Browsing articles in "pensions"
Monday 14th December 2015 - 7:18 pm
Comments Off on Tomorrow’s mini-budget “will fail” Labor

Tomorrow’s mini-budget “will fail” Labor

by Alan Thornhill

Australia does not need the “tax secrecy” adopted by the Liberal Party and the Greens in the final session of Federal parliament this year, a senior Labor figure warned today.

 

Andrew Leigh, the Assistant Shadow Treasurer, said it is likely to curb growth and impede revenue collections.

 

He said:” The Government’s economic update tomorrow will likely fail both its own test for the economy and Labor’s test for the economy.
“ When they came to office, the Abbott-Turnbull Government said that they would pay down debt faster and make sure that Australia was running a surplus in the first year and every year after that

 

“ Well we’ve seen deficits blowing out; doubled over the course of the last year alone,” Mr Leigh said.

 

And he added:”….the mini-budget is also likely to fail Labor’s test and that of the Australian community.

 

Mr Leigh said:“ Australia now has a Prime Minister and a Treasurer that are looking to slash the best-targeted social safety net in the world.

 

“We know that this will not only hurt the most vulnerable but will also potentially impede growth because those in the middle and bottom of the distribution spend all of their pay packets.

 

“ So the cuts to family support that remain on the table are a signal threat to growth in the years to come. .

 

Speaking to reporters in Melbourne, where he was supporting a local ALP candidate, Mr Leigh said:”Labor believes that all Australians and companies should pay their fair share of tax.

 

“We’ve been leading the debate around multinational taxation.

“Earlier this year, Bill Shorten, Chris Bowen and I introduced our multinational tax plan which would close debt deduction loopholes and add more than $7 billion to the budget bottom line over the course of the next decade.

 

“And yet from the Government all we’ve seen is a multinational tax plan that has asterisks where revenue estimates should be.

Worse, at the close of parliamentary sittings we saw the Liberals and the Greens band together in favour of tax secrecy.

 

“That’s not what Australia needs.

 

“We need more transparency and we need a Government that is willing to do the right thing on multinational taxation,” Mr Leigh said.

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Wednesday 9th December 2015 - 8:58 am
Comments Off on Warming up for next year’s election

Warming up for next year’s election

by Alan Thornhill

Speculation on tax reform has peaked ahead of a meeting between the Treasurer, Scott Morrison, and State premiers on Friday.

 

The Federal government has insisted, in the lead up to this meeting, that “everything will be on the table” as these talks progress.

 

Labor has responded by alleging that Malcolm Turnbull is secretly planning to increase the GST.

 

Opposition strategists know that an effective campaign on the GST will be their best chance of defeating the still popular Prime Minister, at the Federal elections expected next year.
Lingering divisions in the Liberal party – mostly flowing from the September coup in which Mr Turnbull replaced Tony Abbott as Prime Minister, might help.

 

Especially as Mr Abbott is finding it difficult to remain heroically silent, about his loss.

 

But Mr Turnbull knows, deep in his political heart, that his own scare campaign, on the carbon tax, is also the best card he has in his hand.

 

And – perhaps for that reason – he has been reluctant to say – flatly – that his government won’t increase the GST if it is re-elected next year.

 

There are several good reasons for not doing so.

 

After all, coalition governments don’t have a particularly good record, when it comes to keeping pre-election promises, particularly on tax.

 

Why draw attention to that?

 

Then there would be recalcitrant premiers to convince, if a Prime Minister did want to increase the GST.

 

Why give them time to organise, too?

 

No

Much better to keep mumbling about “everything being on the table” when it comes to tax reform.

 
There are risks, of course.

 

That was illustrated – all too well – today when Fairfax newspapers claimed to have a secret document showing not only that massive increases to the GST are likely, but that the Medicare Levy could rise as well.

 

There is an old game, in politics, called “frightening the horses.”

 

And our politicians – on all sides – are quite good at it.

Wednesday 2nd December 2015 - 6:30 pm
Comments Off on New measures will “support families”

New measures will “support families”

by Alan Thornhill

The Federal government says its new child care package and related tax bills will encourage workforce participation and provide a more flexible, accessible child care system.
The Minister for Education and Training Simon Bimingham said the savings from the Family Tax Benefit bill would be used to fund the $3.2 billion Jobs for Families Child Care package.

