Age Pension: Industry Super Australia calls tempered changes

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In a 43-page submission to the tax review, Industry Super Australia (ISA) has called on the Federal Government to temper the changes to the Age Pension that are due to come into effect on 1 January 2017. The ISA believes that winding back the Age Pension changes, along with drastically reducing annual superannuation contribution limits, will make the retirement system more coherent and should encourage low- and middle-income earners to save.

“It would be a serious mistake to think that significant short-term budget savings are available from the super system. Without careful thought we could make the system worse not better. Short term savings could come at a long-term cost,” said Industry Super Australia Chief Executive David Whiteley.

The ISA has said in its submission that the January 2017 changes to the means testing regime for the Age Pension would achieve savings for the Government in an untenable manner. The ISA is suggesting that the taper rate, which is due to increase to $3, needs to be increased by a lesser amount, to $2.

The ISA’s proposals contained in its supplementary submission to the tax review include:

  • a 25 per cent rebate for all income earners on contributions (capped at an appropriate level) and limiting total contributions to $50,000 per year, rather than $230,000 currently
  • A targeted Superseed contribution paid into the accounts for younger workers, particularly women to maximize the magic of compound interest
  • a fairer Age Pension asset test with a taper of no more than $2 per $1000 of assets
  • level earnings taxes of 15 per cent in accumulation and the retirement phase with a rebate for earnings under $50,000 per annum in retirement.

Read more from www.afr.com

Opinion: Uncertain retirement landscape future

The last three years have seen significant changes to the retirement landscape in Australia, but even after all these changes, the future of the retirement system is still uncertain.

The latest submission by Industry Super Australia (ISA) has thrown another difference of opinion into the ring. The suggested changes make a lot of sense, but a Federal Government struggling to rein-in a budget deficit may not see them in the same light.

The retirement system is too important to the economic success of Australia’s future to simply accept changes on face value. We should be encouraging organisations such as ISA to work alongside Government in preparing a sustainable model that focuses on the big picture for all Australians.

What do you think? Is the Federal Government too focused on reducing the budget deficit to ensure there’s a retirement system that will have an outcome that’s better for the country and those in retirement? Are you feeling uncertain about your future because of the confusion over the future of the retirement system and the constant changes?

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225 Comments

Total Comments: 225
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    Limiting the amount contributors are able to make into super will limit the rorts. Average Australians are not able to make contributions of $200 000 plus pa and one needs to understand that people who can DO NOT NEED THE SUPERANNUATION SYSTEM OTHER THAN TO AVOID PAYING FAIR TAXES. That is the game.
    It sounds like the super is just protecting its patch. What else is new for.

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      Ditto, Mick!

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      Must agree with Mick. If you can afford to put more than $200,000 pa into super then you do no need tax breaks. If I HAD $200,000 pa I would be retired and enjoying my freedom.

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      Agree absolutely. I’ve been saying this for a long time. The system needs to be focused on enabling battlers to be at least substantially self-supporting in retirement. We should not be directing benefits to the rich.

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      And yes, the taper rate change needs review. At $3 per $1000 it amounts to a tax of approx. 160% of investment earnings, which is unacceptable by any fair standard. Punishing people for saving will be seriously detrimental in the long term as it will remove any incentive to strive for self-sufficiency.

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      I don’t think you people understand what you’re agreeing to?
      Do you understand the difference between a tax deduction and a tax rebate?
      Where does the $230,000 come from? Is that a combined total of $180,000 non concessional and $50,000 concessional limit for the over 55s?
      If that’s the case then under this proposal from ISA we would see the $35,000 concessional limit for the under 55s raised to $50,000 with a 25% rebate?
      Why should a high income earner receive a 25% rebate on $50,000???
      Is the 25% rebate to replace the 15% contributions tax?

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      Frank, you kill me! I have no idea re the questions posed by you. I have no idea of the full implications of the suggested proposals. Yet, all posting above agree with mick ie. Limit the ‘rort’s’ ( which would be what exactly) and ‘super is just protecting it’s patch’ (how?). But they all agree with mick even though his posting is all but meaningless???

      This is yet another great topic that will end up in a slinging match of baseless ideas!!!!

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      Peter, now that I can agree on 🙂

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      Frank the voice of the Liberal Party strikes again. The only thing that matters at the end of the day is what is costs taxpayers. The way the rich structure their affairs may seem fair to them but if the result is avoiding the tax system then I beg to differ. Maybe instead of throwing figures from all over the park concentrate on working out the savings a wealthy person enjoys compared to a person on an average salary. That way you compare apples with apples.

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      One could be excused for thinking that this site is being paid to promote the super industry propaganda.

      This is the third similar article posted recently.

      Time to start doing your own research, & provide untainted information rather than publishing industry press handouts, unexamined.

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      If you don’t allow these lump sums to be put into super you deny those inheriting wealth to use that wealth to fund their retirement. Instead people are likely to spend more of this inherited wealth on the big four wheel drives, caravans, luxury trips etc and then rely upon the pension.

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      Bonny, I agree with that. A $250,000 investment on a 4WD and a Caravan would be valued at $150,000 after a few short years.

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      Bonny, you contradict yourself. You just can’t make up your mind, can you?

      On the one hand you want the wealthy to retain the right to put big lump sums into super – because otherwise people are likely to spend more of this inherited wealth on the big four wheel drives, caravans, luxury trips etc and then rely upon the pension. But on the other hand you support effectively ”taxing” less well off retirees at 160% of earnings – forcing them to dip into savings to live, which of course will tempt them to spend on travel, boats or caravans or over-invest in the family home to avoid the very harsh punishment for saving.

