Is a $250k household poor?

Apparently, yes. Poor enough to feel sorry for yourself anyway. From The Age today:

Former chief whip Joel Fitzgibbon has joined other Labor MPs concerned about the prospect of taxing the superannuation earnings of the wealthy.

After the Prime Minister, Julia Gillard, again refused to rule out such a tax, Mr Fitzgibbon feared Labor might botch the definition of what constitutes a ”wealthy Australian”.

”In Sydney’s west you can be on a quarter of a million dollars family income a year and you’re still struggling,” Mr Fitzgibbon said.

“You can be on a quarter of a million dollars family income a year and you’re still struggling”: Joel Fitzgibbon. Photo: Brockwell Perks

”Coal miners in my electorate earning 100, 120, 130, 140 thousand dollars a year are not wealthy.”

He said he would consider changes to the taxing of superannuation at the ”very, very, very high end” but would not brook changes that affect ”ordinary people like my coal miners living in the Hunter”.

Meanwhile, from AAP, Ross Garnaut makes more sense:

Professor Garnaut said while he hadn’t taken a close look at exactly what was being discussed, superannuation “shouldn’t be untouchable”.

“Some of the concessions to superannuation that were made during the high points of the boom half a dozen years ago were unrealistic,” he told ABC TV from England.

He said that during the past decade or so governments made “a lot of middle class welfare, a lot of unaffordable reductions in tax, a lot of pretty sloppy increases in expenditure” that needed to be tightened up.

Having said that, I can’t see how superannuation can work if its going to be exposed to arbitrary changes. It’s supposed to be a long term store of wealth and that’s what it must be to be effective.

In theory what is needed is a long term review aimed at determining a long term and inviolable framework for super based on conservative principles not boom time extrapolations. What chance of that in today’s political economy?

Comments

  1. People need more money in super and it needs to come out of super slowly

    for people to commit to that for 40 years takes total trust

    govt needs to build that trust from an almost zero level!

    • Yes good point. If governments can suddenly raid super, we have seen from the Cyprus experience that they can raid deposits, then how does the average person maintain faith in the systems that governments need us to use.

      Certainty and absolutely no retrospective legislation is what people need to adequately plan their lives including retirement.

      • The Householder

        As much as News Limited likes to talk about ‘raiding super’ there’s no prospect of government announcing it’s going to take money from super accounts. They might change the tax rate on contributions or super earnings for high income people, which could mean people earning $250k pa might not have a lower tax rate on their super than the marginal income tax rate of someone on $25k pa.

        • Either way Householder, moving the goal posts on something as core as Super in any way simply confirms peoples suspicions of the un-trustworthiness of the Govt. Just another deceit.

          This continued tinkering by Govt with the wealth of private citizens is making the electorate roundly sick of their presence.

          • +1
            Trust is something that takes a long time to build and moments to lose.
            I can only assume labour won’t learn anything from the Cyprus debacle when they continue to talk about taxing pension income over a certain amount. It’s one thing to talk about changing the maximum contribution one can make in the future, quite another to change the rules retrospectively. Idiots.

          • I take it you had no issue with the Coalition moving the Super goalposts in favor of high income earners ?

          • Actually Spleenblatt, I personally feel there should be a limit to how much you can put into Super at a discounted tax rate, and also accept that there may be a better formula across the board ie.
            Going forward.
            Retrospectively taxing what you have promised not to is an entirely different matter.
            May I ask you if you remember Gillard & co volunteering to retrospectively change their defined benefit schemes? As a point of principle of course. Do you have the $5.6 million required to enjoy the same benefits Mr Swan will?..

          • Government currently contributes $30 billion to super and is expected to grow significantly. For a scheme that suppose to be self funded, Government sure contribute a big slice. Without changes, how will Government fund this without adverse impact on the budget? There needs to be changes to reduce Governments contribution to a manageable level, set in stone and unchangeable.

          • drsmithyMEMBER

            I wonder if you were complaining so loudly when Costello introduced the CGT discount ?

            My bet would be “no”.

    • If anyone believes the Government won’t raid super sometime in the next 20-40yrs then there is a bank in Cyprus that needs their custom.

      • I’ve been saying for a number of years now – “If you are under 50yo, then I’m willing to bet you all of my super that you will never see all of yours”.

        • Spot on!

