick and not taking responsibility for himself.
    anna
    28th May 2020
    11:17am
    Spare a thought for those in the middle, instead of dividing Australians into the rich who are rolling in money and the poor who are struggling on the pension. I was brought up to believe that government assistance was temporary safety net if you lost your job or needed a hand to get back on your feet, not a permanent way of life - except for the pension. We have worked all our lives, never taken anything from the government, brought up four kids at the same time .We had a decent super when we we retired but the GFC flattened that and it has never gotten back anywhere near to its original level. So money is not abundant and although we could get a part pension, we are managing okay, so why take it from someone who is really struggling , for example? It may become inevitable in the future but I am doing my damnedest to avoid that. But I can see things ahead which will ruin that , such as targeting tax concessions or inheritance tax or death duties. The desire to leave something to your kids is pretty strong in most of us but no doubt, we "rich" will be targeted.
    Rae
    29th May 2020
    9:16am
    I'm in the same situation but I was a widow raising three kids and money was very tight. So I worked two jobs and ran a business and saved in super.

    I have no sympathy for the majority of those who squandered their incomes for decades.

    I regret not having claimed the part pension as I was angry others got $750 and savers missed out even though those on the aged pension may be wealthier by far.

    The FIRE industry will kill itself off if it keeps up. Nobody in their right mind would delay gratification now to save extra into super. People can see how savers are being exploited and spendthrifts rewarded.
    AutumnOz
    28th May 2020
    11:30am
    "Mr Warner says all Australians will need to pay their share of taxes to help repay “our bloated national debt” but that superannuation is a “relatively soft target” "

    I recall a comment from the RBA, some weeks ago, that they were printing more money for use during the coronavirus employment upsets, this extra money was to be used for JobSeeker and JobKeeper as well as the stimulous payments etc.

    All I have heard from government lately is how much more money they have spent etc. and our current treasurer now says that money was 'borrowed' and will need to be repaid so the $60 million mistake with payments for JobKeeper cannot be used for anything else but repaying the loan.

    So instead of hitting ordinary Australians with yet another lot of tax why doesn't the government instruct the Australian Tax Office to make the multi-nationals in this country pay a fair amount of tax on the profits earned within Australia and stop them from claiming their debts owed in another country off their tax paid in Australia.

    We are very tired of being ripped off by the coalition governments over the years and the above article sounds to me a warning about yet another rip off that is coming shortly.
    Sceptic
    28th May 2020
    2:10pm
    Garbage Autumn.
    Anonymous
    28th May 2020
    3:56pm
    Why should self funded retirees help the government when the government has not helped them at all during this Covid-19 crisis? That amounts to them paying twice for something they never got in the first place.
    Anonymous
    28th May 2020
    3:56pm
    Why should self funded retirees help the government when the government has not helped them at all during this Covid-19 crisis? That amounts to them paying twice for something they never got in the first place.
    Youngagain
    28th May 2020
    6:28pm
    Because greed and envy rules, RW. And anyone who saved and planned for their future is fair game. Universal poverty is the goal.
    Rae
    29th May 2020
    9:32am
    Exactly right. There is no need for Government to tax people to pay Sovereign money back. This " economist" obviously doesn't understand modern money creation.

    Taxes are used to control inflation. As we are entering a deflationary recession increasing taxes will simply turn it into a depression. This is exactly what cause The Great Depression to get so bad. The Australian Institute should read some historical economics in stead ob neo-liberal theory in my opinion.
    Farside
    1st Jun 2020
    6:36pm
    Rae, the Australia Institute is definitely not in the neo-liberal camp and would be horrified to learn that is the take away. It's Chief Economist RIchard Denniss is strongly Keynesian in outlook and outspoken against austerity measures, frequently commenting how these prolonged the Great Depression in the absence of stimulus.
    https://www.tai.org.au/content/black-holes-and-keynesians
    Fedup
    28th May 2020
    11:43am
    The more money the government takes from super and investment earnings, the more people will end up on the age pension, so it would be counterproductive.
    Eddy
    28th May 2020
    3:31pm
    Not necessarily Fedup, it is easy to make blanket statements that it would be "counter-productive" without any substantiation. For instance if franking credits were abolished the $6 billion in extra revenue would pay for about 260000 in pensions for couples. How many SFR receive franking credits, I do not know, but if it is anywhere near 260000 it could be cost neutral. We need proper economic modelling (aka SWAG (scientific wild arse guesses) not unsubstantiated statements.
    Youngagain
    28th May 2020
    6:26pm
    If franking credits were abolished, Eddy, investors would change their strategies and there would NOT be $6 billion saved at all. You can't base savings on past behaviour that changes when changes are made. That's why the country is in a mess - because nobody can think forward.
    Rae
    29th May 2020
    10:09am
    Imputation should stop. Corporations should not be paying provisional tax for shareholders at all. Other countries don't use imputation as it distorts company decision making. Companies are best investing and growing rather than being cash cows for shareholders.

