Wealthy Aussies’ super, pensions in the cross-hairs

By Leith van Onselen It seems the days of giving wealthy older Australians a free Budget ride are coming to an end, with both Labor and the Abbott Government strengthening rhetoric against superannuation concessions for the wealthy, and the Coalition flagging that it will tighten the assets test for the Aged Pension. On superannuation, Labor


Wealthy collecting $10b super tax free

By Leith van Onselen The Association of Superannuation Funds Australia (ASFA) has today released new research showing that wealthy retirees are collecting $10 billion worth of income tax free, courtesy of the Howard Government’s short-sighted decision in 2006 to scrap taxes on the retirement income from super. According to this report, there are over 200,000 people


Finally, super concession rort in the gun

By Leith van Onselen Reform to Australia’s inequitable and unsustainable superannuation concessions looks like a real possibility, with all major parties now backing reform. According to The AFR, Labor Treasury Spokesman, Chris Bowen, said there would be bipartisan support to reform the superannuation regime, which he claims is in need of “improvement”: “Where you have


ACTU lobbies to lower take-home pay

By Leith van Onselen The Australian Council of Trade Unions (ACTU) has urged the workplace regulator, the Fair Work Commission, to increase compulsory superannuation for workers on the minimum wage. From The ABC: It says nearly 2 million low-paid workers are $167 a year worse off because the Federal Government delayed plans for employer contributions


Super lump sums in firing line

By Leith van Onselen A senior Treasury official, John Lonsdale, has signalled that the Government is likely to endorse the Financial System Inquiry’s (FSI) recommendations to disallow retirees from drawing-down their superannuation as a lump sum. From The Canberra Times: Australians entering retirement will most likely be stopped from taking their superannuation as a lump


Ken Henry backflips on super concessions

By Leith van Onselen The Henry Tax Review, released in 2010 and chaired by former Australian Treasury Secretary, Ken Henry, acknowledged that current arrangements around superannuation concessions were inequitable and explicitly recommended making superannuation concessions more progressive: The structure of the existing tax concessions is inequitable because high-income earners benefit much more from the superannuation


Hockey talks gruel on super reform

By Leith van Onselen Last night’s Q&A appearance should (but won’t) spell the death knell for Treasurer Joe Hockey. On virtually all issues, the Treasurer was ham-fisted. While there are many examples of bumbling, Hockey’s discussion on negative gearing (see my earlier post) and superannuation concessions were amongst the most embarrassing. After an audience member


Shorten speaks half truths on super

By Leith van Onselen Opposition Leader, Bill Shorten, has come out swinging today, claiming that the Government’s decisions on superannuation will drain Australia’s superannuation savings pool of more than $980 billion by 2055, putting pressure on the Aged Pension. From The Canberra Times: “Last year, the government froze superannuation for nearly 11 million Australians, twice”…


Gotti defends giant super rort

By Leith van Onselen Dad’s Army’s Robert Gottliebsen (“Gotti”) has produced a tortured defence of Australia’s superannuation system today, claiming that the costs of the scheme are a “small fraction” of the “hoax” figures estimated by the Australian Treasury: As we start the next round of superannuation debate, we are still hindered by the elaborate


IGR unmasks failing retirement system

The Fourth Intergenerational Report (IGR), released yesterday, contained some interesting tid-bits which help to illustrate why Australia’s retirement system is failing, despite its massive (and growing) cost to taxpayers. First, superannuation (my emphasis): In 2013-14, around 70 per cent of people of Age Pension age were receiving the Age Pension. Of these, 60 per cent


Hockey rules-out super reform

By Leith van Onselen You cannot make this stuff up. Despite declaring a “Budget emergency” and waging a “war on entitlements”, Treasurer Joe Hockey has this morning ruled-out following The Greens proposed reforms to Australia’s inequitable and costly system of superannuation concessions, which was estimated by the Parliamentary Budget Office to save the Budget $10.3


Greens propose sensible superannuation reform

By Leith van Onselen The Australian Greens have stolen a march on the major parties by embracing the growing push for reform to announce sensible changes to Australia’s superannuation system, which would see concessions more evenly distributed. Under the Greens’ proposal, the current flat superannuation tax rate of 15% would be replaced with a progressive


Calls to unwind super lurks become deafening

By Leith van Onselen The chorus of experts and commentators demanding action on superannuation concessions is becoming deafening, with a number of high profile Australians joining the call for superannuation concessions to be more equitably distributed. First up, former New South Wales Liberal premier, Nick Greiner, believes that some of the generous concessions implemented by


Coalition to limit SMSF leverage?