          If anybody is stupid enough to believe that the government actually cares about your standard of living as a retiree, as opposed to your drain on the public purse once you stop paying in, then you’re kidding yourself.

          The rules will tighten, the costs will rise, and the mobility of your capital will decrease as both govt and the big funds circle the freshly killed carcass of our future standard of living like carrion fowl.

          I’ll wager money on the fact that SMSF will go by the wayside as an early bet, the only question is how long before they do it.

          It may sound overly dramatic but I’ve got ~30 years until I retire, so that’s more than 7 terms of government they’ve got to screw me over before then…

    • Isn’t “compulsory” the most important word in “compulsory super. ”
      Super pushes asset prices higher by forcing their purchase. And there are the fees that “managing” all this liquidity produces (direct and indirect).
      If you believe that Joe Bagadonuts “trust” in the system, or lack thereof is going to slow this gravy train you’re a greater optimist than I.

  2. While I am not 100% sure of what is being proposed, the thought of Super being withdrawn in a lump sum, tax free, so people can endulge on luxuries, OS travel or gamble the lot and then go on a pension is alarming at best.

    The real rort in Super is the SMSF using NG to lower their cap conrtibutions.

      • SMSF, uses a 30% deposit, borrows 70% and runs a loss, uses that loss to lower their cap contribution. Same effect as NG….

          • hubris_and_hyperbole

            doesn’t matter if it is you personally or your super fund making the loss, unless you have capital growth the loss is not going to be offset.

            it is probably a rort to the extent that the government subsidise more of your losses but doesn’t change the fact that it is lunacy absent any capital growth.

          • hubris_and_hyperbole
            No, you do not get it. A SMSF makes a loss on the property, increasing the cap contribution they can make and paying only 15% on the extra contribution, instead at the top tax rate.

          • hubris_and_hyperbole

            Willy I completely get it, I think it is you who are struggling with it. Do the sums for both Joe Sixpack and his SMSF, i.e. total net worth. The total tax savings don’t offset total losses. Therefore you still need capital gains in order to be net profitable. Unless you can show me a scheme in which the government directly/indirectly underwrites 100% of losses this will always be the case.

            But don’t let me stop you buying — its never been a better time to buy. 🙂

        • GunnamattaMEMBER

          Yep so between punters buying residential real estate using this type SMSF Negatively geared of setup, 20 billion worth of foreign purchases each year that isnt being even looked at, right at the margins the young home owning set is being pushed – deeper into debt, further out, or into otherwise crappier housing.

          • GunnamattaMEMBER

            Yeah agreed, but any going into existing dwellings is adding to the malaise. And are the SMSF property funds going into existing dwellings or new construction?

          • HnH – new stock of poor quality where people don’t want to live mate. While it’s a f..g free for all in established housing.

            Give it a rest.

          • H and H,

            Once the price inflation has become an epidemic, all that building new houses under the status quo supply quota scheme will do, is make the eventual bust more severe.

            This is one way to make housing “more affordable” eventually, but it would be nice if somehow the supply issues could be better managed to restore affordability as a first priority. And the cycle will merely repeat until supply has been reformed, unless at some stage the “overbuilding” collides with demographic shrinkage of the customer base and a long stagnation commences. Meeting this when the time comes, with a nice stable position on property prices and debt levels would be preferable.

    • No way. The real rorts are that retirees aren’t taxed on the income their super earns and means testing doesn’t include the family home. Plus a lot more. And I do agree with you.

  3. Professor Garnaut said while he hadn’t taken a close look at exactly what was being discussed…

    What exactly is being discussed? Does anyone know?

    Meanwhile Abbott says he’s going to reintroduce reintroduce the 15 per cent tax on superannuation for 3.6 million people earning $37,000 or less, and the media lets him get away with it (?!)

    • Mining BoganMEMBER

      Careful. I’ve raised this one a few times and the only response I have had was an insane rant about class warfare.

      😉

          • Cleaning services, child and aged care…employment for social workers, DOCs, welfare departments. The list goes on.

          • Mining BoganMEMBER

            Oh, I would never say anything like that. I’m just repeating the LNP mantra.

            😉

            Sarcasm meter not working today?

          • Yes, parties of “the working class” are the worst offenders in the case of “planning” policies that make houses more unaffordable.

