Super struggle

Super argument over the fabulously wealthy

Super struggle

A war of words has broken out over superannuation, triggered by former Labor Minister, now back bencher, Simon Crean, when he declared on Sunday that  he would do ‘whatever I can’ to prevent further ‘tinkering’ to superannuation concessions.

Trade minister Craig Emerson responded, by saying that the Gillard Government was “…developing proposals that are fair and equitable because we believe that the few at the very top end are enjoying tax concessions that can't be afforded by the budget.”

He went on to describe the ‘few at the top end’ as ‘fabulously wealthy’, indicating they were fair game for reductions in their concessions.

The leader of the Opposition, Tony Abbott, has described any tax increase for the higher income earners as a ‘betrayal’, that voters’ money would be ‘safe with us’ (an Abbott Government) but refused to commit to reverse any such changes made by a Gillard Government. Confused? Read on

Mr Crean and Mr Emerson’s remarks 

Mr Abbott’s response 

Who exactly is struggling?

The superannuation argy-bargy is not a new story, but it certainly has a new spin. For a while now the collation has accused Treasurer Wayne Swan of ‘class warfare’, in particular of attacking the super rich such as Titanic replica builder Clive Palmer and mining heiress, Gina Reinhardt.

But what is rich, and what is super rich and who is looking after the vast bulk of people who are really struggling on less than $80,000 a year, rather than those ‘eking out’ an existence on $250,000?

The changes currently under discussion would only apply to Australia's richest one or two per cent. According to the Sydney Morning Herald, “it is understood the bottom 30 per cent of income earners received 1.2 per cent of the total value of super concessions in 2009-10, whereas the top 1 per cent received a 9 per cent share.” 

So we are looking at reductions in highly favoured concessions for 1-2 per cent of Australians who can afford it the most. What is the problem with this?

On the other hand, one of the very few Coalition proposals to be put on the table is a removal of the super tax offset for low income earners – about 3.5 million Australians earning less than $37,000 a year.

So when Tony Abbott says, “Your money is safe with us”, you can rest easy if you are in the top 1-2 per cent. If you are one of the 3.5 million on struggle street, you should be worried, very worried indeed.

What do you think? Is the Labor Government on the right track targeting the top 1-2 per cent? Or do you think your money is indeed safe with Tony?