    Real investors are better off with capital gain as in Australia for some weird reason it is 50% discounted. Now fixing that would be a great idea. It might stop the stupid speculation that's going on particularly in the property market.
    Chris B T
    28th May 2020
    11:52am
    You can't take what you don't have.
    I used mine in pre OAP age retirement and Reinvested In Ownership of Gov Buildings/Major Companies here and around the World.
    If they go Bankrupt we are all STUFFED.
    Rae
    29th May 2020
    10:11am
    Yes it was so good governments could use our tax dollars to build assets to flog off.

    Just another reason to not increase taxes. The bloody private sector should be building itself not using taxpayers to fund it.
    Chris B T
    29th May 2020
    11:23am
    The Assets I'm talking about are Rented, Not ever Government Owned.
    This is the New Normal to Ownership.
    Rae
    29th May 2020
    11:39am
    Yes Chris. Selling taxpayer bought buildings to then go rent at commercial prices is something you could do if you had an unlimited pot of other people's money to spend and no responsibility personally.
    Chris B T
    29th May 2020
    2:50pm
    These are and Before Privately Owned by Australian Real Estate Investment Trust (A-REIT) and a property fund manager with overseas interests as well.(The Group I'm invested in, some Super Funds are doing the same except I'm doing it Directly).No Super Fees.
    Instead of Governments/Larger Corporations Purchasing/Owning Buildings, Maintaining/Fit out it is Cheaper/Cost Effective to lease.(The New Normal) No need to rebuild progressively over time when the Building is no longer Fit For Purpose, just relocate and lease fit for purpose.
    No need for Mega Dollars as your a part of a Group, similar to Super Funds which have small and large Participants. Except No Tax Subsidies like Super and this one no Franking Credits. It is a Individual's Choice and Purpose.
    Horace Cope
    28th May 2020
    12:19pm
    There is a "Mr Warner" quoted in the article yet the only reference to him is the founder and executive director of Rice Warner, Michael Rice. Who is "Mr Warner"?
    Rae
    29th May 2020
    10:13am
    An economist who doesn't understand modern money creation and failed to read any historical economics it would seem.
    Horace Cope
    28th May 2020
    12:25pm
    "What is your view on increased taxation on super pension earnings?"

    Any government that wants to take more from compulsory super will cop the backlash that Labor did when they went after franking credits. I might point out that this article is a hypothesis based on nothing that has been said or written by any political party in Australia. Another academic prepared to play games with other peoples money.
    KSS
    28th May 2020
    3:10pm
    Yep. And YLC reporting it as if it was already Government policy!
    Eddy
    28th May 2020
    4:13pm
    Dear Horace, do you really think that the Labor Party lost the recent election because of it's franking credit policy. Please do not delude yourself. I would suggest that most Australian voters, including the over 50s who never receive them and, in most cases do not really understand what they are, do not care two hoots about franking credits. I suggest elections are won and lost on public perceptions about the party leaders, not specific policies. In the case of franking credits the relatively few numbers that would have been adversely affected, most of whom would most likely have voted for the Coalition anyway, would hardly affect the final result. Changes to superannuation, whether good or bad are unlikely to be an election winner or loser in any election. The young do not care and most of the oldies are unaffected.
    The two party preferred at the 2019 election was approximately LNP 51.5% and ALP 48.5%. Without meaning any disrespect to their recent leaders, if the ALP can overcome their preference for rusted on ideologues, like Mr Shorten and Mr Albanese, and pick an youthful urbane leader they are a better chance to be successful in 2022,
    Horace Cope
    28th May 2020
    4:59pm
    No Eddy, there were many factors involved, franking credits were only a part but quite important in the scheme of things because Bowen, when challenged on them, uttered the famous comment; "Well if they don't like our policies they don't have to vote for us!" Yes, Shorten was too smug by half and I believe he came undone when he refused to explain the costing of the proposed 50% carbon reduction policy with the stupid response of how doing nothing would cost more. Sadly, there are still people around who won't believe that Labor lost the last election.
    Eddy
    29th May 2020
    3:13pm
    One thing that really gets my goat is misguided people who claim that their view can sway peoples voting intentions. Some people seem to think that ALPs franking credits policy cost them the election. I would suggest that the differing debating styles of Mr Morrison and Mr Shorten, and the electorates perceptions of these leaders, was more important than any individual policy position. Having been around, and a little more political, in 1993 I understand that there is no such thing as a certainty in politics. In 1993 I suggest it was the youthful enthusiasm of Mr Keating, with a big smile and lots of teeth, which prevailed against the dry economic debating style of Mr Hewson despite all the polls predicting an alternative result.
    Youngagain
    30th May 2020
    4:55pm
    Personality and debating skill means a lot in politics, Eddy, but hundreds of thousands not only voted against the ALP because of their franking credits policy, but lobbies for others to vote against them. Hence the rallies all over the country. The fact is that the policy was terrible and it threatened grossly unfair hurt on a lot of people, and to pretend that people won't react to that is to be tunnel visioned or totally blind. I am one of hundreds I know who had resolved never to vote LNP again after the assets test change, yet I voted LNP because of the franking credit policy - and for no other reason. Unless there are lots of liars in my circle, I was in good company..
    adbob
    28th May 2020
    12:59pm
    Self-funded retirees with big super balances are certainly the obvious ones to go after - they are (ignoring the super-rich) some of th ewealthiest people in Australia and they don't pay a penny in tax.