            Not to mention the perverse incentives of “welfare”:

            http://www.dailymail.co.uk/news/article-2299927/Sharon-Minkin-refuses-job-better-benefits.html

            ‘Why should I go to work when my benefits are worth £70,000 a year?’ Mother-of-three refuses to get a job because she is better off without one

            Sharon Minkin, 49, says she cannot find a job that pays the same as benefits

            Lives in a semi-detached house, drives a 4×4 and has a 42″ flatscreen TV

            Was qualified accountant on £120,000 a year but has not worked for 18 years

            Benefits she receives are equivalent to earning £70,000 a year before tax

          • The combination of unaffordable housing and welfare is a particularly toxic one in the UK. The marginal “tax” involved in losing one’s “public” housing when one gets a job, is well over 100%.

            There are also perverse incentives against women actually bringing up children while married to a man who is the children’s father and who shares in their upbringing.

          • drsmithyMEMBER

            Not to mention the perverse incentives of “welfare”:

            PROTIP: Don’t believe anything you read in the Tele.

    • General Disarray

      They’ve lost the plot, Lorax. Check out Gottliebson’s rubbish over at BS for a demo in “class war” spin doctoring.

    • It’s easy; The Libs policy is a necessary budgetary measure while Labours is class warfare. Thought that was obvious.

  4. Wow, $250K struggling? I would kindlt suggest that is mostly beacuse of discretionary spending (yes, that includes having a mega-mortgage!).

    My family and I are currently getting by IN THE HUNTER (!!) and much, much less than $250K. We struggle; but on $250K? Oh please, this is just Australian Entitlism near its worst.

    We have it great here; we are so blessed, even if we are far from perfect.

    • We’re also in the hunter and are just under the 250k mark (when the wife decides to return to work, that is) and there is no way we could be regarded as struggling. A few guys at work, however, on similar levels of income are struggling … to pay off their 600k home loan, a few Investment properties, two Audis’, a boat, and of course the obligatory biannual overseas trips.

      Debt, it’s the sh!t! Get some today!

      • Mining BoganMEMBER

        Don’t forget the violin lessons from Vladimir who played first chair for the Moscow Philharmonic.

        Getting the young girl at the music store to teach your kids is a solid indicator that you’re living below the poverty line.

      • Classic. That’s what the RBA, the gov’t and all the banks are offering up as the solution, isn’t it? When the debt all gets to be too much, some day off into the future, we can be comfortable that someone’s going to bail us all out. It could be first home owner’s grants, lower interest rates, Rudd-style cheques in the mail, QE, a straight out debt jubilee. Who knows exactly, but loading up on debt is the only politically palatable solution at this point in time. Everything else is just all too hard.

      • There is this angle to consider: in an affordable-housing city in the USA, a household on $100,000 per year would be able to afford a house of the size and quality that a $250,000 household here will be struggling with.

        The same is true even comparing unaffordable cities within the USA with the affordable ones. Gary North told a story of one of his clients who sold his home in CA and bought 7 houses in Atlanta with the proceeds. He was able to live in one of them on the rental income from the other 6, and at a higher standard of living than he had had in CA – without even working.

      • That sort of arbitrage is rife in the US at the moment, from what I’ve heard anecdotally Phil.

        Ive also heard of Aussies doing the same – sell your Sydney/Melb home, pay off the millstone mortgage, buy a really nice home in Texas clear and free, and buy a couple more for some passive income (since deposit rates in US are much worse than here).

        The gap may close in time, but like here, the states with poor planning policies are unlikely to catch up to the more progressive, cheaper housing states any time soon. It really is that disparate over there..

        I’d consider the same in the future to be honest (I’m half Yank)…if we get another bout of price inflation here while the AUD stays elevated that is!

    • – Private school fees of 20k pa. 2 kids = 40k.

      – Women now must drink champagne at least once per week. 1x case Moet per month = $3,600pa

      – B’day gift from husband to wife now has to be exorbitant. Think a 5k watch.

      – Fine dining once a fortnight = $6 – 7K

      – Five new pairs of designer shoes (conservatively) for wifey every year + clothes = 10K.

      – Holiday = 10-15K

      I’m already @ 75k pa after tax and i haven’t factored in payments on any properties, utilities, food, cars, coffee money etc etc.

    • Mr SquiggleMEMBER

      Does a miner on $140K struggle?