 

Senator Birmingham said these measures would provide better support Australian children.

 

“Families using child care in 2017 on family incomes of between approximately $65,000 and $170,000 will save an average of $30 a week on their child care bills,” he said.

“The Jobs for Families Child Care package provides the highest rate of subsidy to those on the lowest income levels and more hours of subsidy to those who work the most,” he added.

“Our priority is to increase access to care for those families who need it most, particularly working parents.”

 

“We know the cost and accessibility of child care is a barrier for parents who want to work or work more.”

“Since the Jobs for Families Child Care package was announced in the Budget the Government has consulted widely with parents, child care providers and businesses,’ he added.

 

“We have modified the child care subsidy for two reasons.”

“The first being feedback that the previously announced subsidy rate was too generous for high income families and the second being the fact this package was to be funded through Family Tax Benefit reform, where savings have not been realised.”

“Accordingly we have reduced the subsidy rate for families on incomes of more than $250,000 and reduced the subsidy floor for higher income families from 50 per cent to 20 per cent.”

Senator Birmingham said the package represents the Government’s response to the recommendations from the Productivity Commission Inquiry into Child Care and Early Childhood Learning.

 

“The Commission found the current child care system with its numerous payments, is unnecessarily complex and that poorly targeted programs are failing to support families to be in jobs or provide additional support where it is needed.”

“The package includes a strong safety net that will provide additional learning opportunities for children in low income families or at risk or in the care of their grandparents.”

 

“The package will also support learning opportunities for all pre-school children,” he said.

Meanwhile the Minister for Social Services, Christian Porter, said the Family Tax Benefit bill would put more money in family pockets each fortnight, through increases in the maximum rate of FTB Part A, Youth Allowance, and Youth Disability Support Pension

“These are real and sweeping reforms – but they need to be paid for,” Mr Porter said.
“That’s why we are restructuring family tax benefits and redirecting the funding.”

In addition, the FTB Part B standard rate will be increased by $1,000 each year for eligible families whose youngest child is aged under one year.
The Government also said it would ensure that single parents aged over 60 years and grandparent and great-grandparent carers with a youngest child aged 13–18 years will be eligible to receive FTB-B at the standard rate.
But it also said the end-of-year supplements would be phased out, given they are no longer fit for purpose.
“The supplements were introduced to fix a FTB debt problem that’s largely resolved,” Mr Porter said.

“It makes sense to redirect the money from the supplements back into families but in a way that allows parents to re-enter the workforce.

“He said research had shown that is the single best way to increase family wealth and prosperity.”

Sunday 29th November 2015 - 7:16 pm
Comments Off on Government says it will help grandparents with child care

Government says it will help grandparents with child care

by Alan Thornhill

The Federal government says a new child care package it will bring into parliament this week will help an estimated 3,900 grandparents who care for 6,300 children.

 

 

If passed, it would take effect from July 2017.

 

In a statement today, the Minister for Education and Training, Senator Simon Birmingham, said that grandparents on income support who provide primary care for their grandchildren would, themselves get subsidised child care under the new Child Care Safety Net.

 

 

“One of the greatest practical challenges for grandparents raising grandchildren are the costs associated with that care, which includes child care,” Senator Birmingham said.

 

He said families on  incomes of between approximately $65,000 and $170,000 a year who  use child care would be be around $30 a week or $1500 a year better off in 2017, under the proposed legislation which is to be introduced this week,

 

However the Shadow Minister for Education, Kate Ellis, said the new package would leave one family in four worse off.

 

She  said too, that  the package breaches the Coalition’s pre-election promise not to introduce income tests for child care rebates.

 

“Nothing in the Government’s announcements today changes the fact that as a direct result of their child care package, one in four Australian families will be worse off, “ she added.

 

“The inconvenient truth remains that this is a Government who is spending billions of dollars to make families go backwards when it comes to accessing affordable child care.”

 

“We know, through the only modelling that is available – conducted through NATSEM – that thousands of Australian families are going to lose child care subsidies as a result of the Government’s actions,” Ms Ellis said.

