Chris Bowen’s Misleading Imputation Example

46-year-old Shadow Treasurer Chris Bowen was a panelist on the ABC program Q and A on Monday evening 29/04/2019 defending Labor’s policy proposals should they win the Federal election on May 18.

Although his arguments seemed convincing, the example he gave to justify the massive raiding of retiree funds by ending cash Imputation Credit payments was quite misleading. Savings to the government are expected to exceed $56 billion over a ten-year period and are ear-marked to fund projects Labor thinks are more deserving.

With life-expectancy projected to soon rise into the mid-nineties, retirees wishing to be as independent as possible of government subsidies, must now work out how to make their superannuation last for possibly three decades from retirement, on a reduced dividend income stream.

Chris Bowen’s example to illustrate the purported inequity in the taxation treatment of a salary worker, and the earnings of a retiree with a self-managed superfund:

 “A nurse on $67,000 pays $13,000 in income tax. A retired shareholder with dividend income of $67,000 from shares in their self-managed super fund pays $0 in income tax and gets a tax refund of more than $27,000 from the Government. Same income, different outcome.” #qanda

Criticisms

  1. Is it not outrageously misleading to equate fund earnings with dividend income not taking into account capital losses, which can be substantial in market downturns and crashes?
  2. Wages from personal exertion provide for current financial needs. Superannuation savings on the other hand must meet as much as possible of their expenses in retirement over up to three decades or more of life. The fact is that most retirees qualify within a decade or so of retirement, for a full or part pension.
  3. Superannuants have paid already paid 15% contributions tax, and tax on fund earnings until retirement. They have forfeited the contributions tax they have paid on their capital losses, and seen the value of their savings eroded by inflation. It is therefore unfair to deny them access to Imputation Credits, on the basis of not paying tax.
  4. The nurse’s income of $67,000 p.a. is within the average range.  The Average Wage of all workers, full and part-time, is estimated to be $62,128, whilst the Median Wage for workers is $55,000. The example of the retiree’s dividend income implies a fund balance of 1-2 million dollars if the dividend return on the portfolio is between 3.5% and 7%. I suspect that this is way in excess of the balance of most retirees. In the context of this comparison of the two groups, it implies that SMSFs are vehicles for millionaires and multimillionaires to avoid taxation. At least that is the way Labor is presenting this policy.

Other considerations that I would like clarified.

In flagging their policy on Imputation Credits, Labor has always asserted that the intention is to end cash payments only. Will then Imputation Credits still be availble to offset tax due on SMSFs in the accumulation phase?.

Labor has backed-down on withdrawing Imputation Credits from retirees on the pension. Will this concession also apply to those on a part pension?

It would seem that Labor’s proposal is virtually a tax on recent retirees, and could have the effect of influencing them to run down their fund balance in order to qualify for dependable pensioner benefits. Will measures be taken to stop them doing this?

It is possible that with diminished dividend income, retirees may seek to bolster their earnings with more capital gains. Is there any intention on the part of Labor to then tax their capital gains? If so, retirees should be able to offset imputation credits from their tax liability.

Disclaimer

This post is written from the perspective of a retiree likely to be affected by Labor’s proposed superannuation changes. No claim is made for particular investment or financial expertise, and readers should discuss any issues of concern with their own advisors.

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Should Water Diversion be now reconsidered for North Queensland?

Don’t just unthinkingly blame Barnaby Joyce for reigniting controversy within the Coalition on the eve of the election by spruiking a controversial policy, previously discarded by the Queensland State government, for a government subsidized coal-fired power plant in North Queensland.


It has actually been the Minister for Resources and Northern Australia, energetic conservative Queensland Senator Matt Canavan’s idea. He argues that despite the capital cost, it would deliver jobs, and he hopes, cheaper power for consumers. However he discounts environmental risks that are fresh in the minds of many
Queenslanders after a summer of extreme weather with drought, bush-fires, cyclones, floods and coral reef damage.

His admirable unswerving support of coal could prove a brave call, both for him, and the government’s chances of re-election. Has he given any thought to how such disasters could be tackled, rather than aggravated as he proposes?