    Two problems there:

    1: They are the backbone of LIberal Party membership - less influence there than before now that both major parties are bought and paid for by big donors - but still highly influential.

    2: There are not enough of them to make a big difference to the overall tax take.

    So they'll have to go after Joe and JIll Average, as usual - the Joes and Jills who were foolish enough to work and save that is - so that the government can continue to pay the Joe's and JIlls who didn't lavishly enough to retain their votes.

    Shorten's franking credit proposals were stupid - as well as being an electoral liability they wouldn't have pulled much extra tax in as the bigger players could restructure easily - ie into unaffected super funds instead of having their own SMSFs.

    If taxing pension-mode super was the only change people would be encouraged to hold more investments outside of super and take advantage of the (>$30,000) generous tax-free ramge for older Australians - that would depend on the non-paying taxpayer getting their franking credits back so that would put a different complexion on that issue - the LNP would have to back-flip and adopt what they had previously opposed - not impossible - and a one-off crisis makes it politically easier.
    Anonymous
    28th May 2020
    1:35pm
    An excellent summary and as one of those liberal self funded retirees let me say this idea will never see the light of day.
    There is merit in the universal pension suggestion that warrants more deliberation.
    the old age pension (which I do to get) is a complex discussion - those who own their own homes are reasonably OK but those who rent do it tough - the income and assets tests do not address this issue fully - perhaps differing rates.
    Super for most came in to effect in 1991 and it was said then we really won't its success until 2031 - 40 years on - however there is already some evidence that super is reducing the OAP burden on federal government.
    The longer term worry is debt and deficit - not a big issue right now with low interest rates but if it ever get back to long term average of 7% - big issue.
    I personally don't like debt that is not generating a positive benefit - if we had no debt and therefore no interest payments (currently billions each year) then we have more money for schools, hospitals etc
    Rae
    29th May 2020
    10:19am
    The States still need to issue bonds if the GST and other payments don't add up to fund schools and hospitals etc.

    The Federal debt does not fund State responsibilities. They may grant money but it comes with responsibilities.

    The Feds imported millions of extra population to fudge the GDP figures and should have issued much more to the States carrying the cost of this population ponzi scheme.
    Anonymous
    29th May 2020
    10:50am
    Rae,

    I hear you and I agree entirely regarding Feds immigration policy - the view of Treasury was that high immigration would lead to productivity and thus GDP growth - it hasn't. If they had not done it there would have been a technical recession at least which govn would not have liked - let alone voters. That said States economic performance have also mostly been poor and little medal attentions given to States performance.
    Rae
    29th May 2020
    11:43am
    Yes DISCN. NSW is a perfect example with money squandered on toll roads and stadiums nobody can afford to use now or are willing to attend.

    Spending hundreds of dollars crossing town to watch a football game is unaffordable now for most of us.
    BrentonG
    28th May 2020
    1:26pm
    Maybe I missed something. Agree with fair taxation for all, but the payback for concessions on super contributions is that self funded retirees have no lean on the government coffers at all in retirement, not even a health card. That’s what self funded means, and to look to those who have saved enough to be self funded to pay Dow the government debt, be it job aid or stimulus is a slap in the face. Especially the stimulus debt, paid to everyone on benefits (and I don’t begrudge them this) at a time when stimulating the economy was so hard to do, and receivers of government payments had no impact to their income. Changing the superannuation laws to the detriment of retirees balances or incomes will lose votes whoever initiated them. I said I agree with fair taxation, closing the loopholes that facilitate low or no tax payments by business large and small, along with tracking down welfare fraud and and waste would be a good place to start.
    P$cript
    28th May 2020
    1:33pm
    The tone has definitely changed from how Labor was going the ruin retirees with the chances to the franking credits, the retiree tax. With the financial down turn the returns of dividends has become lower and the share price tumble, it looks as if Labor's changes would have caused SMF's to restructure away from the stock market and been better off in the long run.
    The tax cuts already give out by this fiscal irresponsible Government, which has not done what they said it would, means there is even less now coming to pay for the spending.