Friday 27th November 2015 - 7:30 am
Comments Off on Malcolm;s big statement

Malcolm;s big statement

by Alan Thornhill

Some might call it a mini-budget.

 

All the Prime Minister said, in an interview with Leigh Sales on the ABC last night, though, is that his government would release “an innovation statement” within the next two weeks.

 

Well, perhaps he did add a little dressing, to make the prospect enticing.

 

How?

By promising, for example, that he would would “set out a very large number of substantial measures. to drive the innovation that would ensure that Australians, their children and grandchildren, will have great jobs.”

 

“…better jobs in the future that will drive our economy,” he added.

 

Then he laid it on the line.
“I don’t think anybody has any doubt that if we are to remain the high wage, generous social welfare net country, first world country that we want to be then we need to be more innovative, more competitive, more productive and the innovation statement will be a good example of the measures the government is undertaking to achieve that.”

 

Yet Mr Turnbull, himself, has some catching up to do in this regard.
He saddled Australia with the pursuit of an internet system which, even if achieved, would offer speeds be well below those of many other first world countries, such as France.
Of course, with its vast expanses to connect, Australia does have difficult – and expensive – problems to overcome, in building anything that could – even remotely – be called a fast internet system.

 

Yet the picture emerging from Mr Turnbull’s attempt to do so – on the cheap – has not been impressive, so far.

 

Long waits for connection.

Cost over-runs.

 

There can be no doubt about one thing.

 

This “innovation statement, when it appears, will be drawn up to underwrite Mr Turnbull’s bid for re-election next year.

 

Politically, his situation has its difficulties, despite what some are calling his initial “honeymoon” period.

 

He is still the man who became Prime Minister, without a popular mandate.

 

And he is not short of opponents who stand ready to remind him of that fact, if he starts making mistakes, as most Prime Ministers do, as they start to settle into office.

Mr Turnbull also declared during his interview last night that he is “comfortable” in his new job.

 

But make no mistake.

 

His handling of the Brough affair is already being watched very closely.

Wednesday 25th November 2015 - 8:17 am
Comments Off on Adjusting to lower rates: RBA chief looks ahead

Adjusting to lower rates: RBA chief looks ahead

by Alan Thornhill

Australians may find it harder to provide for their retirements in future,

 

The Reserve Bank Governor, Glenn Stevens, mentioned that possibility in a speech he gave to the Annual Dinner of Australian Business Economists in Sydney last night.

 

He said:“In a low interest rate world, the problems of providing retirement incomes will become ever more prominent.

 

“The very low level of yields on fixed income assets means that it is very expensive today to purchase a secure stream of future income, which is what someone who is retiring is usually seeking.

 

“ And there are more of such people, living longer. “

 

So there will be choices.

 

Mr Stevens said:“The retiree can of course respond to this by holding more of her portfolio in dividend-paying stocks – accepting more risk.

 

“She may hope for a dividend stream that is fairly stable from year to year but that tends to grow over time.

 

“ It certainly seems that many Australian listed corporates feel the pressure from shareholders to deliver that, even some whose earnings are inherently volatile.”

 

Then he presented a question.

 

“Can the corporate sector realistically promise growing dividends over a long period? “ Mr Stevens asked.

 

And an answer.

 

“Not without being prepared to take the risk on investment in new products, processes and markets.

 

“How much of that risk an older shareholder base will allow boards and managements of listed entities to take is an important question.

 

“Overall, in a world where a higher proportion of the population wants to be retired and living (even if only in part) off the return on their savings, those returns are likely, all other things equal, to be lower.

 

“ Part and parcel of the same adjustment may be higher real wages for the smaller proportion of the population that is working.

 

“These changes, driven by demographics, may require some adjustment to our collective thinking about what is ‘normal’, not just for rates of return on assets but also for returns to labour,” Mr Stevens said.

Thursday 12th November 2015 - 1:53 pm
Comments Off on Life expectancy hits a new high

Life expectancy hits a new high

by Alan Thornhill

Life expectancy in Australia hit a record high last year, according to the the Bureau of Statistics.

 

The Bureau said said  male life expectancy at birth rose to 80.3 years in 2014 from 80.1 in 2013 and female life expectancy  increased to 84.4 years from 84.3.

