To describe Australia’s superannuation policies as grotesque is to flatter them. To add absurdity to injury, successive governments have been scratching their heads about “how to pay for the aging population” while taxing super to the bone.
This is the no-brainer of all no-brainers for a rich country.
This issue has been rattling around since gum trees learned to pose for landscapes. The
current argument about income based super entitlements is equally poignant.
If the average superannuation policy was a business contract, nobody would sign one. It wouldn’t be worth it:
1. You allocate money from your income to superannuation.
2. The dividends and other income your super generates are taxed.
3. The income earned from your super is then taxed.
4. You usually get charged fees by your insurer as well.
5. Then, when you pull your super out, it’s taxed at a special rate, provided you’ve had the policy for decades.
6. Some super policies, notably more recent ones, are much less generous in tax terms than others. Somehow, the lucky policyholders get even less.
You couldn’t operate a stall at a school fete like that, but that’s basically how Australian superannuation works.
This is effectively triple taxation. You never get the use of the money until the policy matures, and there are no deductions, hedges, or other means to preserve the dollar value of the policy, unlike every other known form of investment including gambling and burying your money under the petunias.
In effect, the Australian superannuation policy holder is a revenue source. That revenue source will shrink in the next ten years as millions of Australians retire.
That’s what’s got the gigantic brains in Buckley’s Retirement Village, um, I mean Canberra, in a panic. (To say someone has Buckley’s chance means they have no chance, in Australian.) They’re also exercising these fossilized intellects on the subject of pension entitlements to this large number of retirees.
Talk about not seeing the woods for the furniture warehouses.
a) Could it be, Buttercups, that if the retirees had enough money in the first place they wouldn’t need pensions?
b) Is it just possible they might find a workable retirement income more appealing than the three lentils and a whiff of disdain they get on the age pension?
c) Might not this appeal lead to more investment in legitimate income sources and less into tax evasion?
d) Do retirees not pay GST?
e) Would they not pay more GST if they had more money?
f) Would this gigantic amount of money (we’re talking about a trillion in funds alone, without other investments) do anything nice for the dear little economy?
g) Would this not also remove the requirement for prodigies of expensively pointless bureaucratic buck-fondling, given that what comes in goes straight back out in such amounts?
Awww, diddums break little calculators? There’s some in the Gibson Desert, if you look under the rocks. I can even sell you the buckets and spades, if necessary. Do the tender, and we’ll talk about it…
May I suggest Messrs. Rudd, Brown and Turnbull look in the classifieds for bipeds able to process this information to the point it may be battered into some form of crude future policy?
God only knows how a conservative party managed to miss this one while in office, but the union-oriented Labor Party could have charged up several brain cells for its base, too. The Greens should have a position on this too, if only to show what a super policy which wasn’t drafted in 1948 looks like. Then the others can copy it.
Literally every economist in Australia has been seeing this situation coming for decades. I first remember hearing about it in about 1975. Libraries have been published on the subject. Now it’s an “issue”?
One of the strange theories of government is that somebody, somewhere, is supposed to know what they’re talking about. So they bloody well should. Basic arithmetic shouldn’t be beyond the grasp of Treasury. Politicians could have been getting better advice 40 years ago.
Because nobody's going to come and kiss it better, when the well runs dry.