There is a scheme, moth-balled since 1938, but raised from time to time by politicians including former Queensland Premier Peter Beattie, that could deliver benefits for North Queenslanders in the face of climate change. I refer to what is known as the Bradfield Scheme after Queensland born civil engineer Dr John Bradfield, designer of the Sydney Harbour Bridge, and Brisbane’s Story Bridge.

It is an inland irrigation scheme that diverts some river flow from the upper reaches of the Tully, Herbert and Burdekin rivers into the Thomson River on the Western side of the Great Dividing Range. In a boost for agriculture, it would irrigate more than 7,800 sq. km, cap erosion in Central Queensland, provide hydro-electric power, help control flooding, and likely improve the health of the Reef

It is a project that has hitherto been considered too expensive to implement but in the light of the cost of disaster relief, Matt Canavan for the Coalition, or an incoming Labor Administration, must surely explore the possibility of a modern version of the Bradfield Scheme.

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Scott’s Trump Card

This week Prime Minister Scott Morrison lost an historic vote, the first for a government in 90 years. It was a loss by only one vote, and might have been avoided had a neutral speaker been appointed as an interim measure to allow the speaker Tony Smith to cast his vote.

It was a Bill to allow the remaining 1000 odd detainees on Manus Island and Nauru to come to Australia for emergency medical treatment, if needed, on the say so of two doctors, but only with ministerial approval.

Scott Morrison at his ebullient best

Surprisingly the loss hasn’t disturbed his composure, and in subsequent debate, he has given no ground, and been at his aggressive best in castigating the Labor Party for its failure to stop the boats when in office.

Perhaps it is because he is now electioneering on a preferred issue on which he has undeniable authority. Turning back the boats was a crucial issue in winning the 2001 federal election for John Howard.

Scott Morrison can argue that Labor has once again weakened the Coalition’s successful border policy, and will have to take responsibility when the boats start arriving again on the rocky shores of a re-opened Christmas Island Detention Centre. It was on these very rocks that some poor desperate refugees lost their lives.

Even although about 78% of those still in detention have been processed and shown to be genuine refugees, it is distinctly possible that they will be sent to the Christmas Island facility to frustrate the provision of the new legislation.

A humanitarian Bill, condemned as weakness.


The Independents together with the opposition, have been painstaking in their efforts to come up with a Bill that neither jeopardizes Australia’s security nor grants sick detainees with back-door access to Australian residency, even although the government has been doing so on the quiet for sometime.

In addition the legislation specifies that the medical evacuation provisions apply only to the present cohort of detainees, not to any new arrivals. This clause eliminates Dr Kerryn Phelp’s Medevac Bill as an incentive to come to Australia. Furthermore Australia now has established a potent Border Force that should have no difficulty in continuing to turn back the boats.

In spite of this the government has fought the Bill at every turn, even to the point of trying to create a constitutional furphy. Yet the Bill has been passed, and is now law. Interestingly division vote results were given standing ovations from visitors in the gallery.

Why the opposition supported the legislation.

You might have thought that there was little need for changing the rules for the management of detainees, given that the Coalition since 2013 has stopped new boat arrivals, and successfully removed all but about one thousand, including all children; but has there been a price for this?

Although the government has been able to slowly but surely deal with the backlog of refugees in detention, and boasts that it has closed 19 detention centres, it is an almost impossible task to manage the expectations of those in indefinite detention, especially when they are battling crowded conditions and poor health.

The administration bureaucracy has come to be perceived as insensitive to the plight of valid refugees. It appears that they may have been vindictive to some by taking legal action to prevent them from going to Australia for medical care they did not think was needed. While there is a more than adequate doctor to population ratio, they do not have to my knowledge, a specialist psychiatric unit. 11 or 12 lost hope, and became so depressed, that they took their own lives.

There have also been delays in decision making with one detainee dying when he might have lived had he been evacuated earlier.

Disturbances and riots in the two detention centres have been regarded as insubordination to be punished, rather than symptomatic of genuine underlying mental and emotional anguish needing treatment.