 
The Bureau’s Beidar Cho  said: “There are only six other countries worldwide where both men and women have a life expectancy over 80 years.”

 

” These countries are Japan, Italy, Switzerland, Iceland, Israel and Sweden.”

 
“Australia has a higher life expectancy, at both the male and female level, than many similar countries to ours, such as New Zealand, the United Kingdom and the United States of America,” she added.

 

But there are big differences between different parts of the nation.

 

Ms Cho said:” “In 2014, the Australian Capital Territory had the highest life expectancy for both males and females while the Northern Territory had the lowest.”
 

She said too that  the number of registered deaths rose 4.0 per cent to 153,580 in 2014 from 147,678 in 2013.

 

Ms Cho said this reflects both Australia’s ageing and its growing and ageing population.

Thursday 5th November 2015 - 7:58 am
Comments Off on A higher GST? take care

A higher GST? take care

by Alan Thornhill

There’s been a lot of talk about a higher GST.

 

Raising the rate from 10 to 15 per cent, perhaps.

 

Then using the extra revenue to fund  “much needed” cuts to income and company taxes.

 

A peak welfare body, the Australian Council of Social Service says that’s all hogwash.

 

It says that path leads straight to  tax breaks for the rich at the expense of the poor.

 

It bases that declaration on detailed economic modelling, that it commissioned from the National Centre for Social and Economic Modelling.

 

That research is being published today – and there is a lot at stake.

 

So let’s have a look.

 

NATSEM says its study confirms that using an increase in the GST to fund income tax cuts will mean households on low and modest incomes are significantly worse off and higher income households are the winners, paying less tax overall as a proportion of their income.

 

That’s not what advocates of a higher GST have been saying.

 

A shiftt towards a greater reliance on direct taxes can have advantages.

 

However the NATSEM modelling suggests that lifting the GST to 15 per cent has its dark places, too.

So what are they?

NATSEM found that either  raising the the GST rate from 10 15 per cent or  broadening its base to include fresh food, health and education confirms that either change would be regressive.

 

“Low and modest income households would clearly pay a higher proportion of their income, in comparison to higher income households through an increase in the GST, whether by increasing the rate or broadening the base by removing the exemptions,”  ACOSS CEO, Dr Cassandra Goldie said.

 

Ben Phillips of NATSEM agreed, saying:“An increase in the GST has a much bigger impact on low and modest income households because they spend more of their overall income to meet their living costs, in comparison to people on higher incomes who are better able to save.”

 

An increase in the rate of the GST to 15 per cent would require people in the lowest 20 per cent of the income brackets to pay 7 per cent more, people in the middle 20 per cent 4.2 per cent more, and people in the highest 20 per cent just 3 per cent  more of their income.

 

Mr Phillips also said, “A broadening of the base of the GST to fresh food, health, water and education would also be regressive, with people on lower incomes paying proportionately more of their incomes on these essentials.”

 

The relative impacts are clear: 4.6 per cent of income for people in the lowest income brackets, 2.7 per cent for people in the middle, and just 1.7 per cent for the highest income earners.

 

A higher GST to fund income tax cuts?

 

“NATSEM has also modelled the impact of raising the GST to 15 per cent to pay for a cut of 5  per cent in all personal income tax rates…

 

It says “ The results are stark.”

 

“Ttwo thirds of households – on incomes up to about $100 000 –  would be worse off and the top 40 per cent would gain at the expense of the bottom 60 per cent.

 

The lowest 20 per cent of households by income would lose $33 a week (6.6 per cent of income) on average while the top 20 per cent would gain an average of $69 a week (2.1 per cent of income),” Mr Phillips said.

 

Dr Goldie said, “Increasing the GST to fund income tax cuts is a also a big, complicated revenue ‘churn’ that would do nothing to ease the pressure on State health, education and welfare budgets,….”

 

 

“If it’s not about raising more revenue, the Government has to justify why this option is being considered at all,” she warned.

 

“Raising the GST to fund cuts to personal income tax across the board, as some advocate, is a recipe for more inequality, not a stronger economy,”  Dr  Goldie said .

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