    For a Government that claims to be the better economic managers, they have a dismal record.
    Anonymous
    28th May 2020
    1:40pm
    No matter how bad the coalition might manage economic the labor government had and always will manage considerably worse. It is one of the major reasons the coalition has won 7 of the last 9 elections and will win the next.
    The evidence shows that over the last 100 + years the stock market is the best long term investment.
    Get over this virus and I am predicting a V economic recovery - stock market went down 38% and has already recovered 24.5% in past month and a bit.
    Fedup
    28th May 2020
    2:00pm
    You’re overlooking the simple fact that Labor have proven that they are better managers of the economy that the LNP. Australia got through the GST better than any country in the world, thanks to Wayne Swan. I shudder to think what would have happened if Frydenberg and Morrison had been in charge then.

    Also the ‘budget emergency‘ debt that Abbott and Hockey used to scare people into voting Liberal, has been more than tripled by the Liberals (and that was before COVID).

    It is not because they are better economic managers that the Libs have won 7 out of the last 9 elections, it’s because they CLAIM to be better economic managers and stupid people believe them.
    KSS
    28th May 2020
    3:19pm
    FED up what a very short memory you have. Australia only survived the GFC because of the of the great shape the economy was in when Labor won the election. Labor had the money to fritter away (school hall, pink bats anyone, money to dead people and those overseas anyone) because of the billions set aside by the previous Liberal Government for the rainy day. Well the rainy day came and Labor spent it all and more, even setting up landmines for the next incoming Government to have to deal with (NDIS, schools funding). And then true to form when the next Government had to fund these thought bubbles, Labor grandstands about all the extra borrowings that had to happen to fund Ms Gillards fantasies.

    Even today, Labor is bemoaning the fact that the Government borrowing for JobKeeper will be lower than originally thought, complain that the exstimate was over done and now that 'saving' should be spent anyway. NO! it shouldn't, we don't need to borrow as much is all. But then Labor cannot stop spending other people's money.
    Anonymous
    28th May 2020
    6:32pm
    Feduo - you hold to your delusional views - meanwhile I will continue to vote with the majority - as Richo says - the punters need get it wrong.
    Labor managed the GFC poorly and won't go into the failures here - Swan could not manage a "chook" raffle.
    The coalition have in the past 30 years managed to provide 11 balanced budgets - labor has only done one since it came to power in 1972. that year was 1989 with a great treasurer in Keating.
    Only 2 countries did OK out of GFC - Australia and Germany because both had money in the bank that labor proceeded to squander.
    Julian
    29th May 2020
    10:05am
    KSS: agreed wholeheartedly. As usual there's a significant divide in opinion but who in their right mind would complain about having their loan liability reduced ??

    If I had to borrow 130 widgets and then notified two months later, that my loan was reduced to only 70 widgets and subsequently have to pay less interest, like most, I'd be cheering.

    Obviously, some people would not welcome this news. Maybe so as to have a reason to complain.
    Rae
    29th May 2020
    10:32am
    Where do you go to restructure away from the sharemarket and still make income and not lose bundles of capital. Capital losses in shares happen but I'm suspecting the losses from property will be huge as this recession drags on.

    Warner is not seeing reality. A high income earner schooled on Chicago nonsense and about to face reality.

    There will be capital losses for years carried over after the dust settles and hundreds of thousands seeking Centrelink benefits for the OAP.

    Talk of taxing market returns or savings in a deflationary recession is appalling advice.

    As to frittering away I suggest giving OAP recipients $750 when their income hadn't changed fits the bill. And not giving self funded retirees anything when their incomes and capital had collapsed bloody mean and not about to win them any favours.

    At least Labor gave almost everyone, Aged Pensioners Disability pensioners and all taxpayers that $900.

    The Federal budget is not a household account. We owe ourselves money. So what. After WW11 the debt was enormous and yet we built a great Nation and built a strong middle class of home owners. Why is the LNP so keen to destroy the middle class and create poverty. It makes no sense.
    Viking
    29th May 2020
    10:52am
    Rae, nearly everyone maybe but Labor excluded the 'hated' Self Funded Retirees. Wouldn't it be nice to live in a country where success (beyond kicking a ball between two posts) and self reliance and resilience were celebrated rather than reviled. Maybe then we would all be better off!
    Rae
    29th May 2020
    11:47am
    Yes Viking indeed it would. The Tall Pppy Syndrome has been done to death and I'm afraid saving is not in favour. If we judge by the 14% of women and 12% of men having taken all their Super out to spend.

