Superannuation is inequitable and unsustainable

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By Leith van Onselen

Fairfax’s Michael West has published a ripper article questioning the merits of Australia’s superannuation system, which he argues is overly generous to higher income earners. From The Age:

Super tax concessions cost the taxpayer about $32 billion a year, according to Treasury. The bulk of this, says [actuary Geoff] Dunsford, goes to middle- and upper-income earners…

Dunsford illustrates four ways in which middle-class retirees gain taxpayer benefits that are relatively more generous than those for average workers.

He uses the examples of a clerk and an executive in the final year of their employment and the first year of their retirement, assuming an age of 65.

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Via concessional super contributions, concessions on super fund fixed interest earnings, pension credits on investment earnings and the income tax scale on pension earnings, the executive does proportionately better than the clerk.

Fifty years ago, says Dunsford, normal income tax was paid on super fund pension payments…

Since then, the rules have been changed many times ”enabling the tax on fund withdrawals to be reduced in ever more complex ways”, he says.

The piece de resistance was Peter Costello’s move in 2007 to scrap the tax on super withdrawals taken after the age of 60.

It all makes for a super generous system, so generous though that Dunsford, and those few with the principle to speak against the compelling interest of their own hip pockets, reckon it won’t last for too long.

As illustrated in the above table, there are many flaws in Australia’s superannuation system that make it both highly inequitable and unsustainable as Australia’s population ages. Central among these concerns is that it allows an individual to retire at 60, withdraw their super tax free as a lump sum, blow the money on consumption, and then go on the aged pension from 65 years of age. In such instances, the taxpayer is left wearing the cost of superannuation concessions throughout the individual’s working life, and then again once that same individual goes on the aged pension. It is a loop hole that must be closed, and taxing superannuation lump sums, whilst at the same time encouraging retirees to withdraw their savings as a annuity (instead of the pension), is essential to ensure the system’s longevity.

More broadly, the flat 15% tax on superannuation contributions should also be axed in favour of a flat 15% concession. As illustrated above, under the current 15% flat tax arrangement, the amount of super concessions rises as one moves up the income tax scale, resulting in a system whereby higher income earners receive the most super tax benefit, despite being the very people that are the least likely to rely on the aged pension in retirement. A flat 15% concession, by comparison, would improve the equity and sustainability of the system by: 1) providing all taxpayers with the same taxation concession; 2) boosting lower income earners’ super savings and thus reducing reliance on the aged pension; and 3) reducing costs to the budget.

A major impediment to reform is the superannuation industry itself. As noted by West elsewhere in his article, the industry has grown so big and powerful following the introduction of compulsory superannuation, that like “Frankenstein’s monster… [it] is now pulling its master’s strings”.

Ultimately, however, with Australia’s population ageing as the large Baby Boomer cohort shifts into retirement, and Australia facing a falling proportion of workers supporting retirees (see next chart), root-and-branch superannuation reform will have to be pursued. Just don’t expect anything to happen until there’s a fiscal emergency.

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  1. I have a bad memory, but wasn’t there a tax on lump sum withdrawals in the past? I seem to recall the change was an election winning policy.

    Definitely agree on the concession idea. But are you arguing that those in the tax free bracket get a 15% government contribution rather than a tax?

  2. I have low super because of raising a family in my earlier years. The most I can put in is 25,000 that is capped. It is so low that I would have to work to 85 to have any meaningful “nest egg”. The increased taxes I pay and have paid contribute to Nicola Roxon’s pension, I read in the Australian the equivalent of having 10 million in super. The hypocrisy of the current government in reducing caps and all the while increasing their own retirement benefits is infuriating. Is saving for one’s retirement middle class welfare? The taxes on contributions are the GST and the 15% contributions tax. Were it to be for negatively geared assets the taxes would be next to nothing for shares, and reduced capital gains and inputs for property. I am on the top tax rate- effectively 55 % including gst omitting levies. If I don’t work so many hours at least I am subsidised by the ATO to that extent. Is that a tax rort too?

  3. Are there any knowledgeable people out there – financial advisors, SMSF advisors, accountants and planners and the like who would be interested in trying to do a podcast on this issue?