      Appears you are just one of the privileged elite who want to crush the middle class and stop people moving up in the world, but keep lining the pockets of the rich and greedy.

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      guess what, the first four to react to this article are the normal labor stooges, labor mick and his mates, fast eddy must be slowing up or did not receive the instructions of labor comrade mick in time, love to see them for just once to understand the question asked, but that be asking if there is a brain between them, as for the comment of peterrj, just try to read the question asked in this article before you agree with comrade mick’s statements, just because his labor stooges and trolls agree, show some leadership and start thinking for yourself, there are enough drones in this world not to add more to them!

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      No I disagree Rainey I want a decent future for our kids not one where they have to pay for those who can look after themselves. I want those who get the pension because they are entitled to but don’t need it to be stopped. Why should our kids struggle to pay rates, insurance and other things while these people get big discounts? It simply does not make any sense to me.

      These are not less well off retirees if they own a house and have over $1 million in other assets. Our kids now need two income just to make ends meet as they struggle to pay full price for everything.

      I’m not stopping anyone moving up in the world but these ridiculous pension rules are stopping our kids moving up in the world.

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      Bonny, I think you have a major comprehension problem. If you punish people for saving by taking $1.28 of every dollar earned they will NOT save. They WILL put their hand out for the pension. You cannot reduce the aged pension bill by forcing 560,000 people who would otherwise be nearly self-funded to spend up big to avoid being severely penalized for being frugal.

      As for your kids struggling to pay rates, etc. PLEASE! The young today are a thousand times better off than we ever hoped to be. Let them reduce their expectations a little – go to restaurants less often, take local holidays instead of overseas, buy an older, smaller home instead of a new brick mansion as a first home… Furniture, household items, cars, appliances,clothes, travel – all way cheaper in proportion to wages than when we were young. Interest rates a tiny fraction of what we paid. The young ARE NOT doing it tough by comparison. They just expect a great deal more than we did.

      And these ”ridiculous rules” that you support will certainly stop our kids moving up in the world because they will remove the incentive to work and save, make it impossible for retirees to leave a little to their offspring or to give them a helping hand, and ultimately drive the cost of aged pensions through the roof as fewer and fewer people strive to be self-funded because the punishment if you don’t quite make the grade is just too harsh.

      Obviously you flunked math, Bonny. Offering retirees an extra $78 a year for every $1000 of their savings they spend, when they can only currently get between $30 and $50 return on that money CAN NOT SAVE THE GOVERNMENT MONEY. Even expert advisers are waking up that the taper rate change was dumb and destructive!

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      Heemsy I agree Fast Eddie is slowing down a little. Ha ha ha ha!! But happy cyclist is still full of energy. I think mick may have some skills we are unaware of? They all agree with Labor mick even though he didn’t say anything???

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      Rainey, looks like I also flunked maths as I am totally lost with your assertion,’If you punish people for saving by taking $1.28 of every dollar earned they will NOT save.’

      Where do you get ‘every dollar earned’, the rate ‘$1.28′ and the $1.28 is taken from where exactly’????

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      OK I guess I flunked maths but not too sure what that bit of wall paper is that says something about a bachelor of maths and quantitative methods.

      Even with that under my belt I can’t work out your maths either.

      All I know is that the day is fast approaching whereby some pensioners that should not be pensioners will have to do some fancy maths to keep their pensions. Maybe this is where this fancy maths has evolved to master.

      My ordinary maths says that it will save the taxpayers some coin in fact quite a bit of coin. Sorry folks you will need to spend some of your money to get the pension back.

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      Rained and Bonny, OK, I think I get the Govt $78 bonus/$1000 -v- the less attractive $30/$50 self invested earning concept. But I am still working on the $1.28 figure????

      Bonny, put on your strictly quantitative maths hat: Is the Aged Pension a good deal or not?

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      Bonny, Rainey explains the $1.28 figure this way:

      The new taper rate is $3 per $1000 per fortnight, or $78 per year per $1000. But the investment return is only $50 per $1000 saved. So savers with over the threshold are losing $28 per $1000 saved per annum. In effect, they are being ”taxed”, because they are being denied a pension others get in order to save tax dollars. At that rate, the effective ”tax” rate is 78/50, or 156% of the investment return. It has been rounded up to 160% because there are administrative costs to run the investment, and a portion of the assets will be non-returning (car, furniture, personal possessions and liquid cash for living costs). And we haven’t yet factored in the value of pension benefits, which further compounds losses to retirees hit by the new taper rate.

      Of course the scenario is worse if the retiree is only getting 3% bank interest. But regardless, it seems ludicrous to ”tax” someone more than $1.28 for every dollar saved, and then suggest that the way for Australians to get out of the economic doldrums is to save!!!

      Who would work if they were taxed $1.28 for every dollar earned? Who will save when they lose $1.28 in pension benefits for every dollar saved?

      Bonny, What do you say about these calculations???? Is Rainey right???

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      It really doesn’t matter because it’s just a case of where the line is drawn for the cut off. If someone is now outside the assets test then they could say they are losing out because their savings deny them a pension. So should they still save?

      So now the line is to be drawn at a lower level and anyone above this is losing out because they are now denied a pension.

      So with the new tapering rate a pension loses more of their pension faster. This is a good idea in that it forces people to spend their assets to qualify for the pension in the future. This also stimulates the economy.