    Money burning holes in pockets and purses is nothing new. Apparently 63% spend everything, a lot of it unnecessarily and then complain about savers having money.
    Youngagain
    30th May 2020
    4:51pm
    I have a relative who puts 100% of her net wages through the poker machines every week, and her husband spends $100 of every pay on lotto and lottery tickets. They will claim a full age pension. Yet I am condemned for wanting to preserve SOME of my hard-won life savings to leave to a special needs grandchild to ensure he can afford the care and opportunities he needs to thrive.
    Bakka
    28th May 2020
    2:16pm
    They need to be very careful and clear about what is required... Don't confuse the need to repay the Covid -19 debt and the entirely separate need for Super ?Retirement reform.
    The Covid -19 debt could be partly addressed by a means tested tax levy ( ie:like the old Ansett tax levy) That way those who presumably can afford it, shoulder the most burden .
    Australia's retirement system has become complex,over regulated and full of anomalies and safety nets ect. caused by constant meddling by 1 or 2 term administrations.
    Have to agree with others in that a universal age pension structure should be the long term objective and may be underpinned via a "future fund" type structure,. That way various Administrations will not be able to " meddle with it except for issues at the margin.
    How we get to this will take very careful navigation and require a visionary and bipartisan approach as it is highly likely that the party who sponsors this process will incur ballot box retribution from many sections of the electorate ... Unfortunately history shows that's the way of today's Australia.
    Rae
    29th May 2020
    10:41am
    Yes. In all the fuss about $6 billion in Franking credits what has been missed is the $42 billion being creamed off Superannuation by the Fund Industry.

    A universal system that is once again fair, efficient and low cost is exactly what we need.

    Fees should never be more than a low cost index fund. The funds simply can't beat the index consistently except for a few odd outliers which none of us have enough money to invest with anyway.
    dabi56
    28th May 2020
    3:23pm
    Will someone tell me the secret how people with very large sums in super still get the pension. If you are a Single pensioner and own your home you get no pension if you have more than $578,000 in assets and if you are a couple with your own home no pension for you if you have $870,000. I would agree though that in the pension accumulation phase ultra large superannuation balances should be taxed higher, as people that have huge amounts in a SMSF are not accumulating for retirement but avoiding tax.
    Viking
    29th May 2020
    11:04am
    dabi56, I don't think people with large sums in super or the super rich do still get the pension nor would they bother to go to the trouble. I believe it's a myth perpetuated by wellfarers ie that anyone with any more money or savings than them has got there by cheating or tax evasion. In my experience most got there by hard work, paying lots of tax, thrift and financial discipline. If anyone disagrees I challenge then to provide names and numbers of those rich on the pension.
    Youngagain
    29th May 2020
    2:53pm
    I could do that, Viking, if it weren't for the fact that I'd lose too many friends. Most of my neighbours are rich and on full pensions. Most of my cousins and in-laws are quite well-off and on full pensions. My partner and I are by far the poorest in retirement of everyone I know, yet we are self-funded. A great many wealthy DO dodge tax effectively and even manipulate to get pensions. It's not the wealthy, but rather than low to middle-middle class that worked hard and honestly.
    Viking
    29th May 2020
    7:37pm
    Yes Youngagain everyone is better off than me so they must be dodging the tax system! I know people who earned the same as me and their wives the same or similar to my wife. They spent we saved and invested, now they probably think we are tax dodgers. Envy obscures rationale.
    Youngagain
    30th May 2020
    4:46pm
    It does, Viking. But facts are facts. If you lived near me I would introduce you to the couple who made millions selling home-made alcohol illegally for cash in hand. Didn't pay any tax on that income. I could introduce you to a relative who ran a landscaping business. 70% of his shop sales were for cash and nearly half that went under the counter with no receipts issued. Then there's the group I knew well who traded drugs. You think THEY declared their income? Takeaway food store owners and pub owners will tell you they routinely take cash from the till every night before counting the take. In fact, very few who were paid cash in hand ever declared it. Tradespeople routinely ask for cash and offer a discount if paid cash, because they don't raise an invoice, don't pay GST on the job, and often don't declare the income at all. I've had tradies tell me they would take cash for half the price but they would have to issue a GST invoice for 50% because otherwise they wouldn't have enough funds to cover their business outlays for the period.

    I also saved while others spent, and no doubt some think I dodged tax (not that I ever had the opportunity to do so), and yes, envy does obscure rationale, but the fact is that tax avoidance and tax minimisation has been rampant in Australia for a very long time. So much so that a famous Australian stated publicly that everyone has an obligation to minimize their tax contribution. The vast majority of folk who had the opportunity to do so DID dodge tax, using any means at their disposal. And anyone who claims otherwise is blind and deaf.