    Basically going over …..

    How the system works
    Why the system is as is it
    Who pays what in
    Where that money goes
    How different earning categories are treated
    How different age categories are treated
    How SMSF’s are used and work
    How SMSF’s can be used to buy RE
    The sustainability of the system
    Likely changes to the system

    etc etc

    I went along to a workplace at a manufacturing plant last week and had the owner of the place trying to honestly explain things to his employees, he had an accountant and a Union official on hand to try and explain things as well, and I was overcome by a profound suspicion that nobody really knew (or felt really confident about it) they had a strong grip on how things worked. The owner said to me he didnt get it himself, the Union guy said to me that he didnt think most workplace he knew of would go to the effort this particular owner did to try and let his punters know what was going on, and the financial guy described the super system as a mess which he thought very few actually got.

    I know it all washed over the heads of the sub 25 YO kids, and most of the late 50s guys trying to make head or tails of it all.

    • Gunna, totally agree. My old man has a huge knowledge in this area, I’ve got a higher degree in engineering, and between the two of us we barely get it.

      There is no money to be made in simplicity.

      I’m learning this applies to pretty much everything I see. Financial systems, regulatory systems, immigration systems, engineering design – the more complex it is, the more opportunities for people in the middle to ‘help’ you through the process.

      Elegance is dead.

    • Hey Gunna,
      I work in tax in the super/managed funds industry. Happy to help out – do you have access to the email address on my MB subscription? Let me know if not.

    • Tell the employer to get someone from one of their default super funds to come and present (whether industry fund or retail fund). In most cases they’ll happily send someone out.

      One of the problems with the system is that the rules are different depending on your age (this is where most of the confusion lays), and depending on how long you have been contributing to super (as rules have changed over time bits & pieces of the old regulations have stuck to older components of the super).

      As for the rapid rise in SMSFs. Well let’s just say that in the past 5 years or so I’ve closed down probably 5 funds for every 1 I’ve started (in a lot of cases accountants are recommending they be established without understanding the rules/regulations/costs)

    • The system ultimately relies on someone younger to buy your assets so you can eat.

      It is no different to grandparents moving back in with the kids in old age historically.

      It’s identical in principle, but it is abstracted via layers of personal-disconnection (they’re not directly your kids, but still SOMEONE’S), cool sounding “trust funds” which are just legal entities to abstract the responsibility of caring for your parents, and of course, cash, the ultimate abstraction.

      But in the end, it like any ponzi scheme, requires new members or it fails.

  4. I was an investment banker back when the modern superannuation system was devised by Paul Keating in 1985. Behind all the rhetoric, its purpose was quite simple – to protect and enrich the Sydney finance industry by feeding them captive customers!

    When the Victorian Liberals ruled Australia from 1949 to 1972 it was Melbourne’s manufacturing industries which were protected – through import tariffs. That may have damaged the country as a whole, but it fulfilled its primary purpose of enriching the friends of those in power.

    Manufacturing protection was a system that collapsed under the weight of its own inefficiency. But not before it had done vast damage to the Australian economy.

    Unfortunately, rent-seeking is the defining characteristic of Australia. It didn’t go away with the collapse of manufacturing protection. It simply changed industry and moved its base from Melbourne to Sydney.

    Superannuation has failed in almost every respect – except that for which it was devised.

    It began as a voluntary scheme, but it was soon made compulsory for wage and salary earners.

    It was originally a “savings” scheme, but for those born after 1960 the age at which they can access those savings is pushed out ever further. Realistically, young people are never going to see any of the money they believe they are putting into a “savings” scheme. They will die with large balances unaccessed, and the Government will reclaim them on the grounds that “tax-advantaged” savings should not be a windfall to their heirs. It will be a de facto death duty.

    It has not increased national savings levels.

    Much of the so-called savings has in fact been recycled straight back to government through the sale of government monopolies, through tax-farming arrangements (such as the sale of road-tolling rights), and through hideously expensive public-private “partnerships” to finance government capital expenditure. There is now a campaign to force funds to “invest” a minimum proportion in such projects, in effect a return to the old “30/20 Rule” which prevailed before 1985.