    COMMENTS

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    Pass the Ductape
    3rd Apr 2013
    11:07am
    I was under the impression that the 'Super Rich' don't bother with placing money in superannuation too much, on account that the most they are able to put into super is only a pittance compared to what they could get by utilizing their funds in other ways.
    MITZY
    3rd Apr 2013
    12:53pm
    It's not the "money" so much as all the other assets they can put in their self-funded superannuation funds. It's the greatest slush fund ever.
    Grateful
    3rd Apr 2013
    11:15am
    Not only is the government "on the right track", they should be absolutely bound to doing so. What is taking place with Australia's superannuation "system" is disgraceful and made more so with the pork barrelling done by John Howard in trying to win the 2007 election. The government's (tax payers') subsidies to the very rich income earners is a laughing stock. The people who blatantly "salary sacrifice" large portions of their massive incomes, so large that they don't even know what to spend it on, from PRE-TAX income, to be taxed at only 15%, a third of what they would pay if they didn't, is nothing more than gross legalized tax avoidance .
    And then for those very same people being able to borrow money to use to buy properties and putting huge competitive pressure on genuine home buyers, makes it an absolute farce, especially, when they eventually retire and create an income stream from their massive super fund all the income from that rental is tax free and any capital gains made on the sale of that property are also tax free!!
    And the Abbotts and the Creans of this world are telling the government not to create "class warfare"!! Just look at what is happeneing in Europe, the Middle East and very soon, I fear, in China, when there is so much largesse given to the obscenely wealthy at the direct expense of those that are genuinely in need and battling.
    IF this current government stands true to what they call "Labor Principles" then they have NO alternative but to smash "Middle Class Welfare" in the May Budget, including the grossly generous assets and income means tests for pensions and "hand outs, as that will certainly be the last opportunity that the "battlers" will get for many more years to resore a bit more equity in to the super and "welfare" systems in this country. It will certainly not happen under an Abbott (blue tie) led government.
    The "blue tie" is a P.R. gimmick to make the wearer look more "friendly" and Abbott has not been seen without one in any pubilc appearance for the last 6 months. Seems to be working. Is the Australian public THAT gullible???
    MITZY
    3rd Apr 2013
    12:51pm
    So well said Grateful and very true. The "blue tie" is a gimmick, and "blue" is noted as a "calming" colour. We are being programmed into submission and calmness!
    The wealthy have had a field day for far too long with superannuation. They really do not even need it. I wish I had had the opportunity to be in a super fund years before the Keating/Hawke govt. made it compulsory. Private enterprise paid above award wages in most cases years ago but there weren't very many who provided superannuation until it became compulsory. I can't understand Crean not wishing the government to tax the top earners at 30% instead of 15%. After all he, along with Keating, were the main ministers that drafted and legislated the Superannuation Act in the first instance. The top earners (1%) received 9% of the total value of super concessions and the bottom 30% of income earners received 1.2% of the total value of super concessions. Just reverse it!!!!
    There isn't much the top 1% can't put into their super funds, the paintings in their fabulous mansions (which they are welcome to admire and enjoy) are owned by the S/F, i.e. they are not in storage until retirement (like the bottom 30% of income earners presently) the rental properties and the costs of running them are all under the umbrella of the S/F and besides super concessions, along the way they have also benefitted by spreading their tax liabilities even further with family trust concessions where their income has been spread between the number of children they have in their family trust for the trust of their children's education etc. No wonder the Clive Palmer's of this world are building replica Titanics (its obscene). My Mother had an Uncle (an engineer) who went down with the Titanic and she would turn in her grave if she knew a replica was being built. Who needs a reminder on the high seas today, of all those people lying at the bottom of the ocean in their graveyard. I hope when he builds it, nobody takes a trip on it, that would be poetic justice, but of course it won't happen.
    It's now just over 5 months to the election and this bickering between the two major parties about what they are NOT going to do has to stop.
    As soon as either major party says "your safe with us" that's the time I start to worry.
    adbob
    3rd Apr 2013
    12:17pm
    Brian Toohey in the Financial Review has been arguing for a long time that giving everybody a full age pension (ie no income or assets tests) would be cheaper than the tax breaks which were previously available. Since then the maximum salary sacrifice has been reduced to $25,000. It's still a gift for over-60 middle upper income earners (not necessarily super-rich) but a very limited one.

    The elephant in the room is the fact that it's exactly those people (middle income earners currently aged around 55-65) whose modest pension pots will now disqualify them from an age pension even though it will be lucky to provide them with the same income. Those who do get a means-tested pension are in a poverty trap where every extra dollar they generate costs them 50c in reduced pension.

    Why there is not widespread anger at this beats me. It's pure theft. When we were paying 48.5% top rate income tax on a modest salary we were assured that international comparisons weren't relevant because ours included social security as well, but in those other countries the social security contribution gets you a ring-fenced age pension as of right.