    That is not to say that everyone who has a few quid was a tax evader, but tax avoidance is a sport in Australia and those who do well at it expect to be applauded, not condemned. They simply don't accept any moral obligation to pay.
    Youngagain
    30th May 2020
    4:49pm
    BTW. Viking. Please introduce me to someone who earned a healthy income and DIDN'T use whatever legal tax minimization strategies were at their disposal? I'll bet you can't. And if the masses didn't minimize tax, there wouldn't be work for countless thousands of accountants and tax agents who spend their days finding ways to minimize tax for clients.
    enyaW09
    28th May 2020
    3:28pm
    I have no problem with the govt. taxing self funded retirees, but make it sensible.As you probably already know those that have over 1.6 mill. in super are taxed at 15% on any income generated by the portion over 1.6 mill. Well then make it that if anyone with over 3 mill. in their super are taxed at the nominal rate on the income generated by that capital that is over the 3 mill threshold. This will then make the rich pay their fare share of tax. Also remove their right for tax imputation credits for non retirees and also those that have over 3 mill in their super.

    28th May 2020
    3:42pm
    Easy fixed. Anyone who has more than $1.6 million in super has to take it out. It is ridiculous that people can have many millions in super and only pay 15% tax and less for CGT.
    Youngagain
    28th May 2020
    7:15pm
    I agree with that, RW. But also fix the tax on pre-retirement super. 15% discount on the member's marginal tax rate. Not the current UNFAIR flat 15% that loads the coffers of the wealthy and gives battlers little or nothing.
    Anonymous
    29th May 2020
    10:54am
    High income earners pay 30% tax on their super.
    Youngagain
    29th May 2020
    2:50pm
    Only VERY high income earners, RW. And not many of them. The rich are far too skilled at manipulating a system designed to ensure the average worker funds the rich man's lifestyle and loads the coffers of the wealthy.
    Viking
    28th May 2020
    5:30pm
    Firstly, several 'perhaps, maybees or mays' stated or inferred in yet another retiree scare article. What are these people experts in? Tax dodging, picking stocks, forecasting bubbles and bursts or government mind reading?

    It's not only the couple of million retirees the government will answer to at the ballot box, it's also the ten million workers many of whom are less than happy with their not so super savings already. Elimination of dividend imputation would have far more reaching effects than just upsetting a few hundred thousand self funded retirees. It would affect the super returns for millions of of workers and other bodies invested in Australian businesses. It would result in massive sell-offs of Australian stocks at a time the government is trying to encourage financial stability. This would result in foreigners buying these cheap stocks and eventual takeovers at a time that more self sufficiency is being encouraged. Then before we know where we are it will be election time again with all the joyous budget news they bring.

    We keep hearing from pensioners about these super rich people also drawing the pension, really? Can anyone put a number or some names to these people because frankly I don't believe it.

    No one yet knows what the government will do about the black hole, we don't even know its size. They did nothing about the previous GFC debt which doubled and then mysteriously disappeared in time for an election, on the side of a mug. I suggest until we know what will happen that we enjoy the beautiful autumn weather and glorious peacefulness while the pandemic lasts.
    Rae
    29th May 2020
    10:45am
    The only super rich drawing the OAP are the ones who invested for their working lives in the family home buying better and bigger every decade or so. Hear them scream whenever there is mention of that being taxed or added to the asset test.
    Youngagain
    29th May 2020
    2:49pm
    I suspect most 'wealthy' retirees are experts at tax evasion. There's no money to be found there. Most retirees are struggling, whether self-funded or pensioners. Those that aren't are adept at tax avoidance and in many cases at manipulating to appear as pensioners and collect handouts.
    BillW41
    28th May 2020
    6:32pm
    My wife and I manage on $35-40,000pa, comprising full pension, a small annuity, a tiny franking benefit, and 25% UK pension, but wouldn't consider ourselves well off. Our house is freehold but is worth far less than we would need to pay for a new one or entry to a retirement village. Overseas holidays are a thing of the past, but we have a couple of secondhand cars. Any reduction in income would see us struggle to meet home maintenance. power bills, and medical, etc., insurance.
    Rae
    29th May 2020
    10:50am
    Yes you'd have to struggle along just like the hundreds of thousands of self funded did after the Hockey budgets in 2014 wiped their incomes away. It's obvious when you look at the data graphs that that began the decline in retail and hospitality spending.

    Now another is suggesting we cut retiree incomes yet again. They obviously are aiming for another Great Depression is all I can think. Stupid is as stupid does as Gump would describe this.