    The one and only thing that superannuation has succeeded in doing is the one thing it was set up to do – enriching fund managers and their support industries (mainly in Sydney) by feeding them captive customers who must pay at least 1% pa year-in-and-year-out on – what is it now?? – $1.2 trillion of “savings”.

    Like Melbourne manufacturing protection, it is a system that will eventually collapse under the weight of its own inefficiency.

    But not before it has done vast damage to the Australian economy.

    • Sadly, yes, that’s all true.

      I manage my whole family’s super, knowing full well that the only person who will get any benefit from it is my mother (who retired early since I was able to “save” her QSuper from the clutches of the “professionals”) – the rest of us will likely never see it, or only a small portion of it.

      My non-sanctioned advice to anyone, but especially those under 50 – do not put an extra CENT into super. Pay off your debts or save (but I repeat myself) your disposable income.

      Damn the tax accountants (even mine, bless him, then I show him my annual returns) who say “its a no-brainer” to “save” it – i.e lock it up in super for 30-40-50? years…


      • I know I’ve told this story before but I’ll tell it again.

        I learnt all about superannuation in March 1987 while travelling overland to take up a secondment in London. Having five days in Beijing I went to visit the Peking Man site.

        Being the only person on the tour, I got talking with the guide about how much people in China earned and how much things cost.

        After a few quick calculations I said to him: “That means you could buy a television with half a month’s salary.”

        “Oh no”, he replied. “I don’t get to spend all of that.”

        “You mean taxes”, I said.

        He looked at me in horror. “We don’t have taxes!!! But I have to save half of it in bonds.”

        “That’s alright”, I replied. “You can sell the bonds and whip round to the Friendship Store and buy yourself a television.”

        “No”, he said. “We can’t sell the bonds.”

        And at that precise moment I understood how the (then new) superannuation system in Australia would work.

    • notsofastMEMBER

      Ok so the FIRE industry is rent seeking in Australia.

      But isn’t this true of all western countries???

      The only reason why a $1.7 trillion dollar investment industry will collapse is because it is a yielding chasing industry rather than a yield creating industry.

    • Yep – if compulsory saving for retirment is considered a social good all that is necessary is to require each person to have a ‘retirement’ bank account that accepts deposits but cannot be withdrawn from until age whatever.

      Money can go into the account – compulsory or voluntary. Perhaps the maximum deposits per year can be capped and the interest income untaxed.

      The balance can be moved from bank to bank chasing the best rates.

      The banks can do their job of allocating retirement account capital to produce the best return. If we think they are likely to be incompetent in that task- limit the types of investments.

      No need for fund mangers and the rest of the 1-2% extracting flim flam merchants and index crawlers.

      If people fancy themselves as investors or fund managers they can do that outside of the ‘retirement’ savings account.

      The idea that people should be borrowing to leverage their super fund is diabolical.

  5. notsofastMEMBER

    As is increasing becoming clear. Paul Keating set up a good system. Then Howard and Costello screwed it up.

    But John Howard did stop the boats. And that is very, very, very important…I cannot emphasise just how important that is.

  6. thomickersMEMBER

    Superannuation has been very successful for those who have had reasonable/realistic expectations and had a 10-15 year pre-retirement plan in place before retiring.

    trouble is that a majority of people can’t stick with long term goals.

    for some reason though, a lot of people can stick to long term negatively geared property strategies….strange!

  7. I agree – how many funds / advisory firms and other associated hanger on’ers are there for the $12 billion in annual income that is extracted out of super???

    I would say that the rise of SMSF in the past 5-8 years is in part a backlash against the funds management industry. But as more and more start using SMSF AND buying directly shares, TDs and govt fixed interest I wonder what the response will be?

    First step will be reviews of SMSFs that sets out the level of SMSFs non-compliance with various rules and regulations. For the “safety” of people’s money, new criteria will be introduced making individual Trustees exceedingly rare and professional corporate Trustees the norm. Trustee fees to then wipe out what incentive there was to establish a SMSF other than for the wealthy.

    Gravy train to continue on its merry way.

    • thomickersMEMBER

      Agree that the SMSF movement is a protest against the retail/corporate/industry funds. But this will end in tears for many in the future.