    Given the new lower contribution limits it will be interesting to see what else they might have in mind
    MITZY
    3rd Apr 2013
    1:03pm
    My cousin's husband is Austrian by birth but a naturalised Australian for decades. He worked in Austria for about 15-20 years before migrating to Australia. He receives a part Australian age pension and part Austrian age pension. However, if he had lived his entire life in Austria, paid his income tax etc. when he retired he was able to receive the full Austrian age pension. However, whatever other money he had saved in his life-time, together with his newly acquired age pension is taxed. So, in effect, Austrians all get a full age pension but have to pay tax on it and other income.
    Nan Norma
    3rd Apr 2013
    1:27pm
    Egyptian, I think the Austrian idea sounds fair. It would simplify centrelink. (and save a fortune in administration costs) Pensionors would only have to deal with the TAX dept. What is the sitution for eample stay home mothers?
    MITZY
    3rd Apr 2013
    2:09pm
    Nan Norma: Not sure about stay home mothers - will ask my cousin. Her husband has been here for around 45-50 years now and of course when he was working in Austria working and earning would have been a different scenario. He has two brothers and two sisters retired now in Austria and that is why I knew of the above situation with age pensions there. Cheers.
    Alaskan Princess
    3rd Apr 2013
    2:03pm
    I don't know about those on the higher incomes mentioned but we are only on $25000 for the 2 of us for the year. We have no other income & pay insurance, costs for an old business that we are trying to close (accountant, fees, etc), health & funeral funds, scrips, grandkids, food, fuel, electricity, gas, water, rates, etc. You name it we pay it. Last fortnight we had $2 left after the bills. The bank is trying to take our house at the moment but I am fighting to save it.
    Nan Norma
    3rd Apr 2013
    2:12pm
    Alaskan. I feel for you. I know how horrible accountent charges etc can be. When your down seems like everybody wants to kick you to keep you there. I wish you there.
    niemakawa
    3rd Apr 2013
    2:07pm
    Those in a higher tax bracket are already subsidising the so called "low" income earners through the PAYG system as well as receiving a reduced or in some cases no Private Health Fund rebate. Generally with higher pay comes greater responsibility and people in this situation make many personal sacrifices to provide for themselves and families. If the Government keeps going down this road, always taking from this group to fund their ideologies, then the incentive to save and become successful in business life will be lost. Then what? Instead of the low income earners always expecting handouts and top ups they should educate themselves and gain further qualifications to improve their chances in life. I would prefer that the GST being extended to food, then everyone would be making a more even contribution to the tax system.
    Nan Norma
    3rd Apr 2013
    2:23pm
    Good grief Macjam pensioners are struggling enough to buy food.
    Grateful
    3rd Apr 2013
    2:51pm
    Macjam. Really with respect. Those on high incomes are, by nature, "go getters", they thrive on "making money". They will never stop being themselves and stop trying to make as much money as they possibly can, just because of being taxed.
    They will also always want as many "concessions" and "hand outs" that anyone will give them, especially from governments. of all persuasions. Kerry Packer once famously stated that "anybody who didn't try to minimize their tax is a fool"!! He didn't say let's stop making money!!
    MITZY
    3rd Apr 2013
    3:07pm
    Macjam: Haven't you read the posts that people can't feed themselves properly because of the high cost of their utility bills etc. Now you want to make them pay 10% more in tax for food? So, you say, "with higher pay comes greater responsibility and people in this situation make personal sacrifices to provide for themselves and families".
    So, why is it that these "highly paid" (1%) received 9% of the total value of superannuation concessions; and,
    "low earners" (30%) received 1.2% of the total value of superannuation concessions? Superannuation tax from 15% to 30% for this 1% of high income earners is negligible compared to all the ways and means available to them to put arts/property etc. into their self managed super funds. Leveraging is the way of today for this 1%. If the government had a heart they wouldn't tax the low income earners at all on their super contributions and then when they retired they would have a better nest egg and maybe not such a burden on the public purse.
    franksmith
    3rd Apr 2013
    2:52pm
    I also receive a small British pension, but it was frozen at 2005 rates when I turned 65. Centrelink reduces my part Australian pension by 50c for every dollar in UK pension even though I paid for it with my contributions so it is really savings. Moreover ATO taxes 91 percent of it as income. Australian superannuation savings are treated much more generously with no effective tax although my UK pension is really another sort of super,
    Frank
    Alaskan Princess
    3rd Apr 2013
    4:12pm
    We used to earn quite good money. We had a small business & it was fine. I also worked outside that business. Being older we did not have much super. My husband was (stupidly - would not listen to me) diddled out of a large amount by a previos employer who duped him & did not pay any. When my husband was hurt the 24 hour insurance we had (& paid heaps for) only lasted 18 months or 2 years. I used most of our super to pay his surgeons bills (3 ops & still not right) so have none left - because of the public system being so slow. My last tax bill to the ATO was $125,000. Where are we now after paying tax since we were 15 years old & now mid sixties. Joolia is giving it all away. Too bad for Australians who have worked all their lives & now can't afford food, etc.
    leapyearbaby
    3rd Apr 2013
    4:16pm