      Pensioners are in fact their own worst enemy because they only spend the interest received not the capital. The governments sees that this capital is not being spent so use the new tapering to try and force people to spend their capital. To them if a person is not reducing their capital then they must be getting too much income so the result is to reduce the pension for these people. So stop being so fugal start spending your capital.

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      ”It really doesn’t matter”? No wonder the world is in a mess if the ”educated” think it doesn’t matter.

      Someone should tell the dimwits who concoct these idiotic rules that people can’t be duped into behaviour that is against their own interests – not even with BS claims that it’s good for the country so they should ”think of the common good”.

      The solution is simple enough. Do the damn math and construct the means test to recognize the realities of saving and investment and provide incentive and encouragement. It needn’t cost any more to be sensible and logical. In fact, it would cost a hell of a lot less. But the current system is all over the place, catering to privilege. Looking after the high income earners with their fancy degrees that mean nothing other than they sat in a classroom for a few hours and regurgitated stuff other ”educated” people claim to be fact. (I saw a classic example of the value of university degrees. A friend of my daughter obtained one in sociology – with honours. She wrote a paper that completely misrepresented history. When challenged, she said ”I know it’s wrong, but if I wrote the truth I’d fail. My professors don’t want the truth acknowledged.)

      Pensioners are NOT their own worst enemy because they only spend the interest on their money. They are smart planners who assess their priorities and lifestyle choices and set saving goals accordingly, and they save their capital for the things they saved to acquire. They don’t go without luxuries for someone else’s benefit. They go without luxuries in working life to enable them to achieve their goals later. Later might be at 65, or 70, or 80, or even on death – by providing for loved ones who may otherwise be unable to achieve their own desired lifestyle.

      It’s funny. Bonny thinks the retirees who, despite often having low incomes and little opportunity, managed to save enough to be almost self-sufficient (and would have been self-sufficient if economists hadn’t stuffed up and caused a global collapse!) are dumb and don’t know how to make the right spending decisions. So how did they get to have those savings? Well, she’s probably right, actually. They are the people who don’t manipulate the system and put pressure on the budget by lying and cheating to get more than their due. They are the honest folk who live frugally and plan carefully, and then get screwed over by idiots who peddle stupid nonsense like ”you can live on your capital. You don’t need income.”

      If you take away the right to plan and make choices and force people to sacrifice the rewards of saving, they stop saving. Simple. When they stop saving, the cost of the aged pension rises. The economy slumps further.

      The fools in power are happy enough to only take 50c in the dollar from the more privileged who can continue to earn – even those earning quite substantial incomes – AS LONG AS THEY DIDN’T BOTHER TO SAVE MUCH. But screw the less fortunate who have to rely on their savings because they wrecked their bodies in physical work and they weren’t fortunate enough to be given a taxpayer-funded education or to inherit wealth from someone the taxpayer subsidized to accumulate a huge superannuation fund.

      DO NOT SAVE, FOLKS. IT’S A SIN (unless you can save more than about $1.5 million). Bonny says it’s okay to do it as long as you accept that you will be forced to spend your savings according to her edict, ”for the common good”, but don’t you dare save so that you can achieve your personal lifestyle goals. That is simply NOT permitted unless you are privileged enough to get over that magic mark where your investment income exceeds the aged pension plus benefits plus allowed earnings. We can’t have the working class improving their lot and enjoying retirement, can we now?

      Let’s watch the economy go to hell in a basket, rather than use common sense and contest the rubbish peddled by the ”educated experts” who are really only looking after their own interests at our expense.

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      BTW. Bonny says ”This is a good idea in that it forces people to spend their assets to qualify for the pension in the future. This also stimulates the economy.”

      So she’s admitting the policy might create a short burst of economic activity at the cost of much greater expense to support pensioners later. Exactly the reverse of what Morrison says the Government is trying to achieve and exactly the reverse of what she says she desires. In fact, she is supporting transferring a massively increased financial obligation to the next generation! Growing the cost of supporting retirees by ensuring that far fewer can be self-sufficient in old age.

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      Rainey once again it is short sighted policy aimed at retaining power and privilege by winning the next election. Yes Bonny has fallen into that belief. Perhaps we all should. Personally I think the sooner this neo liberal ideology crashes and burns the economy the better the rebuild will be. At the moment it is a long slow train wreck waiting to happen as money is sucked out of the economy into corporate coffers and asset prices.

      Savers have been disadvantaged for at least a decade unless they were fortunate in asset allocation and timing.

      I managed to be entirely self funding although I never drew more than $43000 take home salary after full tax and super contributions.That included periods of running rural enterprise and retail businesses.

      Two people had to work during the 70s and 80s and 90s to purchase a home, pay childcare without rebates and raise a family.
      And only the high income people could buy in the trendy inner city suburbs. Same as now.

      This current indulged generation with high salaries, low taxes, government assistance for childcare, baby care, home purchase, private schools etc so they can buy the big SUVs and caravans, and holidays and brunches and coffees and designer everything that opens and shuts need to suck it up and try the frugal saving for a year or three.

      The savers probably do need to spend a bit but rather than leave the money to the grandkids to go to Disneyland, I say take them yourself. Forget being frugal as it is now a mug’s game and enjoy some well earned experiences while you can.

      Draw down the savings and live a little. As Bonny says you can’t take it with you and if you want to help your kids give them some money now if possible.

      The mobile home might be the best thing you could buy as this Great Recession rolls on.

      The hard working Boomers have been had big time here for at least 40 years. Peace, love and brown rice just doesn’t cut it anymore.