      In 10-15 years time, SMSF windups are are going to be a core financial planning/accounting task. The final audit/tax report/trust windup is a nasty process and costs $$$$$$$$ especially if you have a direct property/borrowing arrangement in place.

      those who are interested in SMSFs should tread carefully….

    • The roadmap on SMSF regulation is quite clear, IMO.

      Trustees will likely have to be RG146 qualified (i.e like a financial planner)- i.e Diploma level education, which for many will mean they will employ a financial planner and pay at least 1% fee for the privilege.

      Annual reviews of investment strategy probably next, again at a cost.

      The cost of ATO administration is rising extremely fast year after year – I could see that go to an asset based fee too.

      NExt is a mandated minimum – say the big bandied about “minimum $200K” balance, thus wiping out any Gen Y (and most Gen X) from even contemplating a SMSF.

      Plus a big tightening on what assets you are allowed to invest in – e.g the exotic ones are gone, already (art etc).

      I’m sure restricting investing in international property (my main endgame with my super, for obvious reasons) will be high on the agenda next, as will compulsory allocation to government bonds (Done in good faith, but yeah…) all to keep funds “in the system” as it were.

      The gravy train only runs one way, for sure. Although I’m also sure that domestic residential property investment will be encouraged, not restricted….

      • thomickersMEMBER

        Those ATO workers sure have AWOTE increases locked into their ATO contract.

        As for gen-Y SMSFs getting locked out due to low balance. I haven’t seen too many flash Gen-Y portfolios. some of the dumbest things they do “$40,000 cash only balances” or “add gf/bf/de-facto as a member/trustee to the fund”

  8. In most parts of the world contribution into a retirement fund does not attract any tax.Australia is an exception.

      • Disagree.Worked in Singapre for a few years and had contributed to the provident fund there(20% employee and 20% employer).When I left the country,I pulled out the money in full and not a cent was taxed.

      • Well, you pulled out an example of ONE country (and a non-OECD one at that).

        You win.

        Come back when you have some facts.

      • When I left the country,I pulled out the money in full and not a cent was taxed.
        How about if you had stayed in the country and pulled it out ?

        Presumably you declared that money as income in either Singapore or the country you moved to ? Was it taxed then ?

      • Davey: Just because you wanted to attack “Passimist” for giving you the facts, I will give you another fact. Switzerland. Tax free when it went in, and tax free when it came out. That makes TWO countries, and not ONE.

        You must be a fun person to be around at a party.

    • Lets not forget the untaxed pollie/ public service funds.

      For fairness, their defined benefits are taxed as income going forward, however this does present a good case for holding lots of negative geared property (investments) in retirement….

  9. How about the cost to the community of negative gearing? West should spend more time on that.

  10. Currently the top 10 per cent of taxpayers pay more than 45 per cent of all income tax, while the bottom 35 per cent of taxpayers pay about 5 per cent … and only the top 40 per cent of households paid net tax. For every dollar a household in the lowest quintile earned privately, for instance, it received more than $6 in welfare (ref The Australian 2 Feb 2013). On top of this that same top 40% group must contribute enough into their super to be self-funded since they will never be eligible for any government assistance. We (the various governments of the day elected by a majority of us) promised these people that if they contributed under current rules they would be allowed the prospect of a self-funded retirement. Let’s put aside the rubbish about there being lots of people with huge pension accounts that will rort the system by spending up and falling back on the pension because there are no stats to support this (I think the average accumulation balance is sub $200k). Now we are doing that old favourite of retrospective taxation, lets change the rules and tax the super we promised not to (because that the only place there’s any easy money).

    Why don’t we grandfather the existing super schemes so we at least cover ‘our’ commitments to all those that have contributed under an agreed set of rules. Then we can create a new set of super contribution rules (like flat 15% concession) and see if anyone contributes more than the minimum. The result will eventually be everyone on some forms of government assistance. Hurray!! Maybe we should tackle some of the other genuine rorts first, like negative gearing, polly pensions, doctor and legal concessions and on and on and on.

    • On top of this that same top 40% group must contribute enough into their super to be self-funded since they will never be eligible for any government assistance.
      The top 40% of income earners will(/are) absolutely be eligible for “government assistance”.