      He will if he’s had to borrow $500k to buy a miner’s cottage.

      I was looking at Abbotsford, Melbourne the other day.

      An inner city suburb with housing that used to be dismissed as ‘factory worker’ accommodation, now they are up around $800K to buy.

      The blessing seems to have forgotten the chance to buy a home in the city you grew up in

    • $250k indeed Burbwatcher, who would want to work for those nasty, conniving, money grabbing mining Billionaires?

  5. Surely thinking folks must pause to consider the totality of the present situation, and draw the blindingly obvious conclusion that for the government to be thinking about tinkering with (ie, increasing taxes on) the people’s retirement savings, then all “fairness and equity” smokescreens aside, such moves can only be because (a) they have lost control of the nation’s finances and (b) have run out of acceptable (to them) options for fixing it? Thus, they turn to pilfering the people’s $1.4 Trillion savings pool.

    If these utterly self-serving spendthrifts could manage a budget honestly, w/out using (fudging) its annual forecasts for pure political advantage, there would be no need to find plausible-sounding excuses to “fix” the superannuation system.

    • To an extent, yes. But the point to remember is that the loss of control is mostly in the assumptions for growth that have missed badly because they were dependent upon endless booms in China.

      Despite some sloppy spending the actual budget position is still excellent.

      • H&H
        Excellent? Not so sure about that and the projected fiscal gap, due to paying pensions and healh in an ageing nation is hardly an excellent position to be in.

        • Given that reality we’re better off than most.

          I’m not arguing we won’t need future discipline. We will.

          I’m saying that the ongoing deficits are not very large, though I expect they’ll grow some more as China changes.

          • H&H
            I am actually not worried about increasing deficits as I feel the population will peak around 2035 and then start its decline. This will happen even while our GDP grows as we actually are a smart nation and our real wealth to mine, is our minds. Future generation will accept the deficits as a result of the aging nation and especially as the pig in the snake as we do not have a population pyramid, rather a vase shape. The necessary infrastructure to cater for the ageing boomers, will be built and not really require, in quantity at least, after the pig is finnaly shat out. By then anti-speculation laws on resendential will well and truely be in place and our capital will be invested into actual GDP producing works. So, in short, yep big debt to come and then paid off by a smarter generation to follow.

          • Willy_nilly

            Your optimism depends heavily on Australia’s “tradables” sector growing, and also productivity growing. Neither are looking particularly flash right now, and I do not see any reason to think the policy makers have worked out what to do about it.

          • Phil
            Our ‘tradables’ will include IP, technology, services and areas that are only just starting. Have no fear, a nation of only 220 years, has the most creative kids in the world as they have seen during their whole life, society being created in front of them.
            ‘Have no fear, the kids are here!”

      • Does it really matter what are the reasons for the loss of budget control? They have been doing it (grossly over-estimating revenue) every year. Rather than learn their lesson, and adjust accordingly, they have just resorted to fudging the next budget even more, in order to make glorious announcements each May.

        I’m surprised that you think the budget position is “still excellent”. Hasn’t MB been one of the shining beacons of truth in pointing out the structural deficit problems inherited from the Howard welfare-spending / vote-buying juggernaut? And haven’t the current mob done nothing about that, and instead, made it worse?

        Would you disagree with the observations of Eslake, Madsen, and Westacott on the state of the budget?

        http://www.heraldsun.com.au/news/national/julia-gillard-to-leave-australians-in-165-billion-dollars-worth-of-debt-this-term-alone/story-fncynkc6-1226607170108

    • But the Super system is broken and needs fixing. It was never designed for people to draw a lump sum, spend it all and then rely on the pension. It was designed to support the retired throughout the rest of their lives. Yep, it has broken parts and needs fixing…

      We also need GST to 20% to tax the over 65’s more while we raise the tax free threshold to approx $50k to compensate for any regressive nature of the tax. Wefare/pension would also need to increase to conpensate for the rise to 20%.

      Couple the GST rise with a broad based land tax, also to extract tax from the over 65’s and we are moving to a system where the taxpayer will not bear all of the burden for paying for the ageing nation.

      The PPOR, value over $750k, also needs to be included in the asset test for pensions and reverse mortgages provided exclusively by Centrelink to pay for the land tax, or to release funds for those effected by the new asset test rules on the PPOR.