By Leith van Onselen Assistant Treasurer, Josh Frydenberg, revealed yesterday that the Abbott Government is considering following the Murray Inquiry’s recommendation and banning the ability of self-managed superannuation funds (SMSFs) to leverage into investments. From The AFR: Mr Frydenberg indicated that the government wanted to analyse whether the strategy of using debt was consistent with


Super now worth $1.93 Trillion

By Martin North, cross-posted from the Digital Finance Analytics Blog The Australian Prudential Regulation Authority (APRA) today released its December 2014 Quarterly Superannuation Performance publication and December 2014 Quarterly MySuper Statistics report. At 31 December 2014, total assets, which include the assets of self-managed superannuation funds and the balance of life office statutory funds, rose


APRA joins rich super rollback chorus

By Leith van Onselen The chorus of experts calling for superannuation concessions to be reforms continues to grow louder, with Australian Prudential Regulation Authority (APRA) member, Helen Rowell, today calling for a rethink on how concessions are distributed and how funds can be invested. From The AFR: “We have already seen a big chunk of super


Guv’ invites wealthy to suck Australia dry

By Leith van Onselen Fairfax’s Peter Martin is on point this morning urging the Abbott Government to plug the Budget deficit by unwinding Australia’s overly generous and highly inequitable superannuation concessions: …as Hockey puts it, “the government is spending $100 million more than it collects every day. It has to borrow that $100 million per


Australia’s world-beating tax concessions

By Leith van Onselen The International Monetary Fund (IMF) last year released a report estimating that Australia has the highest tax expenditures in the OECD when measured against GDP (see next chart). According to the report, tax expenditures are: …government revenues foregone as a result of differential, or preferential, treatment of specific sectors, activities, regions,


Super’s ballooning budget black hole

By Leith van Onselen The Mid-Year Economic and Fiscal Outlook (MYEFO), released yesterday, contained the below table showing the cost of Australia’s largest tax expenditures, the biggest of which are Australia’s superannuation concessions: As you can see, the concessional taxation of superannuation entity earnings – whereby earnings within super funds are taxed at just 15%


Murray pushes superannuation reform

By Leith van Onselen The Final Report of the Murray Financial System Inquiry (FSI), released to the public yesterday, has taken direct aim at the efficiency, equity and sustainability of Australia’s superannuation system. As expected, the first target is superannuation fees, which the FSI believes are far too high by global standards and are an


Will regulators ban SMSF property leverage?

By Leith van Onselen The Pascometer has produced an interesting piece this afternoon arguing that regulators may clamp-down on self-managed superannuation funds (SMSFs) leveraging into property, rather than embark on macro-prudential curbs on investor mortgage lending: Unlike foreign investors, SMSFs don’t have a regulated bias towards new housing – the building of which the RBA


More Australians shift to SMSFs

  By Martin North, cross-posted from the Digital Finance Analytics Blog APRA just released their quarterly super statistics to September 2014. Superannuation assets totalled $1.87 trillion at the end of the September 2014 quarter. Over the 12 months to September 2014 this represents a 9.6 per cent increase. Total assets in MySuper products was $378.1


More Aussies tap super to pay-off mortgages

By Leith van Onselen The Department of Human Services (DHS) has released its 2013-14 Annual Report, which revealed that the number of Australians seeking to access their superannuation early jumped 7% over the financial year to 19,286, which was the highest level since the Global Financial Crisis (see next table). The Early Release of Superannuation


Keating backs macroprudential, SMSF curbs

By Leith van Onselen Former Treasurer, Prime Minister, and architect of Australia’s compulsory superannuation system, Paul Keating, over the weekend called for curbs on self-managed superannuation funds (SMSFs) using leverage to invest in Australian residential property. From The AFR: [There has] been “a dramatic acceleration” in investor financing, said Mr Keating… “This is associated with


Costello slams super industry self-interest

By Leith van Onselen Former Treasurer, Peter Costello, has savaged Australia’s superannuation industry, labeling those whom work within it as being self interested, of acting liked spoilt brats, and delivering returns no better than the sharemarket despite paying themselves massive fees and salaries. The video, which aired last night on ABC’s The Business is a


Super is another Boomer rort

by Chris Becker I contend that the jury is still out on the long term effectiveness of the experiment called superannuation in Australia. Although in its 21st year, compulsory superannuation has not yet had the length for its impact to be examined fairly across differing generations – i.e those solely reliant on the Age Pension,