      Heck, you could be in the top 5% of income earners and still be eligible for “government assistance” if you structure it correctly (ie: in an expensive house).

  11. what’s really bad now is that people can negative gear their property investments in super, then sell them TAX FREE in the pension phase. double whammy which the younger generation pays for.

    • thomickersMEMBER

      thats the idea….but will it work?

      risky strategies have a history of earning the megabucks….or failing in a catastrophic mess!!

      • Mining BoganMEMBER

        …like my fellow bogan who had negatively geared Moranbah property in his super.


      • dont worry – that loophole is in the process of being reviewed and closed…

        The advent of 15% on above 100k plus is the first step.

      • thomickersMEMBER


        1) is there are chance that the loan needs to be called in due to breaching covenants? (ie breach of max LVR %)

        2) is there a personal guarantee on the loan?

    • innocent bystander

      If negative gearing is the attraction then they may be better off buying In their own name since their tax bill can be reduced by negative gearing which may be more attractive since their marginal tax rate would probably be higher than the 15% inside super?

      the property may be tax free if sold when in pension mode, tho in all likelihood this would be deemed income and if over $100k profit then 15% tax would be applied

      Do you really want to time your asset sale based on tax advantages or the market situation?

      • Not to mention the cost of meeting repayments on the loan.

        For example:

        Person wants to buy a $500k property. Has $200k in super already. Add $20k+ in establishment costs (Bare Trust, duties etc).

        Therefore requires a loan of $320k. Interest rates are generally above market (as non-recourse) so let’s say 7.5% ($24k p.a.).

        Repayment terms on the loan is 10 years so repayments are about $3,800/mth. Rental income @ 3% (net agents) = $1.25k/mth.

        Therefore need to contribute $2.55k/mth to service the loan (assuming no periods of vacancy or maintenance expense).

        Concessional Contribution cap is $25k = $21.25 after contributions tax ($1.77k/mth). Therefore the additional contribution of $780/mth will need to be funded using after-tax money ($9.3 k p.a.). For someone on the highest marginal tax rate this is equivalent to roughly $17.4k.

        Tax refund within super in year one from excess interest cost = $1.35k. This reduces each year.

        This means that for someone on the highest marginal tax rate it’s costing around $29.5k p.a. (after tax) to keep the investment alive. For someone on a 15% tax rate it’s roughly $31k p.a.

        This is not to mention the rules surrounding what can and can’t be done to the asset (i.e. maintenance vs capital improvement/asset replacement).

        For most people it makes no sense to borrow to buy property in their SMSF. The carrot at the end of the rainbow is the opportunity to potentially sell tax-free while in pension phase (so 55 or older). If that’s 5 or 10 or 20 years away, then you’re rolling the dice that the rules won’t change before you get there.

  12. innocent bystander

    ” Central among these concerns is that it allows an individual to retire at 60, withdraw their super tax free as a lump sum, blow the money on consumption, and then go on the aged pension from 65 years of age”

    theoretically true.
    but does it happens often?
    And when it does it would be those with low super balances? or withdraw their super to pay off their mortgages to be debt free in retirement?

    • I also question how often this actually happens. That’s a mighty big change in lifestyle that most people accustomed to would not be prepared to take.

      With that said, when a couple can have a million bucks in the bank and still qualify for a part pension…

      • Re ” Central among these concerns is that it allows an individual to retire at 60, withdraw their super tax free as a lump sum, blow the money on consumption, and then go on the aged pension from 65 years of age. ”

        I agree with the other comments above in their skepticism about this claim.

        Where is the evidence that this is happening? Or is evidence irrelevant?

      • You keep talking about people with big incomes and lots of money being able to get government assistance and pensions. I’ve obviously been missing something here because I don’t understand how someone with a big income (as in taxable) and lots of assests (millions) get this assistance. Please help me understand or stop saying such rubbish!!

    • Common strategy is for the eldest in the couple to withdraw a lump sum (tax free) to then whack a lump (say $450k) into their partner’s super as a non-concessional contribution.