      • Land taxes always have been a good idea, but they are an absolutely essential idea today if people really want to “contain urban growth” given that blunt instrument “planned” containment does massive harm to the economy and society.

  6. So….. scrap the whole thing then, like Piggy Muldoon did for us (NZ) back in ’75! His prescient view was that such a large pot of money would be too great a temptation for a future Government not to want to get their hands on. “Better to leave the money with each person to build their own retirement fund or business ” was his rationale( or words to that effect.) Mind you, we are broke, today, and you aren’t…..

    • I don’t think NZ is broke because Piggy Muldoon scrapped the Super scheme. NZ was doing not too bad after several terms of liberalising governments, until the fake housing-bubble-based boom of 2000 – 2007 in which Cullen the profligate spent every cent of “bubble revenue” as if it was going to keep rolling in forever, and committed the government to ongoing spending at those levels.

      The real horror charts are those that show the increase in government revenue and spending over that period.

      John Key got in just as everything went pear-shaped, leaving ignorant Labour supporters claiming that Cullen was a fiscal genius and the Nats are not, because Cullen could maintain generous spending on all the favourite causes without going into deficit, yet the Key government is trying to cut spending and still runs a deficit.

      The most ignorant/opportunist of these people connect the government spending levels with the “prosperity” or lack of it.

  7. I wonder if Professor Garnaut has a tax payer funded defined benefit scheme like every politician wanting to meddle with super.

          • The PSS (Public Sector Superannuation) is a DC fund for all new members and has been that way for a good few years now.

            Contributions are around the 15% of salary for DC members.

            DB members contribute min of 2% up to 10% of after tax salary to the fund which determines what their final ‘Multiple” will be. Typically it takes around 25 years contributing at 10% to reach your max multiple of ten.

            So your payout if you reach the max multiple is a lump sum of ten times your final average salary or a CPI indexed pension for life of 10/11ths of your final average salary.

  8. What a joke. Surely we don’t make policy on the basis that $250,000 pa is struggling. I think a family of four can get by on half that and still enjoy some basic luxuries. Perhaps those on quarter of a million struggle to pay for the investment property, overseas travel, jet ski, massive TV. What an obscene comment from Fitzgibbon.

    Older public servants tend to get defined benefit super, but governments have generally changed this for new starters. Defence, police etc still cling to defined benefit I think.

  9. From the latest tax figures I could find, the top income distribution listed was for the top 1.4% and was $264k a year.

    So people on less than $250k are pretty close to the 99%.

  10. I know several people on this kind of money who cry poor constantly. The typical response is “My mortgage is really expensive”, as though someone forced them into it and there’s no alternative. Meanwhile I know of many others, usually renters, who are living really comfortably on a lot less.

    If you can’t live very well on $100k you are terrible at managing your money.

    • Mining BoganMEMBER

      “I know several people on this kind of money who cry poor constantly”

      A lady married to one of my fellow bogans is like that. Her children call her ‘the richest poor person we know’.

      • If your outgoings are greater than your incomings, then your upkeep will be your downfall.:)

  11. seanraceMEMBER

    I know that this is off topic sorry. However there are already a few comments on SMSF.

    If I have my SMSF heavily invested in precious metals (potentially even holding physical metal)

    How would the government be able to confiscate this? Or enforce capital controls?

  12. at the end of the day its the debt and the cost of housing, I suspect all the crap with super is more to the fact that the property lobby want more NG, treasury wants more CGT and the banks want more loan growth.
    If you have a 300 or 400k loan and couple of kids things are tight on 150k a year. The aspect and context of fitzgibbons remarks are though 30% contribution tax for 100k plus earners, ie the old surcharge tax.
    Happy to give NG concessions though

    • “At the end of the day its the debt and the cost of housing….”

      EXACTLY. I pointed out above that the same house in an undistorted market, that the $250,000 household is struggling to service the mortgage for in Aussie, would be manageable on $100,000.

      Aussies need to send links to affordable-US cities RE sites to each other, and it needs to “go viral”.

      There is a good challenging comparison at the top of “Cantabrians Unite” Facebook page that I understand has got quite a lot of hits.

  13. Rumplestatskin

    This total BS about household incomes and what is poor or wealthy really has to be brought into line wherever it appears.