      Yes Rainey that is entirely what she suggests except ration out those savings for a continued frugal life. I say to hell with it join the gen X and Y and have a lifestyle.

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      I like your post Rae.
      Interesting thing is that genY has whinged for many years about ‘poor them’ whilst spending like there is no tomorrow………and then blaming their parents for the fact that THEY cannot get a house. I wonder how this miserable bunch would feel if boomers dod spend it all?

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      I notice Bonny didn’t answer Peterrj’s question. She can’t respond to the numbers. She can only waffle with an idle and irresponsible claim that ”it doesn’t matter”.

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      Guess what, Bonny? It DOES. It matters greatly to the taxpayers of tomorrow. It matters greatly to the savers who are being denied the comfort they worked so hard for and now fear the rising costs of health and aged care because they have to erode their savings long before they reach the end of their lives. It actually matters greatly to the intelligent here who understand that the future of our society depends on doing what is right and fair and economically responsible. And it matters greatly to the genuinely needy and those who care about the needy, because there will be less and less resources to meet their needs as these ill-conceived policy changes begin to really bite.

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      You are all doing my head in. I can’t keep up with all these wild assertions being sprayed about as fact. And you keep on jumping from one concept to another without pausing for breath. It’s almost impossible to join in on this rant as half truths are blended into falsehoods and political speeches!!!!

      The joke on us all is that the tapering of $3 for every $1,000 IS the law! It has passed legislation and will come into effect in 2017. What we say here will NOT change the law. The heading topic above is but a minute extract of the full submission yet most are talking about these proposals as if they really knew what they actually meant??? I seriously doubt that. In any case, it’s all twaddle … by all of us. It’s hard to have a serious debate as we all only push our own wheel barrows and ridicule those who dare think differently.

      I am only here to review Rainey’s assertions re the figure of $1.60

      I have to get out of this particular posting due to the enormous ill will that is floating about and I will try and be polite and start a new posting at the current very end of this topic.

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    I’m fed up with Governments. Since arriving in this country in 1950 after WW11 as refugees we’ve saved and lived within our means, no holidays, no 4 wheel drives, no squandering, we paid for private health, we did without and paid for our sons private schools, and it goes on, yet todays refugees receive benefits that would blow your mind, take for instance the 12,000 that are to be brought in apparently to cost $7 hundred million.
    Those that have arrived here in the last decade plus have received more in welfare than I have after 65 years.

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      Dot, this is just nonsense. You were very lucky to come her in a time of full employment which enabled you and your family to do what everyone did then — to work and enjoy the modest benefits of that work. The world is a different place today. Refugees DO NOT receive benefits that would blow anyone’s mind but if they cannot get employment then of course they must be supported as anyone else should be so their children can be educated and become high-tax payers in their turn. It does society as a whole NO GOOD to have people unable to enjoy a basic level of survival. That is not the society we should want. Stop being so selfish and share like we were happy to share with you when you arrived.

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      Well said Happy cyclist! Too many folk, perhaps carried away with their own emotional resentment, start to utter untruths as proven facts or merely pick the bits that seem to fuel their resentment. For example, Dot refers to the 12,000 refugees costing $7 hundred million – over how long a period? how does this compare to the benefit costs for non-refugees? how much will the work and income of those resettled refugees bring to our economy? This negativity and resentment is surprising coming from a self-confessed former refugee. Surely we can continue to offer what was offered to you – a second chance?

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      It’s seems bizarre that someone who benefited from migration would seek to deny others the opportunity. This envious perspective is why we have divisions in society. Quite disturbing actually.

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      I have to sympathize with Dot. I don’t know what benefits today’s refugees get, but I do know that a whole generation of refugees and immigrants came here with nothing and worked very hard to assimilate into Australian society and contribute to this nation’s growth. Today, too many gripe about everything and demand we change our ways for them, and it is a fact that certain nationalities are exploiting our welfare system (by ”child swapping” and claiming child care benefits dishonestly among other methods). My sources suggest they are also getting excessively generous handouts, and if not, there is something seriously wrong with the way the government allocates funds for their support and processing.

      There is far too much welfare misdirected in this country. I have a personal gripe about the money that goes to Aboriginals (yes, I know, I’m racist! Actually, it’s my accusers who are racist, not me.) There are huge handouts based solely on race and without any consideration of circumstances or need (and some who benefit are privileged, well educated, earning good salaries). Meanwhile whites who were stolen get nothing regardless of need. (Yes, thousands of white Australian children aged 3 and upward were stolen from good but poor homes and abused and deprived in institutions). Care leavers needs are ignored despite recognition, now, that they suffered years of abuse that damaged them irreparably. The genuinely disabled and chronically ill get very little. And people like Dot who worked hard and saved are now suffering grossly unfair dealing and denied a fair reward for their efforts.

      I agree we need to be compassionate, and realistic about the capacity of people to find employment. We must afford people a basic level of survival. But we need to stop putting people in boxes based on race or country of origin etc. and distribute welfare fairly according only to need and circumstance, while at the same time acknowledging that hard work and frugal living must be fairly rewarded if we are to encourage it, and if we don’t encourage it, there is no hope for the future. It sounds good to say we’ll take money from the have-a-little’s to give to the have-nots, but it simply does not work. It’s NOT selfish to expect to be permitted to enjoy a fair and well-earned reward for years of effort. And it’s NOT selfish to expect that the welfare system be properly managed to be genuinely fair and to maintain incentives.

