Federal election 2016: super debate deserves better than polemics

Today in The Australian

Let’s start by clearing up the confusion which seems to have clouded even Judith Sloan’s usually razor-sharp insights. The government’s changes to superannuation, whatever one may think of them, are not retroactive: they do not seek to alter the state of the law at a time prior to their announcement.

About Henry Ergas

Henry Ergas AO is a columnist for The Australian. From 2009 to 2015 he was Senior Economic Adviser to Deloitte Australia and from 2009 to 2017 was Professor of Infrastructure Economics at the University of Wollongong’s SMART Infrastructure Facility. He joined SMART and Deloitte after working as a consultant economist at NECG, CRA International and Concept Economics. Prior to that, he was an economist at the OECD in Paris from the late 1970s until the early 1990s. At the OECD, he headed the Secretary-General’s Task Force on Structural Adjustment (1984-1987), which concentrated on improving the efficiency of government policies in a wide range of areas, and was subsequently Counsellor for Structural Policy in the Economics Department. He has taught at a range of universities, undertaken a number of government inquiries and served as a Lay Member of the New Zealand High Court. In 2016, he was made an Officer in the Order of Australia.
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32 Responses to Federal election 2016: super debate deserves better than polemics

  1. Robber Baron says:

    I don’t know if they are ‘retroactive’ or ‘retrospective’ but if the government wants to steal some of our hard-earned super, then the issue is ‘radioactive’ and Turnbull will learn just how hot it really is on polling day.

  2. Robk says:

    Henry,
    I agree the policy is not retroactive or retrospective in one sense but it would be fair to say, as has been pointed out in previous posts here, that some people would have made different investment decisions in the past if they knew these changes were to happen. They entered into a deal to lockup their funds under agreed conditions. The government has now unilaterally changed those conditions of the agreement and highlighted the risks of entering into a long term arrangement with the crown. In retrospect, some investors would have made different decisions if they had today’s facts before them.

  3. Robk says:

    Perhaps, in fairness to those who maybe adversely affected by the changes, they should be given the opportunity to withdraw those funds from their super accounts.

  4. Robk says:

    Hopefully, the same thresholds and limits will apply to defined benefit superanuants.

  5. Oh come on says:

    Fabulous. News gets some more free publicity for its paywall articles (oh, the irony). I’m sure Henry Ergas wrote something interesting.

    I don’t understand why the genuinely esteemed Henry Ergas is permitted to use the Cat to flog The Oz.

  6. 1234 says:

    The Australian is a propagandist rag that indulges Rupert. However, never interrupt an enemy when he is making a mistake. The public has made its mind up about this. Ergas may continue.

  7. sabrina says:

    I take with grain of salt anything that comes from OECD economists. From the Australian today:
    ………nine cabinet ministers are among those whose lucrative pensions…….they will collect an average allowance­ of about $211,400 each year for the rest of their lives from the scheme, which will pay out about $46.4m next year alone. Tony Abbott alone will be $331000 per year pension for the rest of his life.

    23 Labor MPs plus John Howard, Keating, Hawke, Gillard, Rudd will all be massive beneficiaries whose superannuation and pension will not be touched by what has been proposed.

    No wonder we attract only leeches into the politics.

  8. 1234 says:

    Oh, and another thing. Who is this Henry? The same one that did Turnbull’s initial NBN costings in 2013 that were out 50%? Score: ideology +1; analytical -1; credibility, nil.

  9. Herodotus says:

    Credibility nil for you too, 1234.

  10. Siltstone says:

    Sabrina
    +1
    Ever increasing numbers of leaners who pay no net tax, such those described, have to rip off the ever decreasing numbers of lifters with ever higher tax burdens to try to pay for the largess they feel they deserve. Largess that goes on and on into retirement, as they lean and bludge off other retirees who still lift yet are demonised for it (and are subject to constant adverse superannuation rule changes).

  11. Gilas says:

    Hello numbers!
    Your comments are as enlightening as usual.

  12. Baldrick says:

    It looks retrospective, it feels retrospective and it even mentions the year 2007 from when the new maximum provisions apply.

    It is retrospective.

  13. Simon/other says:

    The changes are either retrospective or you’ve failed to advise people regarding the product properly in 2007, which is it? If you need to reinterpret the conditions 9 years later and only one party to the deal suffers then there must be recourse to legal or administrative appeal. Or just admit it is a rip off and watch the superannuation system get scorched by people, forced to contribute, demanding that it comes to an end.

  14. Mr Anderson says:

    What Robk said is his comments hits the nail on the head IMO.

    This is reminiscent of Julia Gillard’s protestations that the CPRS was not a carbon tax. Maybe to a sharpie lawyer, judge or economist, the proposed changes are not “retroactive” or retrospective, but that’s irrelavent. What matters are the resulting effects/consequences.