    The mean gross household income was $87,000 in 2009, the median closer to $69,000. Add a little wage inflation etc and you are up to about $77,000 median and $99,000 mean. This is total gross for the whole household.

    To get $250,000 gross household income you would have to be up in the top quintile (top 20%) , probably nearer the top 15% of households.

    I’m sure Matt Cowgill would have examined all the data much better than I have.

    The big question is what all this means. For example, share housing with young professionals would have become for more common over the past decade, and I assume that such estimates mean that 4 professional salaries get lumped into the measure. This is one of the reasons for the ABS generating equivalised disposable income measures, which adjust for household size and income earners.

    In any case, I can’t image how any household earning $5,000 a week can be regarded as anything but very wealthy. It’s more than 4x my own household income, and I am definitely not struggling – taking overseas holidays with a family of four and dining out whenever we please.

    • GunnamattaMEMBER

      Well said

      Have a look through salaries touted on seek and mycareer and what have you.

      You get up towards 100K and you are in really serious managing professions ranks.

      A quick surf through right now has me looking at Uni lecturers being offered 70K, very low level public servants being offered circa high 50s.

      Then there is day to day existence. A couple of people I went through Uni with years ago.

      Sure they now own their own house, but raise a kid going to local catholic school (private but cheaper private) – married, recognised that professional employment was full of bull. He (despite having degree ) has been wool testing for 25 years, she worked for State bank, took package and works part time as admin assistant mixed with some part time caring work for elderly. They are grossing about 70K right now. Both would rot rather than claim they were battlers.

      The wealthy not wealthy paradigm needs to be looked at in conjunction with the debt, access to debt, and need to service debt, as well as what debt is being focussed on.

      A lot of people are battling on mega salaries – but only because they are leveraged to the eyeballs.

      • It makes a massive difference when the household bought its first home.

        If you bought your first home, or up-sized substantially, since 2005, on tick; you were an idiot. This is about what it comes down to.

    • +1 Cameron.

      This “they took our super!” beatup is just that.

      The real “raiding” of super has been done to the lower/middle class by the corporate fund managers skimming large fees coupled with poor, below-inflation performance for the last decade.

      BTW – most of those fund managers probably earn $250K a year, so this is all coming home to roost.

      Edit: just read this at AFR – shocked they would print it actually, given they normally support these chaps: http://www.afr.com/Page/Uuid/d4d33ff6-95de-11e2-b92a-d9429e3a9ad6?articleGift=TRUE

      • ceteris paribus

        Yes, indeed. And the CEO of the largest fund Australian Super, Mr Silk, an honest man, blew the whistle on his colleagues in the for profit sector.

        If people are going to have their super with a fund manager, I can’t see why they are still putting their dough into retail funds rather than one of the better industry funds.

        Don’t get me wrong- I am no union person or advocate at all. But the retail funds are shockers.

    • Leverage is the answer. I know quite a few young professionals earning more than 200K (household income more than 300K) but the leverage is extreme.

      Several have debt, including investment debt, more than 1mil. Most have mortgages in excess of 500K and investment properties.

      These guys and gals are thinking about buying a house to raise kids in and put their kids through school, cover medical costs etc, and live in a world where job security is not so certain any more. I don’t think it’s disingenuous that they feel they are not wealthy, it’s more to do with the fact that they don’t feel like they are making much ground with all the hard work – and they are probably right.

      This is not to say that there are not people doing it much tougher and it’s a kinda relative view of the world.

      • But they don’t need a politician bleating about how he wants to protect these “struggling” families.
        If they’re struggling then they bought one too many (or too expensive) investment property. They can solve their struggle by liquidating an investment.

        There is something warped about their thinking if they choose to be in hock up to the hilt in pursuit of wealth and then grizzle about how poor they feel.

  14. A bus driver earns circa $40k without overtime.
    I’ve seen a job add for an electrician in Sydney offering $4xk.
    Politicians and many posters here are completely out of touch with ordinary people.

  15. ceteris paribus

    Go to the evidence base folks.

    This discussion is not about what anyone has saved for retirement in super or elsewhere.

    It is about Government retirement welfare handouts (which boost these private savings). That is, it is about super tax handouts and the aged pension.

    Even the rabid AFR accept and quote Government modelling of the standardized $520,000 to $270,000 advantage in retirement welfare handouts to the retirees who has been high income earner over a low income earners for BOTH the pension and tax breaks welfare combined.

