The Howard government’s generous regime of tax concessions on superannuation is proving a major headache for Treasurer Joe Hockey as he escalates his crusade to balance the government’s budget.
Each year, the federal government forgoes $45 billion in revenue because it levies special tax rates on super contributions and payouts.
With the government poised to release its whitepaper on tax reform, it seems Australia’s superannuation system is on the cusp of a tax overhaul that could have material effects on future returns and benefits of super members.
Richard Denniss has perfectly refuted the liberals’ “debt and deficit disaster” bullshit.
From his brilliant articleCompanies don’t grow by reducing debt; they grow by borrowing to make the right investments. BHP Billiton has been around for 130 years and is currently carrying $66 billion in debt with no plans to repay it. Indeed, since the mining boom their net debt increased by a massive 315 per cent from $16 billion in 2004 to $66 billion now.
Exactly! It’s why we have a house mortgage, or borrow for business purposes. It’s what makes the world go round.
Everyone should read Denniss’s article. It’s so compelling, its logic so self-evident, that one should memorise it.
Debit (judicious debt) is necessary.
Here's what's missing: trust. Not just between Abbott and his backbenchers, but also between Abbott and us. If anything, the leadership contest has made things worse.
As Abbott brought forward the timing of the leadership vote on Sunday, his supporter and finance minister Mathias Cormann told the ABC the economy was "heading in the right direction". He wanted "to build on the achievements we made in 2014".
Without trust we lack confidence. We are neither spending nor investing what we should.
Take a moment to consider the achievements and the direction in which things are heading. That year began with a quarterly rate of economic growth of 1 per cent. After the budget, it slid to 0.5 per cent, and then to 0.3 per cent. It's falling, rather than rising. The direction is down. (Ignore the through-the-year figures Cormann quoted. They make the budget look good by including the very strong economic growth that preceded it.)
The Reserve Bank made its view about economic growth clear on Tuesday. Here's what it said when it cut rates an hour or two before its governor briefed Cormann and others in cabinet: "In Australia the available information suggests that growth is continuing at a below-trend pace, with domestic demand growth overall quite weak."
It's weak and it's bleak. It isn't heading "in the right direction".
Looking ahead, the Reserve Bank expects growth to remain "a little below trend for somewhat longer, and the rate of unemployment peak a little higher, than earlier expected." Unemployment has climbed from a quarterly rate of 5.3 per cent at the end of 2012 to 5.8 per cent at the end of 2013 to 6.2 per cent at the end of 2014. We get the first figures for 2015 on Thursday.
Unemployment is worse than it was at the peak of the global financial crisis. The Reserve Bank expects it to get worse still.
Hockey and Cormann will tell you that while unemployment is growing, employment is too. But it's not, really. The number of hours worked per month grew barely at all throughout 2014. More people may have been employed at the end of the year than the start but on average they've been working less, some shifting to part-time work and others to fewer hours of full-time work. Disturbingly, the Reserve Bank says the number of hours worked per month has scarcely changed since December 2011 despite three years of population growth.
HBS Guy wrote:What a colossal mess Abbot and Hokey have made:
http://www.afr.com/p/national/joe_hocke ... uyacn25ilJ
Still “can’t find savings” FFS. Easy:
1. Restrict the concessionary 15% tax on super contributions to the first 9.25% (current rate IIRC) Save like $50Bn
2. Abolish negative gearing
3. Kick asset millionaires off the Old Age pension (that is $1.25m in declared assets OTHER than the family home.)
4. Tax those on high retirement incomes
5. Tighten the FBT—heaps!
6. Stop offshore processing of ASs—better ways of handling this.
7. Tackle the arsewipe multinationals who avoid paying their fair share of company tax. Just “deem” EBIT from revenue figures and tax payable by deeming from EBIT
8. Tackle the “Australia tax” not a direct revenue gain but lower cost of living, remove a lot of the need to buy stuff overseas, so the economy gets a boost.
9. Scrap all four FTAs, none do us much good at all.
10. Get down on bended knee to Toyota and GM, get them to stay here.
11. Let Age pensioners do some work without losing the pension—they will do that, earn money and pay tax on that. Cut Centrelink paperwork and so reduce staff.
With the savings and some sensible borrowings—run out FTTH, get interstate rail working better, boost NewStart.
Maybe that is simplistic but the savings ARE there!
Treasurer Joe Hockey has warned Australia must not fall into a position like Greece where it would be subservient to global bankers.
He was responding to Palmer United Party leader Clive Palmer in parliamentary question time who asked him why the government was destroying living standards with austerity when Australia's debt was less than the OECD average.
Mr Hockey said the yet-to-be-released intergenerational report would identify Labor's legacy of debt and deficit.
When a nation imported money from the rest of the world to fund growth, it was at risk of being exposed to the volatility of global capital markets.
"It makes you, in one sense, subservient to the bankers and the rest of the world," he told parliament on Monday.
The extreme was what was happening in Greece where it was totally subservient.
"We do not want to be in a position where we are subservient to other nations."
Mr Hockey said the fastest way to pay down debt and reduce exposure to the people that lent to Australia was to have a government that lived within its means.
Wage growth continues to moderate and the unemployment rate remains elevated as the Australian economy continues to struggle in the aftermath of the Chinese mining boom.
With the terms of trade declining and prospective job growth modest, the household sector is expected to struggle throughout 2015.
Australian nominal wages excluding bonuses rose by 0.6 per cent in the December quarter, meeting market expectations, to be 2.5 per cent higher over the year. Wage growth remains at its slowest annual pace in around 16 years (the measure only goes back to 1998).
Wage growth remains weak across both the private and public sectors, with growth moderating considerably over the past couple of years. Private sector wage growth is now below its crisis trough, while public sector wages are rising at their slowest pace since the turn of the century.
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A distinguishing feature of this wage slowdown has been the moderation of public sector wages, which simply didn’t occur during the global financial crisis. Some will be quick to blame the current federal government, but the slowdown pre-dates the Coalition's election win and is also present at the state level.
If anything, moves by the Coalition to ease the public payroll have simply built on the work of the previous Labor government, which saw real government expenditure decline in both the 2010-11 and 2012-13 financial years.
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