What to do with asylum seekers is still an unresolved national problem

It was actually Kevin Rudd who in August 2013 declared that asylum seekers would never be able to settle in Australia, an announcement that caused international concern for the welfare of refugees at the time, but was adopted by the Abbott government after winning the ensuing election. It has been an important factor in altering the mind-set of refugees, and deterring people smugglers.

Although it may have been an effective deterrent, the difficulty of finding satisfactory alternative destinations has never been completely resolved in the five years of Coalition government, and the problem is likely to persist for further refugees, unless there is a change in the present policy vowing to never let them enter Australia.

Not only are their liberties curtailed, and their housing conditions basic, many have encountered hostility from the locals on Manus Island, and all face daily uncertainty about their fate. Little wonder that so many men, women and children have developed severe mental health problems waiting.

Australia’s manifestly rigid and hard-hearted management of refugees contrasts starkly with the willingness of the German government to accept about one million displaced persons from Syria, the Middle East, and Africa. We do not have anything like the problem they are dealing with.

Admittedly all nations have the right to determine who is eligible to enter their country, but is it humane to ban refugees forever from entering Australia because they have bypassed our processing protocol? Should we not take into consideration the urgency of their situation?

Given the difficulty Australia has had, and will continue to experience in re-settling refugees elsewhere, is it not cruel to keep them in indefinite detention?

Asylum seeker policy should be bipartisan. We want political parties to tell us how they will tackle the nation’s problems such as this, without point-scoring over how good they are, or have been.


aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp1314/BoatArrivals

https://en.wikipedia.org/wiki/Asylum_in_Australia

https://www.abc.net.au/news/2013-08-03/rudd-announces-asylum-policy/4863226

https://en.wikipedia.org/wiki/Operation_Sovereign_Borders

 

 

 

 

Posted in Political debate

Australia’s Third Political Option

Currently the Australian government has 74 Coalition members in the House of Representatives, 58 of whom are members of the Liberal Party of Australia, and 16 are members of the Nationals.

The Opposition is formed by the Australian Labor Party with 69 members.

The 7 remaining members, often referred to as the Crossbench, are formed of 4 Independents, and single members of 3 minor parties, Australian Greens, Centre Alliance, and Katter’s Australian Party.

The Crossbench Political Option

The Crossbench should not be written off as far as political power is concerned, since they have frequently held the “balance of power” if not in the House of Representatives, at least in the Senate.

One need only recall the “hung parliament” from the 2010 federal election in which the ALP was able to provide stable government with the support of 3 Independents and one Australian Green under the Prime Ministership of Julia Gillard.

The power of the Crossbench could well be greater after the 2019 election if small-l Liberal voters who feel disenfranchised by the shift of the Liberal Party to the Right and are wary of Labor’s economic credentials, look for candidates who best represent their policy preferences.

Former Prime Minister Tony Abbott who has held the safe Liberal seat of Warringah for the past 24 years, now has a formidable high-profile Independent Candidate in Zali Steggall. The veteran of many a political battle has betrayed his feeling of vulnerability by urging voters to vote for the ALP candidate rather than the Independent, Zali Steggall.

Even the very elite of the Liberal Party face the possibility of defeat at the next election by well credentialed Independent candidates if the present trend continues. You might imagine that rebellious Conservatives would refrain in an election campaign from continuing to provoke Moderate Liberal voters, but not so.

For me the most egregious media stirrer of unrest is the smirking indefatigable Andrew Bolt who is completely undeterred from promoting fanciful conspiracy theories, this time that it is Malcolm Turnbull who is orchestrating an Independent campaign against those responsible for his overthrow. Where is the evidence Andrew?

House of Representatives Crossbench on display in First Q and A for 2019

The Panelists for the ABC’s first Q and A program for 2019 on 04/02/2019 were five members of the House of Representatives Crossbench:

  • Adam Bandt, Greens Party, for the seat of Melbourne
  • Julia Banks, currently an Independent for the seat of Chisholm
  • Kerryn Phelps, Independent Member for the seat of Wentworth
  • Rebekha Sharkie, Centre Alliance Member for Mayo
  • Andrew Wilkie, Independent Member for the seat of Denison.