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      I agree totally with you Dot. People of your generation who migrated to Australia in those days came with the desire to work, the desire to assimilate into Australian society, and the desire to become Australians! Unlike today where so-called refugees (otherwise known as country-shopping economic migrants) just want everything while giving nothing! They want to come here because we have a good welfare system and a good standard of living. As Australians, if we were being attacked we would stand up and fight back because no one has the right to attack us without expecting retaliation – these so-called refugees are just using the turmoil in their country as an excuse to leave and come to Australia rather than standing up for their country.

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      I don’t think Dot is speaking from an envious perspective. Nor is she denying anyone opportunity. She made good use of her second chance and contributed to the nation that extended her that privilege. She is merely asking that today’s refugees do the same. Many do, but far too many do not. And it’s not the ”envious perspective” creating division in our society. It’s unfair demands and unrealistic expectations from select groups of people who want to trade on sympathy to claim far more than their due.

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      If dot came here just after the war, I don’t think there was a welfare system. There was something called “dole” but it was far from a welfare system, It may have been something more akin to food vouchers.

      If there was plenty of employment it was because wages were low and there was a lot more hard manual work to be had. It was post war rebuilding time and time for having children to replace those lost in the war. A war so horrific and on such a large scale that it would make todays refugees look like pussies.

      Many migrants made their way to north Queensland to cut sugar cane by hand in tropical heat. There were no harvesters. Others bought little stores and opened 7days a week sometimes working 12 hours a day. I can understand why Dot thinks the refugees “demanding” sanction in this country have got it comparatively easy.

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      Wow, would the real Rainey please put up his hand? At last commentary without a totally biased political perspective and no name calling? Has someone hijacked Rainey’s avatar???? Would this Rainey please keep up the good work.

      Dot, well done, welcome aboard! One of my relatives came here in chains and, a few years later, one jumped ship from a foreign Navy to settle in Australia. Welfare handouts for these relatives of mine did not exist. I am not against refugees provide they come here to assimilate ….. Which means that I am a racist in some eyes!

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      Dot my sentiments exactly,another very valid point to bear in mind is that after WW2 a lot off the incoming people were in fact our former enemies. My father fought in the British navy but i remember going to school in the early fifties with a kid whose father was in the german army, he still wore his traditional clothes he wore back in his homeland but we used to socialize together at school and visit each others homes.Every body was on the whole all equal ,but now new ball game .Minority’s rule the roost

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    Lets face it the welfare system is always going to change at the moment this country can’t afford to pay all those that seem to think they need it.

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      Robbo, if it changes to punish savers by effectively taxing them 160% of their investment earnings and making them worse off than pensioners, it will prove a strong disincentive to endeavor and ultimately drive welfare costs sky high. Already, large numbers of those affected are planning big spending on travel, home improvements, etc. It’s clear the claimed savings won’t materialize.

      The Government and Greens took a simplistic view and sold it with gross misrepresentations and idle claims of savings that are not achievable this way. And their claims of fairness can be clearly demonstrated to be false and cruel. They need to think again and structure the system to be fair and retain incentives. Otherwise, it will definitely NOT be affordable.

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      Rainey, have you had a personality transplant because to a large extent I generally agree with your conclusions and your comments have grave implications for everyone ranging from young tax payers all the way to those in nursing homes!

      However, I am really only interested in stats. I agree that the pension changes have the potential to do punish ‘savers’ but can you please explain how this is ‘effectively taxing them 160% of their investment earnings’? How do,you calculate this 160%???

      Note, I also agree with you conclusion that those with attractive Super balances could be worse off than pensioners.

      Those pensioners who think that they are getting a bad deal from the Govt please read and then re-read Rainey’s comments above.
      It all boils down to three competing issues: Pensioners don’t get enough, Self Funded retires can get less than the Pensioners and the Govt is broke! Now where is the way forward.

      OK, I know, I can’t prove that the Govt is broke and that Labor does not accept that we have a deficit to worry about so they will spend more when next in power! And that’s a real worry for future generations????

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      The 160% is an estimate, Peterrj, because it will vary depending on what returns someone gets. But the government is saying returns average around 5% p.a. Many get much less, but we’ll put that aside for the moment. We’ll also temporarily ignore the fact that many retirees will be paying around $5000 pa in management and audit costs to manage their investment.

      The new taper rate is $3 per $1000 per fortnight, or $78 per year per $1000. But the investment return is only $50 per $1000 saved. So savers with over the threshold are losing $28 per $1000 saved per annum. In effect, they are being ”taxed”, because they are being denied a pension others get in order to save tax dollars. At that rate, the effective ”tax” rate is 78/50, or 156% of the investment return. It has been rounded up to 160% because there are administrative costs to run the investment, and a portion of the assets will be non-returning (car, furniture, personal possessions and liquid cash for living costs). And we haven’t yet factored in the value of pension benefits, which further compounds losses to retirees hit by the new taper rate.

      Of course the scenario is worse if the retiree is only getting 3% bank interest. But regardless, it seems ludicrous to ”tax” someone more than $1.28 for every dollar saved, and then suggest that the way for Australians to get out of the economic doldrums is to save!!!

      Who would work if they were taxed $1.28 for every dollar earned? Who will save when they lose $1.28 in pension benefits for every dollar saved?

      There’s a strong incentive for affected retirees to spend up big or over-invest in housing, and for younger workers to limit their savings so that they don’t exceed the new thresholds and can eventually claim full pensions and benefits.

      Bonny claims superior knowledge of investment, returns and budgeting, yet endorses this absurd scenario which is clearly counter-productive and destined to cancel out saving, reduce investment in superannuation, and drive pension costs UP UP UP.