      Another way some dispose of great lumps of money is to pass some off to the kids so they can pay off a chunk of their mortgage, and in return their kids pay them a nominal cash sum (say 5% p.a. of the loaned amount for life).

      In a lot of cases people chase part-pensions just to get the health card benefits.

  13. The general commentary on the SMH article was good ie. some of us worked extremely hard to get good qualifications, worked and moved locations (and families with all its disruptions) to get a superior salary, made sacrifices and saved cause we didn’t want to have to rely on the government pension (surely a last resort for society anyway). Now I realise that I will spend my retirement fending off government money grabbers out there trying to prop up the country’s finances and transfer wealth to those moaning about not having enough hand-outs !

    • some of us worked extremely hard to get good qualifications, worked and moved locations (and families with all its disruptions) to get a superior salary

      That’s true. Some did. Most just lucked-it and attached themselves onto some rort like a tick jumping on a dog. Their subsequent tax-evasive activity confirms in my mind that they are low-life parasites.
      Decent rich people admit their good luck and act generously to those less fortunate.

  14. My first superfund (early 80s) charged me 5%. That is: 5% of my contributions. Then the financial industry ‘cleverly’ changed their approach and only charged 1% to 1.5% of the accumulated capital. I was quick to point out that under the new approach I would be charged more in just the final year of my expected 40 years of contributions than the total I would have been charged over 40 years under the old approach.
    Now the financial industry sits on a golden egg: charge 1% of total accumulated superannuation capital in fees, year after year after year. This is a massive amount shared by a select few (well, relatively) and is steadily growing based on the government pushing more and more super money into the system.
    The ‘average’ punter needs some protection from this wrought. For myself, I moved my assets into a SMSF as soon as it became worthwhile ($20k) and I had become financially literate enough. (Important pre-requisites!)

    • From an Earlier Post – –

      The one and only thing that superannuation has succeeded in doing is the one thing it was set up to do – enriching fund managers and their support industries (mainly in Sydney) by feeding them captive customers who must pay at least 1% pa year-in-and-year-out on – what is it now?? – $1.2 trillion of “savings”.

      I agree. The Superannuation world is full of fee charging a$$holes who do F$%all except churn & burn. Trouble is Australians are too bloody lazy in general to learn some basics about finance and so let themselves get screwed by the smarties.

      Bottom Line- NO ONE should pay a % for some turkey playing with OP (other peoples) Funds. If advice is needed then INSIST on/ find an expert who will charge an hourly rate.

      Also do NOT be put off setting up your own SMSF. It is easier than the sceptics make out & does NOT cost an arm/leg!
      eg Cost for Accountant + Audit for 4m Fund was under 6k last year.(Doing simple investments with no outside input)

      If at1% cost would be $40k!

  15. ceteris paribus

    There is an absolute fortune to be made in super IF:

    1. You are high income and use salary sacrifice
    2. You are highly fee conscious and steer away from the retails
    3. Your investment strategy is realistic- forget 70% growth allocation
    4. You are not Gen X or Y and are not debt-ridden ( mortgage et al)
    5. You are in a pollie scheme.

    But Super as it stands is a pig’s trough of inequity. And don’t waste your time hanging round for change.

    Labor is paralysed by the ferocity, organization and the media support for the current super racket lobby. And besides, Labor pollies can’t throw stones when they live in glass houses.

    As for the majority of average workers for whom the scheme is a sad joke, they are easily dis informed by stories that the little they have will be lost in any reform or change.

    The ferocity of the pro-super no-change lobby is a good indicator of how much advantage they are protecting.

  16. I saw that article and found it very interesting.

    By all means inplement reasonable adjustments to the superannuation rules prospectively.

    But what would be patently unfair would be to change the rules retrospectively.

    My generation has worked very hard for more than 30 years, and bought into the proposition put forward by successive governments (Labor and Liberal), that we needed to invest in superannuation to ensure that we could life in retirement. We were sold the story that an ageing population would mean that there would not be enough taxpayers in the future to continue to pay an aged pension.

    So many diverted our excess income into superannuation – encouraged by taxation incentives to do so.

    Now suddenly we are demonised and called “rent-seekers”.