I understand that it was Adam Brandt who first mooted a Banking Royal Commission, not Labor. Each of the above five members have made valuable parliamentary contributions, including Dr Kerryn Phelps who has already come up with a well thought-out Urgent Medical Treatment Bill that will provide prompt expert compassionate healthcare for asylum seekers without undermining the integrity of Australia’s refugee policy.

Thank God we all have a democratic vote!


Despite the limitations of our political system, individual parliamentarians and political parties are eventually accountable at the ballot-box.

Let us vote for those we think have Australia’s best interests at heart, rather than their own!


Posted in Political debate

Time for voters to scrutinize Labor’s economic policies.

With less than four months until Australia’s proposed federal election 18 May 2019, it is time for those long-term Liberal supporters who have been disgusted with the antics of the right and are proposing to change their allegiance, to take another look at Labor’s radical economic proposals. Will they be willing to accept possible adverse economic consequences of voting Labor?

Are Liberals Deserting a sinking ship or Is the Party undergoing a Renewal Process?

According to “Happy Jack” Scott Morrison’s confident reassurances, the Party is being refreshed by the changes now afoot, but to most onlookers it looks more like all is not well within the divided Coalition and they are about to be voted out of office:

  • Current ministers Kelly O’Dwyer, David Bushby, Michael Keenan and Nigel Scullion are not seeking re-election for personal reasons.
  • Several Conservative Liberal members such as Tony Abbott and Peter Dutton, face a voting backlash from their electorates.
  • Julia Banks and Ann Sudumalis have left the Party with accusations of sexism and bullying.
  • The National Party Member for Mallee Andrew Broad has resigned over admitted sexual indiscretions.
  • SA Senator Lucy Gichuhi and NSW Senator Jim Molan have been demoted on their State tickets, and are unlikely to be returned.
  • There have been rumours that former Turnbull Ministers, Julie Bishop, and Craig Laundy are also thinking of not running.

With the Coalition in disarray, is Labor a safe alternative for disaffected small-l Liberal supporters?

Federal Labor, in contradistinction to the Coalition, is presenting as a united Party ready to assume office with a talented team of near equal numbers of women and men, a commitment to the Environment, and a well intentioned desire to improve the lot of the less fortunate in society.

Believers in the core Liberal values of small government, and private enterprise, are likely however to be uneasy about Labor’s oft stated intention to end negative gearing except for new constructions, and properties already negatively geared. The current capital gains tax concession of 50% will be simultaneously halved to a 25% concession.

Ambitiously, Labor has three unrelated objectives for these two measures:

  • more affordable housing
  • wealth redistribution
  • raising revenue to fund their reform initiatives.

In essence Labor is not prepared to construct and manage affordable rental accommodation itself, but expects investors to do so for them, whilst increasing their financial risks, and diminishing their return.

Savvy investors will undoubtedly consider options to thwart the government’s plan to increase their taxes, and at the same time to vilify them for being rich.

Does Labor have the discipline to manage economic uncertainty?

Labor governments aspire to being reformist, and good reforms are usually expensive. This is not to say that they are what Paul Keating derogatorily called “bleeding hearts”

He himself was a pragmatist, who did not hesitate to employ the economic levers available to him to meet Labor objectives. Unfortunately, the economy did suffer under his supervision, as he allowed interest rates to rise to a stratospheric 17% to control inflation. Business activity stalled under high costs, and faced with an election in NSW, he opted to restore the negative gearing he had abolished three years earlier.

Rentals increased 25% between1985 and 1987, but it was only in Sydney and Perth that there was an increase in Nominal Rents with the rent rise exceeding the inflation rate (then about 16-17%). Soon after restoring negative gearing, the stock-market crashed, plunging Australia into further financial crisis.


Posted in Political debate

Complacency, the curse of incumbency!

In the last few days of Parliamentary sitting this year, PM Scott Morrison and his team repeatedly accused the Labor Party of gloating over the divisions within the Coalition, and taking for granted a victory at the next election. But if anything it is they, rather than Labor, that is exhibiting a dangerously complacent culture.