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      I can’t see a problem with pensioners cruising their way around these budget changes. Isn’t that what retirement is all about? The odd thing about this is that cruising is about the cheapest way to travel these days whereas a land based holiday is considerably more expensive. Compare the cost of an Alaskan cruise against the cost of a tour for a similar time in Canada itself.

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      I am blown away by the sheer idiocy of your comments, Bonny. First you want to save money in the budget so the young can improve their lot, by stopping some people getting the pension. Then you can’t see a problem with those people cruising around the pension changes so the government savings disappear and the budget is in worse shape. Meanwhile, you want the government to spend or forego taxes to encourage saving for retirement, but then you want to punish savers so harshly in retirement that they go and blow a few hundred grand to avoid an effective 160% tax on their savings, and despite the incentives nobody with a brain would want to save because it means you pay a massive penalty for every extra dollar you put away.

      Why would you want to give people incentives to save and then penalize them for doing precisely what you urged them to do?

      You seem to have a gripe about someone saving to give a little to their offspring or grandchildren, but no problem with them wasting money and claiming the pension. Someone who saved to ensure they could afford laser eye surgery and dentures when they need them or to ensure they can afford quality aged care should be forced to give up those goals and live on their savings so your kids can pay less, but someone who blows their life savings on cruises should be rewarded with a generous pension plus benefits, and it doesn’t matter whether or not the next generation can afford to pay for it.

      If people invest in a home, they should be punished. But if they gamble or cruise they should be rewarded.

      Just as long as someone makes spending choice YOU approve, it seems, they are ENTITLED. If they make choices that differ from yours, they should be robbed of everything they worked for.

      And people like you are voting and helping decide who is fit to govern. God help us all! No wonder we have blinkered fools in parliament.

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      OK Rainey, thanks for the explanation. I’ll have to study it later and get back to you. That is an interesting conclusion! I have asked elsewhere re the $1.28, consider those questions answered.

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      Rainey I am beginning to think Bonny is quite young. As any experienced traveller knows land based independent travel in the US and Canada is the cheapest way to go. The only cruise necessary is the one dayer out of Seward to see the glaciers and wildlife.

      Buy the Amtrak and Canada rail early bird cheaper tickets with a sleeper. Car hire is cheaper online from here too.

      Although a Caribbean cruise is good value at $130 a day each.

      All done on that $43000 take each year over a lifetime.

      I’m over the young whining they can’t have it all right now.

      It is as simple as saving $1 out of every $10 that crosses your palms for about 35 years and investing those $.

      And don’t forget to spend some on memories.

      My conclusion on the cost of saving matches yours Rainey. It proves Treasury have no idea at all.

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    Of course this would be the sensible road for the Government to travel, but we know that common sense is not very common in Canberra

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    Totally agree Mick

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    The whole point is missed. Chifley and Menzies set up a scheme where people paid an extra 7% in income tax (Up to 47%) and this was put in a TRUST FUND saying that it would never be classed as welfare but entitlement. In 1977 Malcolm Fraser, Liberal Prime Minister, took that TRUST FUND into general revenue saying that we would cross the pension bridge when it came. Well, it is here. Yes, income tax has been reduced drastically BUT today’s pensioners paid for their pensions and should be recompensed instead of threatened all the time.

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      Exactly Perthite. Our age pensions are NOT welfare, it’s the Super we paid into via the Tax system.
      And pensioners still pay taxes via GST, rates, licences, stamp duty.
      Personal Income tax is only about 30% of the government’s income stream.

      Most age pensioners are no longer able to work full time, so start the cuts among those who can work, the unmarried mothers who have more children just increase their payments.

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      There’s another more valid point. Fraser followed Whitlam who like Rudd almost destroyed us. He was that bad he had to be sacked by the Queen.
      Do you recall he secretly tried to borrow money from a Pakistani broker by the name of Khemlani?
      This last Labor government has almost destroyed us too. You are forgetting about the hard work required to clean up the Labor mess each time.
      I was embarrassed to hear about the Khemlani Affair back in 1975 because I voted for Gough.

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      In the end, no loan was ever obtained and no commissions were paid.
      But what was the purpose of these loans?
      The loan was to be used to fund a number of natural resources and energy projects, including the construction of a natural gas pipeline, the electrification of interstate railways and a uranium enrichment plant.
      Rex Connor proclaimed the funds were for the defence of Australia’s mineral resources .
      They didn’t go ahead with the loan and where did all our natural resources wealth go to ?
      And how many petro-dollars have Governments since borrowed ?
      His words of “Give me men with creation in their brains ” was apt.
      I

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      Frank: tell me when the Liberal Party ever did anything for the nation. If there were no financial gain in it for rich Australians then projects were shelved. The Liberal Party would NEVER have brought in superannuation for all Australians, a fair wage, the Carbon Tax, the NBN, etc. All you ever get under Coalition governments is calls for less tax for the rich and calls to turn average citizens into destitute citizens.

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      Frank you are trying to rewrite history.
      yes Whitlam’s government was naïve in economic matters but the fact is that at the end of Fraser’s reign the budget was in worse condition than when he took over from Whitlam.
      The Queen did NOT sack Whitlam it was John Kerr acting on the advice he received from two Liberal High Court judges.
      Money was never sought from Khemlani he put himself forward as a broker and the LNP and the media latched onto him to beat the ALP over the head about him.
      Rex Connor’s project was to buy up Australia’s mineral wealth for the good of the nation and just imagine how well off we would be now if that had happened.