    At least you have the security of government pensions and concessions which is a bonus these days. Imagine if you had to pay full costs including rego on those two cars.
    Youngagain
    28th May 2020
    6:33pm
    Yes, attack savers again and make it even less beneficial to save. Grind the whole country into poverty. The race to the bottom is on!
    Youngagain
    28th May 2020
    7:22pm
    I'm not waiting for this to happen. The short-sighted fools have won. I'm spending up big on home improvements and applying for a pension. Cleary saving doesn't make sense. I put my personal savings into super just before retirement on a financial adviser's advice. It was bad advice. It gained me NOTHING. I'm taking it out now and having a spend-up. Can't keep it to pay for dental work or eye surgery I'll need in a few years. Can't keep it to pay for good aged care. Can't keep it to give the grandkids a leg up. No. Have to 'spend my capital' to satisfy the envy brigade. So I will. And the government can support me for the rest of my days. Income rises. I get nice concessions. And if it increases the burden on taxpayers, good. Time the fools who promote this stupidity suffered hip pocket pain that might actually wake them up to reality
    skinner
    28th May 2020
    7:37pm
    Tax that top 20% of super fund as if they were companies. Also increase company tax to 50% & make them pay a larger share of the tax rather than individuals. Both my daughters paid more tax that the 30% company rate & this is so bloody WRONG!
    Rae
    29th May 2020
    10:53am
    Won't help. The average company tax is around 12% and most pay very little anyway. It's the PAYG workers supporting the economy and the tax office. And all of us paying state charges and GST picking up the real service costs.
    skinner
    28th May 2020
    7:37pm
    Tax that top 20% of super fund as if they were companies. Also increase company tax to 50% & make them pay a larger share of the tax rather than individuals. Both my daughters paid more tax that the 30% company rate & this is so bloody WRONG!
    Viking
    28th May 2020
    8:05pm
    So Skinner, when your daughter's employer closes because their return is so unattractive with a 50% tax rate and the financial risks too high, when company tax is 20% elsewhere, how much tax will your daughter pay then? I'd worry more about the companies which pay no tax than those that do pay; otherwise be careful what you wish for!
    Youngagain
    29th May 2020
    2:45pm
    50% company tax! All companies would either close or go offshore, and goodbye jobs, incomes, tax revenue and pensions (which are funded by tax). That would really stuff the country. Heaven help us all if anyone was stupid enough to implement that level of tax on business. Happily, it will never happen.
    Priscilla
    28th May 2020
    8:20pm
    Not much left to tax after Covid-19! Nothing like kicking someone when they are down.
    Blossom
    28th May 2020
    10:38pm
    The value of my Super has already dropped.
    Not everybody pays a high medicare levy.
    Rae
    29th May 2020
    8:54am
    I'm appalled that an economist and The Australian Institute can tell such dreadful lies.

    We lost the gold standard in 1971. There is no need to run a surplus if you are a currency sovereign nation.

    Just because savers have been forced to use the Superannuation pot is no reason for eyeing it off as a means to continue growing the FIRE industry.

    And there are taxes on Super 15% which is 3% more than the average business tax rate. Then 15% on profits as well. That's 15% more than our billion earning mining corporations pay.

    I suggest the Australian Institute concentrate on getting some tax from our foreign corporations mining, pumping gas, owning fuel stations and countless other business operations.

    How about a Transaction Tax. That would fix it, be fair and everyone pay according to how much money they turn over or transfer to foreign banks or tax havens. Easy.

    Personally I'm over feeding these highly paid scavengers.
    Anonymous
    29th May 2020
    10:53am
    A transaction tax is GST on steroids and would wreck the economy as the money flow dried up. They tried it before with a debits tax and it slowed down the economy.
    Anonymous
    29th May 2020
    10:55am
    Rae,
    The Australian Institute is full of rabid left wing greenies and when it comes to economic matters they are clueless.
    Rae
    29th May 2020
    11:02am
    The UN research shows 0.05% would be adequate unless inflation gets away again. There would be no need for other taxes or charges and GST could be ended.

    The money is already drying up. Cashflow has been falling since the 2014 budget.

    If the only tax was a minimal cent fee for every dollar transferred then the ones paying would be those earning the billions of $$$ not you or me.

    it would be the Glencores earning 28 million but paying 0.01% tax on it over three years.

    Just getting 0.05% out of all the billions transferred away. Including the $20 billion visa workers send out as well.

    Take a look at the UN research. The debits tax did slow the economy but it was an extra tax not a replacement tax.