Two terms from incumbency, the Labor Party is being as painstaking as possible to avoid the appearance of complacency. They are developing democratically agreed party policy positions, and their rhetoric has softened. Labor is being seen as the more likely party to form government, and even Andrew Bolt has acknowledged this by interviewing Bill Shorten on his Sky News program.

The perception is that Labor has built a diligent and competent team, eager and able to assume office with moderate policies, now that the Coalition is faltering. Much of the Coalition’s squabbling and self-serving poor parliamentary behaviour over the past year can be ascribed to having become complacent in office. They have developed a misplaced sense of self-importance and entitlement. Their year of disgrace has now ended with the revelations of the sexual indiscretions of the National Party Member for Mallee, Andrew Broad.

Rather than imposing a needed discipline on the Coalition, an ebullient and triumphal sounding Scott Morrison has cockily vaunted his advantage over Bill Shorten in the polls of preferred prime minister. He obviously fancies his chances of winning at the approaching election contest between the two of them.

Many previously loyal supporters have been quite appalled and angered by the Liberal antics of this year. So they may well express their disapproval, especially of those they hold most responsible, by casting their vote elsewhere this time. In fact, a term or two in the wilderness of opposition may be just what the Coalition needs to remake its image.

Posted in Political debate

Cherish our Children!

At Christmas we honour a baby, the baby Jesus, and symbolically heaven’s most precious gift to mankind, our children.

Let us delight them this day, remembering that our love and nurturing care are our greatest gifts to them.

They are our future. They can enrich our lives and have the potential with our guidance to open up new horizons for the good of the world, if we will but enable their burgeoning genius.

Enjoy, not exploit and abuse them! They are at our mercy!

Posted in Community Issues

A missed opportunity for unity of energy policy

When NSW’s Energy Minister Don Harwin called on the Federal Minister Angus Taylor at the COAG energy meeting in Adelaide this week to add an emission obligation to the agenda for discussion, it was resolutely blocked.

Angus Taylor after the meeting expressed satisfaction that he had been able to maintain a steely focus on energy reliability and price, without the distraction of arguing over emission targets. However his stubborn negativity, is not helping the Coalition’s chance of re-election next year.

It has not been the change of Prime Ministers per se that has turned voters off the Coalition. What moderates are up in arms about, more than anything else, is the dismantling of three times approved Liberal Policy on Climate Change, based on the best available scientific advice, to ensure that Australia’s energy production meets appropriate standards for both reliability and emissions control.

The public is concerned when there are temperatures in excess of 40 degrees in April and November, droughts of increasing severity, lasting 6-7 years, bush-fires before and after the usual bush-fire season, and simultaneous flooding rains and cyclones in others parts of the country.

Tony Abbott’s categorisation of climate change science as “absolute crap”, and his derisive comments directed at those who take climate change seriously have not yet been forgotten.

Don Harwin’s position has gone a long way to improving the NSW Coalition’s prospects at the March 23 2019 election. But there is another reason why if Angus Taylor is really concerned for Australia’s future he would have encouraged debate on emissions.

The Business Council of Australia commended Don Harwin for his stance, and has pointed out the need for certainty as to how emissions will be treated, before business makes major long-term investment decisions. Both the States and Labor have expressed a willingness to unite on energy policy to provide that certainty for business, but to their shame, the Coalition under Scott Morrison will have none of it.

Not only has the Coalition no emission reduction target, and thus does not require power companies to reduce carbon emissions, but they also have an intent to ramp-up Coal Mining, for both export and local use, and to deliver new government subsidised coal-fired power stations.

The selling pitch to consumers is cheaper electricity prices delivered by screwing company profits.

Posted in Uncategorized

The Dean of Climate Change!

Don’t expect accurate investigative journalistic comment from Rowan Dean. After all, he is  just an entertainer, with a quick and acerbic wit, always at the expense of others, never himself.  Does one laugh at his absurdities or kill his diatribes by switching channels?

Last night (12/12/2018) I happened on his Sky News “Outsider” Program and was so mesmerised by his merciless put-down of those poor builders of wood boats, South Sea Islanders who were fearful of the effects of climate change on their low-lying coral atolls, that I could not bring myself to switch him off. 