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      Tom you’re not going to tell me it was a conspiracy contrived by the old boys of Fort Street? You don’t think Sir John asked her Highness for advice on the matter? And what if she said no don’t do it John!??
      Would he have had another 2 scotch’s and did it anyway??

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      You are getting desperate Frank. Never acknowledge the truth or the facts do you. So it is with the LNP.

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      Is there some hypocrisy going on among the privileged and government? ”Superannuants” are said to be living off their own money and untouchable, despite the fact that they built their retirement funds substantially with taxpayer dollars, enjoying huge tax concessions. Those with no super paid the full rate of tax, including the 7% levy to pay for pensions, yet the money they contributed to cover the cost of their retirement is ”not theirs” and their pension is ”welfare” granted grudgingly and with a perverted and unfair ”means test” attached.

      The cost to the taxpayer of supporting a so-called ”self-funded retiree” in retirement is said to be, on average, many times the cost of supporting an aged pensioner. One gets a little taxpayer help in retirement (maybe – if they didn’t save much and can’t earn much), the other get a lot of taxpayer help before retirement, without the onerous conditions. So how is one ”welfare” and the other ”their money and an entitlement”?

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    I doubt very much if we can afford to increase the tax concessions on Super?

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      I don’t see anyone suggesting we increase them, Frank. The suggestion is that we redirect benefit in a way that will result in budget savings while being fair and retaining incentives. It makes good sense. Sad that the current LNP seems more focused on increasing inequity and lining the pockets of the wealthy than on common sense budget measures that will drive economic growth.

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      Rainey can you explain that in a mathematical way? 🙂

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      Hi Rainey, nice words but what do they actually mean? Frankly, I don’t know??? Can you demonstrate that with figures to back up what you have asserted????

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      The figures are quoted in the article, Peterrj. And there are copious articles on the Internet estimating the potential savings from various different approaches to reforming superannuation tax concessions. The bottom line is that currently it costs far more to keep a so-called ”self-funded retiree” in retirement than it does to keep an aged pensioner. The ”self-funded” receive overly generous tax concessions despite having absolutely no need of them, then enjoy a tax-free income (often very high) in retirement. Meanwhile battlers can’t accumulate enough to be even substantially self-funded in retirement because the system is skewed to favour the rich.

      If your income is $37,000 per year or less, your tax concession on super is a mere 4c in the dollar. But if you earn more than $80,000 per annum, you enjoy a concession of 12c in the dollar.

      Sensible advisers are now saying that we should be giving larger concessions to those who most need help to accumulate a retirement nest egg – the lower income earners. High income earners are going to be self-funded in retirement anyway. They don’t need either an incentive or help to build an adequate superannuation balance. So why are we giving them 12c in the dollar, and low income earners only 4c? It should, quite obviously, be the other way around.

      Also, why aren’t we placing tighter limits on the amount that can be contributed at concessional tax rates? And doesn’t it make sense to allow those whose earning might be interrupted (e.g. by pregnancy and early child care) to contribute more in years when earnings are higher to make up for the years when earning are less?

      The ISA proposal suggests substituting a 15c discount that applies to all income-earners equally, and thus clearly benefits higher income earners far more than lower income earners, with a 25% rebate, which means that all income earners get an equal benefit. Someone earning $37,000 pa would get $832.50 pa help from the government, as opposed to $133.20 now. Someone on $80,000 a year would get $1750 as opposed to $864 now, but those earning more than $80,000 would receive that same $1750, whereas currently someone on $250,000 gets $2700 a year benefit. By capping the amount on which rebates apply, the cost of assisting people to build their super is reduced substantially, but low income earners are far better placed to build a decent retirement nest egg.

      The above examples relate only to the 9% employer-funded contribution. Those making voluntary additional contributions (the high income earners, as few low income earners could ever afford to) are claiming 12c in the dollar on thousands more of contribution. Than there’s the concessional tax on earnings in the fund. And then there’s a tax free pension from it on retirement. Again, someone with a $80,000 a year income from their fund is enjoying a $17547 benefit in retirement, while someone with a $37,000 income gets only $3572.

      Now, aged pensioners are paid some $32,000 a year (homeowner couple) from the public purse and that’s tightly means tested. The more you have, the less you receive from the taxpayer. But super is currently working in the reverse. Those with greatest wealth (lowest needs) get the most. The ISA says this should be reversed to match the pension system, where the neediest get the most. Many experts agree, and it’s clear that such a reversal of the current approach would cost the government a great deal less – if only by ensuring more people could save to fund their own retirement.

      Mind you, they would also have to reverse their stupid and economically devastating taper rate change, because it cancels all incentive to save unless you are rich enough to get well above the current (not the new) thresholds.

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    Those changes look pretty reasonable. Winding back the taper rate to $2.00 is a good compromise. Re introduces the incentive to save. How about smokin Joe. Does he pass the asset and income test with his new job. What a joke. The current asset cut off for part pension is only 1.8 years of his new annual salary / pension. Talk about leaners and lifters. Another high profiler that gets rewarded for mediocracy.

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    Perhaps an income and asset test should be applied to former politicians who pick up their parliamentary pension from the day they leave office. For a backbencher that’s currently just under $100,000pa. As former Treasurer, Joe Hockey’s pension is a piffling $180,000pa in addition to his pay as Ambassador. Tea money or pocket money for these fine, upstanding, people of the highest calibre

    Oh and that pension is indexed for life, ie when current pollies get an increase, the former pollies get one too.