    Of course sin taxes on tobacco, alcohol, etc could still be charged.
    Youngagain
    29th May 2020
    2:26pm
    I don't think they want to fix the economy or society, Rae. I think they want to progress a system that favours the privileged minority and makes the majority pay for the luxury lifestyles of the privileged.
    Youngagain
    29th May 2020
    2:29pm
    And no, RW, if correctly implemented a transaction tax would not wreck the economy. It would fix it. But it has to be correctly implemented.
    Anonymous
    29th May 2020
    3:34pm
    A transaction tax would stop people investing money as it would cost too much to move it around. Sharemarket, FX and many other markets would suffer terribly. Pensioners would get hit every time their Term Deposit rolled over. It is a tax we don't want at all.
    Youngagain
    30th May 2020
    4:35pm
    I don't think pensioners will worry much about a small tax when rolling over a term deposit once every few years nearly as much as they worry about getting no interest on their savings, RW. As for Sharemarkets, FX etc. - those who have money to invest in these areas SHOULD be paying income tax and other taxes, which would reduce. The whole point of the Transaction tax is to capture the tax that these people are evading now. It would be fantastic for the country to be able to do that. The rate can be very low and the savings to those paying their taxes honestly now (the battlers, generally, who can least afford the burden) would enable major increases in both consumption and saving. Good for everyone except the greedy tax evaders who always whinge when asked to cough up their fair share.
    Joyful56
    29th May 2020
    1:47pm
    We need to ready our voices very loudly if this comes to fruition. Oh and Youngagain, not all Health Care Card holders got handouts. I am trying to eek out a living on my small super balance, caring for a family member with dementia who didn't qualify for a carer - I have only a Low Income Health Care Card (no pension or other concessions from the government) and got squat in the way of "handouts".
    Joyful56
    29th May 2020
    1:47pm
    We need to ready our voices very loudly if this comes to fruition. Oh and Youngagain, not all Health Care Card holders got handouts. I am trying to eek out a living on my small super balance, caring for a family member with dementia who didn't qualify for a carer - I have only a Low Income Health Care Card (no pension or other concessions from the government) and got squat in the way of "handouts".
    Viking
    1st Jun 2020
    8:10pm
    We were told today that a large proportion (two thirds was one quote on the ABC) of the money withdrawn from Super for "emergency purposes" was in fact used for discretionary spending such as clothing and alcohol and significantly gambling. SFRs not infrequently receive jibes of tax cheats and "alright for you" and other negative terms but this seems to be a clear example of workers who could save for their old age lacking any financial discipline or intention to save for their own later years. No doubt these same people will eventually be the complainers about the the meagerness of the aged pension and their unfortunate inability to save for their future years.
    Farside
    2nd Jun 2020
    12:26pm
    they say acorns don't fall from trees – there are plenty of pensioners spending a chunk of their pensions on gambling entertainment and looking for ways to game the system.
    Anonymous
    2nd Jun 2020
    12:32pm
    Many people who don't qualify are pulling their money out of super as the onus is on you to make the decision whether you qualify or not. Many wont have the money to pay it back so they will get away with it.
    Farside
    3rd Jun 2020
    3:16pm
    payments over and above the compulsory super should have been the only retirement funds that should have been accessible on application.
    Fair Dinkum
    2nd Jun 2020
    7:30am
    Why are we being penalized for looking after ourselves in our old age we scrounge to put something away during our working life while others live it up dont worry about retirement because they know government will look after them while a lot but not all self funded retirees get no help and are worse of than pensioners .these days with low interest poor returns on shares we need at least $2000000 dollars invested to get same returns as pensioners and there perks. But government considers that is far to much for even for a part pension .
    Farside
    2nd Jun 2020
    12:21pm
    Choices have consequences; there is no reason for a SFR to be scrounging, it is a choice to resist spending some of your savings. There were few complaints from SFRs when interest rates were higher and pensions were lower tho easier to qualify because of the more generous taper.
    Anonymous
    2nd Jun 2020
    12:30pm
    The biggest issue now is it sends the wrong message to future self funded retirees.

    You are a big fool to even now consider being one is the message I am getting loud and clear.
    Youngagain
    2nd Jun 2020
    6:14pm
    Yes Farside, choices have consequences. And the consequences of the Government making the choice to destroy self-funded retirement and make it more beneficial to spend up big and put a hand out for pension income, rather than to save, is that the taxpayer will carry a far higher burden and there will be more aged poverty. It's just really sad that some people are too envious or selfish to recognize that people who make choices that are good for the nation need to be rewarded, otherwise the NATION will suffer.

    Intelligent and fair Australians will acknowledge the harm the current system is doing to the nation and resist the urge to make selfish and nasty pronouncements about SFRs. Fixing the problem would yield major economic benefit for taxpayers.
    Farside
    3rd Jun 2020
    3:31pm
    No government sets about to deliberately FUBAR the future so they make the best choices they can, even if we disagree with them. So yes, choices have consequences. Don't like the choices your government makes then vote in a different one.

    Increased discretionary spending will eventually find its way into wages and super as it washes through the economy resulting in increased employment and higher incomes and distributing the pension burden. With more workers contributing to compulsory super then in 30 years time there will be fewer reliant on the aged pension. Savings and super incentives can be improved but should not be an investment vehicle for building intergenerational wealth. On the other hand if everybody saves and minimises discretionary spending then a contracting economy will bring economic pain for taxpayers.


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