Rowan, however, was most reassuring of their plight. He had an authority with first-hand experience of their situation who could put their minds at rest.  Yes it was none other than the former Minister of International Development and the Pacific, Concetta Fieravanti-Wells. On her return from Fiji she had reported to him that if there was any change, it was miniscule.

It was not stated whether her opinion was based on tide gauge data, satellite observation of sea-levels, or simply on the basis of eye-balling of coastal areas. Nor was there any comment made on where the observations were made. 

A graph, posted on NASA’s Global Change website, using tide gauge data, credited to the CSIRO, shows there was an increase in sea level of about 230mm or 9.13 inches between 1870 and 2000.

data graph




Another graph derived from satellite sea level Data between 1993 and August 2018,  supplied by NASA Goddard Space Flight Centre shows an increase of just over 40 mm; the average rate of change being 3.2 mm per year. 

https://climate.nasa.gov/vital-signs/sea-level/

This is a website produced by the Earth Science Communications Team at NASA’s Jet Propulsion Laboratory, the California Institute of Technology.

The ICESat-2 satellite

For those of us who would wish to be as accurately informed as possible about the impact of climate change on sea-levels, it is exciting to note that NASA now has a new tool of investigation. 

Three months ago NASA launched a satellite, ICESat-2, specifically to study changes in earth’s changing ice. 

https://sealevel.nasa.gov/news/149/icesat-2-reveals-profile-of-ice-sheets-sea-ice-forests


By Kate Ramsayer,
NASA’s Goddard Space Flight Center

Less than three months into its mission, NASA’s Ice, Cloud and land Elevation Satellite-2, or ICESat-2, is already exceeding scientists’ expectations. The satellite is measuring the height of sea ice to within an inch, tracing the terrain of previously unmapped Antarctic valleys, surveying remote ice sheets, and peering through forest canopies and shallow coastal waters.
With each pass of the ICESat-2 satellite, the mission is adding to data sets tracking Earth’s rapidly changing ice. Researchers are ready to use the information to study sea level rise resulting from melting ice sheets and glaciers, and to improve sea ice and climate forecasts.
“ICESat-2 is going to be a fantastic tool for research and discovery, both for cryospheric sciences and other disciplines,” said Tom Neumann, ICESat-2 project scientist at NASA’s Goddard Space Flight Center in Greenbelt, Maryland.
Neumann and others with ICESat-2’s science team shared the first look at the satellite’s findings at the American Geophysical Union’s annual meeting on Tuesday in Washington, D.C.



 Local sea-level readings are highly variable, and influenced by many factors, including the effect of ocean currents, variations in land height, upstream flood control and erosion following deforestation.

What is incontrovertible however is an inexorable trend of globally rising sea-level with the melting if ice. We may not be able to accurately forecast future changes, but at least we are now able to monitor them with increasing accuracy, thanks to the science of space travel.  

Unfortunately for the Coalition Party, it is now controlled both in rhetoric and in policy by vocal climate change deniers. Surely it is wiser for our leaders to be acting to reduce risk, than to court disaster by ignoring the science. 

Posted in Uncategorized

Is an Independent Vote a wasted vote?

The two major parties would certainly have you think so. They argue that it is only they who can govern, and execute their agreed policies for the benefit of their support base.

On this rationale, you and I really have only these two choices,. One party that simplistically speaking, represents the “haves”, or “would be haves”. Another party that purports to champion the causes of the “have-nots” or those who are envious of the “haves”.

However within each party are extremes of approach. Politicians of both persuasions polarise themselves into right and left factions. Others, in common with many voters, dislike extremes and prefer to be called centrists or moderates.

Instead of policies being formulated and executed principally on the basis of national good, sectional financial interests frequently dominate.  

Dr Kerryn Phelps in the short time that she has been in parliament has shown an ability to look at issues objectively, on the basis of available evidence, to argue persuasively, and to initiate legislation aimed at the national interest. 

We need more not fewer such high calibre independents in our parliament, but without party support, the odds of them being elected are slim. 




Posted in Uncategorized