    Forget about private savings and focus on the evidence base of associated Government welfare handouts.

    Superannuation is FAT CITY for us privileged people.

    • Even the Kiwisaver scheme in New Zealand has been FAT CITY for people who were saving money anyway, or had money to spare and were investing it elsewhere.

      Meanwhile, the people who are REALLY in BIG trouble in their retiring-age future, the low income people who cannot save money and cannot afford a property of their own, have not been helped one iota.

      • ceteris paribus

        So glad we agree on this one Phil (because we have had worse moments of the planning debate)

        Cheers

  16. The real underlying purpose of Australia’s compulsory superannuation system was always to provide industry protection for the (Sydney-dominated) funds management industry.

    It is corporate welfare for investment bankers (and I speak as a former investment banker myself).

    Superannuation has done little to increase savings.

    What additional saving has been generated is often recycled back into government spending through the sale of existing state monopolies, the creation and sale of new monopolies (private toll roads, for example), and various other public-private financing rorts.

    More corporate welfare for investment bankers!

    This is the 21st century equivalent of tariff protection for Victorian manufacturers.

    Whatever changes might be made, they won’t be allowed to interfere with that primary objective.

    • Too right – clipping the ticket at a very conservative 1% on the $650B or so in public offer super funds is still $6.5B in annual income for the funds management industry!

  17. So, that makes me what? Dirt poor, cos I gross significantly less than half that $250 mark? Never mind after tax…

    Gee whiz, and all this time I thought I was living in a first world country where I had things so much better than most others on this planet. Turns out it was all a lie. Hmmm, if I’m that poor, where’s my welfare check?? Ah, now I’m not so poor am I?

    I just want to know who keeps electing these idiots to parliament where they can stand in a public forum and talk utter drivel?

    • A vast number of Latham’s economic policies made sense.

      The esteem he is held in has more to do with how the media is able to push public opinion.

        • He had a great many bouts of sensibility. They weren’t necessarily exposed on ACA or Howard Sattler’s radi show however.

          He was actually a sound and sincere policy advocate, and is still to date probably the only gu who was dictating policy from the opposition bench.

  18. Income and wealth are only tenuously related. We probably all know high income people who will never be wealthy, because they are too undisciplined and spend most of their income on consumption. On the other hand, there are plenty of relatively low income people who end up quite wealthy through careful money management and astute investment.

    Of course you can have a $250k income and be “struggling”. It just means you’re an idiot.

  19. According to Michael Pascoe at http://www.smh.com.au/business/migration-soars-and-fools-fly-in-20130328-2gw5u.html a $250,000 gross household income in 2009-10 was at the top 3% mark.

    How such demonstrably erroneous claims that anyone at this income level in one of the globe’s wealthiest countries is “struggling” are even taken seriously let alone reported so prominantly is a very sad reflection on the poor quality of political debate in Australia.

    And what a total arsehole that Joel Fitzgibbon is.

  20. Mining BoganMEMBER

    A comment I like.

    “As I understand the purpose of super is reduce the burden on the state, by ensuring people provide, at least partially, for their own old age. But once someone reaches a point where they are ineligible for a state old age pension, I struggle to see why the state should provide tax concessions beyond that point. Then it is just subsidising someone to increase their standard of living in retirement, at taxpayer expense.

    If people want to squirrel away more money to fund a higher standard of living in retirement, that’s a sensible goal, but I don’t see the argument why people should be able to access a tax concession to do so once they would receive no pension anyway.”

    http://www.brisbanetimes.com.au/opinion/politics/super-breaks-inefficient-and-unfair-tinkering-wont-help-20130328-2gxd6.html#comments

  21. Costello stuffed super by making it tax free. Up until that point everyone got a 15% tax rebate, yet still fell under to sliding tax scales, which was very smart. Making it tax free did just benefit the rich. The rich realized that if it’s a tax free structure, the structure was idea for taking big risk in, not small risk, such is how Mich. Romney ended up with $30 mill in his own sf? (refer vanity fair article recently)
    I know people with $10 mill in super in pension phase, they pay no tax on annual income of $500k and pick up a $200k annual tax refund?
    Someone needs to pay for the hospitals etc hence the rules need to change back.