    Don’t forget to email your local federal member on 1 January to congratulate them for their pay rise.

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      I so agree Mygasheater. How can they justify all of this and say that we are a drain on the country. They find the money to fight other people’s wars, foreign aid which never seems to alleviate the problems in those countries, middle income welfare, etc. etc. One unfairness with the asset test now is that interest is so low that even $200 000 (which I don’t have!) will not last long as the pensioners have to live off their actual money will no reimbursement. At $22,000 for a single pensioner, you would be lucky to have enough for 10 years!

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      Better than that they should not get a cent if they pick up another job. Better known as double dipping. Outlawed for the rest of the population and allowable for politicians.

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      Why are we so worried about Joe there is another fat slob named Beasley who he is replacing double dipping as we speak. Not hard to tell who the lefties are.

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      Wrong once more mick. Everyone is allowed to access their super as well as working for pay once they reach a certain age. They can also salary sacrifice their pay to pay back the super they are accessing and pay bugger all tax. Hockey is working within the rules, same as Bomber Beazley has been doing. Gee mick, please get your facts straight.

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      Not too hard to see right wing posts.
      I have my facts straight. Both sides are rorters. You know that. I do not want to hear the dishonest attempts to justify the right getting their rorts whilst at the same time putting it on the left. Stupidity!
      robbo: Jesus was quoted as saying: “what defiles a man is what comes out of his mouth, not what goes in”. That might be lost of you. Maybe you’d like to refer to your colleague Hockey in a similar manner. I think that if you had a vote Hockey would come in a long way below Beasley as Beasley did not betray average Australians. Hockey did.

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      True, Old Man, but those who benefit from the rules make the rules for their own benefit, and they are immoral, unethical hypocrites because they apply the opposite rules to the less privileged. Sure, the privileged with super can access it at a given age as well as working. But we are still talking about the privileged. Those who never had the benefit of super, but paid into a tax fund for retirement and worked damned hard (unlike the privileged politicians who wouldn’t know what work was!) are not allowed to earn a huge salary in retirement and still draw their pension, are they? No. They are different, because they are on ”welfare”, and ”welfare” is only for the needy. Odd. Many of them contributed far more than those whose taxpayer-funded benefits are NOT called ”welfare” but are claimed to be their own money.

      Once again, it’s a case of the privileged indulging the privileged and bashing the under-privileged, then excusing their vile behavior with illogical rhetoric and lies that are sadly phrased cleverly and expressed eloquently, so that a significant proportion of the misinformed masses believe the crap.

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    Dot is correct and “politically correct” Happy Cyclist is entirely wrong.
    Like Dot and as a new Australian have never sought or received a cracker from the government but government must be stopped from getting in my wallet and super which I earned and is mine.

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      I’m getting fed up too, Not a Bludger!!
      Everytime we have a high spending high taxing, out of control Labor government the mess has to be cleaned up and we all pay the price!!
      I’m sick of all the taxes.

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      What do you mean you never received a cracker from the government as an immigrant? You probably arrived on an assisted passage, then you had access to all the social and physical infrastructure that previous governments had put in place before you arrived. You used hospitals when your family was sick, you sent your children to schools and universities, you drove on roads, etc etc. What do you mean you never benefitted from the government? You immediately were welcome to share all that tax payers already here had provided and now you resent new immigrants doing the same. Its is selfish beyond belief.

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      Not a Bludger and Frank, are you not ashamed as Happy cyclist highlights your unlimited selfishness??? Funny that, I totally missed that point till I read the last posting above.

      LOL Frank, didn’t I say earlier that this debate will get down to a slinging match of baseless ideas??? We are getting close ….

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      Sorry Not a Bludger. We have a thing called the Tax System in Australia. Pays for things like the roads you drive on, the hospitals you visit, the schools you send your children too and the wages of the public servants who do your bidding. Only scumbags and some/many (??) of the rich amongst us seek to avoid their responsibilities.
      Good post Happy Cyclist. Maybe Not a Bludger needs to go back to where he came from. Sounds very much like a whinging Pom. Yes?

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      Frank, LOL, I thought that mick was doing well till I read the words ‘scumbag’, ‘go back from where you came from’ and ‘whinging Pom’!

      To Not a Bludger, Happy Christmas and NO you don’t have to go back from where you came from!!!! Thankfully there are not too many mick’s in this world, but unfortunately they seem to have gravated to this web site!

      Ah mick, you are so predictable. And a Happy Christmas to you as well.

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      Not a bludger, I am a tad embarrassed at you being told to go back to where you came from, wherever it is. I too have suffered outrageous insults based on my ethnicity from thong wearing drongos with an IQ that they wear on their footy jumpers. Fortunately the vast majority of Aussies are lovely people who wouldn’t dream of such insults (now illegal?). They fall rather into the camp of:- as attributed to Voltaire “I disapprove of what you say, but I will defend to the death your right to say it”.

      Happy cyclist and Mick would realise, with a little expansion, that all Australian residents including those born here benefit from infrastructure provided by those who came before them. Must we all keep quiet lest we upset those who disagree with us? Imagine that world and you are in the land of where most refugees come from.

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      *Imagine* I like the way you put that!. I’ve no idea what happened to dislodge his chain from the socket but Happy Cyclist should not have reacted that way. And as for mick……..well he has a constant wedgie. It would take a lot to make him positive about anything.

      Not a Bludger, feel free to drive on any road you like. 🙂

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      The comment made was because of the original comment which implied that some folk should not have to pay tax. They do.

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