    How equitable is it to suddenly change the rules (as Labor has done in its current and previous term) as is proposed above and significantly disadvantage those of us who simply followed the rules? Maybe I should cash in my super, lead the life of Riley for a few years, and then go on a full pension thus being a burden on taxpayers for the rest of my life?

    By all means implement fairer rules but quarantine existing superannuation savings from them.

    I have never been out of work a day in my life, I have paid all taxes I was required to, and contributed massively to the financial health of this country. I have never received a cent in government welfare in my life. I worked and saved and raised a family who are now grown up and in gainful employment, raising families of their own. I held down a job, raised my family and undertook gained a university degree part time with no government assistance.

    I am getting sick and tired of being treated as a cash cow to support various money-wasting govermnent initiatives and support many who see fit to sit on the dole and complain about middle class welfare and rent-seekers.

    • I have never received a cent in government welfare in my life.

      Nonsense. The government is deeply inbedded in all aspects of society. Have you entered a govt hospital, driven on a govt road, or ever called on the police, or benefited from their presence?
      Of course you have.

      But what would be patently unfair would be to change the rules retrospectively.
      Complain to the guys who made you the original promise. Complain to Paul Keating. You can’t expect Abbott to use my taxes to honour Keating’s pledges surely.

      • Claw

        Sure I have – and paid handsomely for the privilege far in excess of my consumption while many others pay little or nothing and live off the public teat.

        Not sure what the term “inbedded” means – is that even a word? Perhaps you mean “imbedded” in thaty context?

    • ceteris paribus


      You make fair comments and few, if any at all, would judge you and demand retrospectivity on the rules.

      But prospectively, we have to clean up this mess and introduce identical percentage concessions for all income earners. The high income earners will still get more tax concession dollars, even with identical percentage concessions- so we are not talking the end of the world for the wealthy.

      Reform advocates just want a level playing field for all Australians going forward.

    • I don’t know how this would be achieved but I think we need a method to tally individual’s income (from all sources) and taxes paid (in Australia) over their lifetime (at time of retirement).

      At the moment we have people who have paid minimal taxes in Australia (relative to what they have earned) mixed with people who have paid significant taxes (relative to earnings).

      People have different spending habits (and earning ability). Some live for today, others save for tomorrow.

      A number of commenters on MB talk of abandoning the sinking ship (Australia) for at least a while. Most of us must (or want to) stay. Those who stay will ‘pay’ for the Australia of tomorrow (in more than just the monetary sense). If those who stay manage to keep the ship afloat and ultimately return it to buoyancy, should the rats who abandoned ship receive equal pensions, health care etc. when they return to enjoy the good times?

      Those who curtail spending so they can save for tomorrow do so for a variety of reasons. Some want to assist offspring (children or grandchildren), others want to do things they didn’t get to enjoy when younger.

      Wiser minds might have a poor opinion of the habits of young spendthrifts but few condemn them. However, when spendthrifts arrive at retirement with lots of life’s pleasures and experiences under their belt (travel, theatre, nails and hair ‘done’ every week etc . . . ) but little money they scream blue murder. All of a sudden it’s not fair that fellow retirees (with more money but fewer of life’s pleasures and experiences under their belt) can afford to do things the spendthrifts cannot.

      Leaving aside issues of whether tax concessions on super (and in lots of other areas) need to be adjusted to make them more equitable, we need to recognise some of the imbalances are not down to greed or inequality but different timing and choices.

      • ceteris paribus

        Oh come on, forty- niner. No one is talking about giving more money to people who have spent their cash on parties. They must live on the anti-destitution level of the pension and take responsibility for their choices.

        We are talking about something much more real here, like how do high-income earners get a 30% plus tax break on their super contributions, while under the Libs the lowest income-earners will be penalised 15% tax – a giant 45% difference in tax break.

        Personally, I am sick of this assumption that all low-income earners are lazy, big-spending drunks. We are talking about the super rules which discriminate between high- income earners and low ones, not people’s generalisations about the moral character of poor people.

        And talking about moral character, what about my neighbour down the street who has cared for her disabled husband for over a decade. She works far harder than a merchant banker but will never earn a single cent in super as a full-time informal carer.