    As68 year-old self-funded retirees my husband and I draw $20,000 each andupport ourselves quite adequately without any assistance from the government except the seniors healthcare card which subsidises our pharmaceuticals. All I hope is that this wasteful Labour government does not meddle with our income after we worked so hard to support ourselves.Sadly I do not trust them and am particularly suspicious of those who claim to be standing for "working faaaamilies".
    Grateful
    3rd Apr 2013
    7:46pm
    Leapyearbaby, if you and your hubby are only drawing $40,00 per annum from your super you have absolutely nothing to worry about.
    They are talking about people who are taking advantage of you and me by ripping off the taxpayer to "save tax." Those who earn over $300,000 per annum.
    Now, did you see that guy called Rupert Murdoch who is worth over $2 billion and pays himself and his kids over $30 million per annum? He left Australia, denounced his Australian citizenship and took up American citizenship, why, so he could make more money and save paying tax!!! That's how low the rich people go to just get richer. Greed. Obscenity.
    And he comes into OUR country and calls OUR Prime Minister disgusting and racist because she wants Australians to get jobs before those 457 Visa holders. He says that Australia "should be more like America" where they welcome immigrants and have formed beautiful cosmolitan societies!! Australia IS THE number ONE cosmopolitan society in the world!! "Get like America'!! Now who is being disgusting,
    And he is the number one supporter of the Australian Liberal Party, contributing tens of thousands of dollars EVERY DAY in support of the Liberal Party and Tony Abbott, with his FREE front page vitriolic denunciations of OUR Prime Minister in the Melbourne Herald Sun and the Sydney Morning Herald and supporting bigotted journalists like Robert Bolt and cartoonists like Knight, and he has denounced this great country so that HE could get richer!! SICK.
    HE is the one that should be DEPORTED.
    MITZY
    4th Apr 2013
    10:39am
    GRATEFUL - GO GET EM! GRATEFUL FOR P.M. DEFINITELY!
    niemakawa
    4th Apr 2013
    4:34pm
    GRATEFUL, without the Liberal Party in Government every Australian will end up in the poor house. Labor is only interested in lowering the living standards of us all, and make us dependent on their meagre handouts. There is no logical reason to keep taxing the so called "wealthy" they are already paying excessive taxes through other sources. Regardless of anyone's personal, financial circumstance it is better to try and be independent of Government assistance, and this is what thrifty savers are doing to ensure they can live comfortably in their retirement years. I am a low income earner but still put money aside for Private Health, Superannuation for my long term benefit. I do not begrudge anyone who does the same be "Rich" or "poor" and they all should be entitled to the fruits of THEIR savings and not have it taken away willy nilly by any Government. Lots of sour grapes on this topics against people who are trying to invest for their future.
    Desiree
    3rd Apr 2013
    4:34pm
    We need to go on the attack. Let's not lie down and take it. I think we should go after the Family Trusts - every politician probably has one. Look at Obeid. He had no money but the family trust let him have loans which never seems to get paid back.
    Sylvia
    3rd Apr 2013
    9:42pm
    The greed of man is sickening and obscene, when are we going to get honest men and women to run this country? are there any left?
    Pass the Ductape
    5th Apr 2013
    8:28am
    Where have all the honest men and woman politicians gone Sylvia? Well the only one I know who was ‘hard-working’; had the guts to speak up with honest intent and then tried to do something about it in the public arena, ended up in jail - so that possibly accounts for the lack of front runners these days.
    leapyearbaby
    3rd Apr 2013
    9:54pm
    We'll get honest people to run the country when we vote them in.
    As long as we are hood-winked by $ promises instead of genuine policies and accept political parties who are ruled by the gambling $, the tobacco $ etc etc and whose word cannot be trusted, we'll continue as we are.
    MITZY
    4th Apr 2013
    10:46am
    We have two major parties - we don't have much choice really. The parties decide you will be the leaders - the polls tells us what we want - the politicians take no notice of them.
    We don't want another "hung" parliament again, so I doubt come 14th September there will be an avalanche of support to the Liberals because there is so much vitriol for Labor at present. However, sometimes, something happens to change the current mood and I just hope that sense and sensibility prevails and we get either major party as the winner and the people do the right thing and vote the opposite into majority in the Senate. We need major contenders in the Senate and none of these silly parties like we sometimes get. We need balance. The Greens and Independents are useless. We can't have governments without decent oppositions. They keep each other on course.
    leapyearbaby
    4th Apr 2013
    5:44pm
    Macjam
    A sensible comment which is in line with my situation.
    It's a sad situation that we should feel so threatened after a lifetime of careful management.
    Not only is our economic situation in jeopardy but the emotional climate of our nation is stormy as a result of the unstability of our government.
    Sol
    7th Apr 2013
    2:21am
    Not everyone is successful in their financial lives, some end up wealthy and others dont, for many different reasons, and neither education nor hard work will guarantee success or failure. Many who have succeeded like to say how hard they have worked, but normally no harder than many who have not had great success. I believe it is time to stop the rorting by the wealthy, and that includes many over paid senior public servants..
    Yes, none of the political parties offer any sort of LEADERSHIP for our country, but we keep electing these fools, nowing they no intention of doing the right thing


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