    Anyway, the current round of tax grabs espoused by both the LNP and Labor has ensured super will be a no go zone – for us little people at least – no matter what happens now.

  15. Leigh Lowe says:

    Really?
    I entered into a Transition to Retirement pension on 1sr July 2015 ‘safe’ in the knowledge that the income from the assets underlying that pension would be tax free. That income will now be taxable.
    That smells retrospective to me.

  16. Tel says:

    There’s a debate?!?

  17. Fred says:

    So many problems with this $500,000 cap.

    We have got this one at work at the moment. A client has already exceeded the $500,000 lifetime cap. He signed a contract to buy a property in his SMSF before the budget announcement. He has to tip in more money on settlement to buy the property, but now he’s not allowed to. What happens? No one knows.

  18. I Am the Walras, Equilibrate and Price Take says:

    Well said Robk.

    Feeling, as I do now, completely alienated from the cuckolded Liberals and heir leader Lord ‘cuckoo in the nest’ Waffleworth, I find it schadenfreudenly entertaining to watch them destroy themselves as they try to out-tax their opponents in the Trades Union & Bludgers Party.

    I hope Malcolm and his 53 acolytes get what they deserve – good and hard.

  19. Siltstone says:

    Leigh Lowe – it is retropective. Had the change been to the effect that all new Transition to Retirement pensions would have different tax rules then that would not have been a retrospective change. But that is not what happened. The LNP has vastly underestimated the number of people seriously affected by these retrospective changes.

  20. Gaia Jones says:

    If the retrospective super caps of $500k & $1.6m are not retracted then the Liberals will lose this election.

  21. hzhousewife says:

    Unbelievably sloppy language all around, from people who should know better.

  22. amortiser says:

    Of course it’s retrospective. I am caught by this $500,000.00 cap backdated to 2007. I based my retirement decision in 2011 on the fact that I had made non concessional contributions to my super fund. Based on this decision I now have to withdraw a sizeable amount the earnings on which will be subject to tax.

    This is a changing of the rules after the fact. If this is not retrospective then they have retrospectively changed the definition of retrospectivity.

    These bastards are so hooked on spending that they would rather retrospectively tax retirees than trim future estimates of spending so as to buy votes.

    This will be only the first dip at it too. It is a toe in the water to see if they can get away with it.

  23. Ross B says:

    Amortiser: “If this is not retrospective then they have retrospectively changed the definition of retrospectivity.”

    You score 10 11/10 for that effort…

  24. Ross B says:

    Amortiser: “These bastards are so hooked on spending that they would rather retrospectively tax retirees than trim future estimates of spending so as to buy votes.”

    …and there’s nobody left to take up the fight against it since there’s nobody left to turn the lights out on the right-hand side of the church.

    Might be time to get behind guys like this?

  25. Boambee John says:

    Henry,

    I believe the number is 42 angels dancing on the head of a pin.

  26. Mollusc says:

    Based on this decision I now have to withdraw a sizeable amount the earnings on which will be subject to tax.

    I’m not sure why you have to withdraw anything from super Amortiser. The $500,000 cap only applies if you want to add any more to super and you have already exceeded the figure in the years since 2007. If you are over you don’t have to withdraw the excess.

    Yes, you may now be paying tax on the earnings if you are in Transition to Retirement. Thieving mongrels.

  27. . says:

    This is the worst election ever.

    A choice between shit on toast or a shit sandwich.

  28. Leigh Lowe says:

    No worries.
    The cadaver Foreign Minister reckons that they will fix any “unintended consequences”.
    The only unintended consequence is a legion of white-hot angry superannuants who the Malcontents were assured “didn’t matter”.

  29. Leigh Lowe says:

    This is the worst election ever.

    A choice between shit on toast or a shit sandwich.

    I can’t see any bread anywhere in the equation.

  30. Makka says:

    “This is the worst election ever.

    A choice between shit on toast or a shit sandwich.”

    Finally we agree.

  31. Leigh Lowe says:

    Extract from the Gummint’s “Fact” Sheet on Transition to Retirement changes (my emphasis added) …

    To ensure access to transition to retirement income
    streams is primarily for the purpose of substituting work
    income rather than tax minimisation, the tax exempt
    status of income from assets supporting transition to
    retirement income streams will be removed from
    1 July 2017.
    Earnings from assets supporting transition to retirement
    income streams will now be taxed concessionally at
    15 per cent. This change will apply irrespective of when
    the transition to retirement income stream commenced
    .

    Please essplain, dear Henry, how that last sentence is not a retrospective tax, given that politicians benefits were grandfathered in 2004 to “avoid retrospectivity”.
    Stop apologising for these pricks and insulting the rest of us by treating us like we are stupid.

  32. Beachside says:

    .
    #2030813, posted on May 16, 2016 at 11:09 am

    This is the worst election ever.

    A choice between shit on toast or a shit sandwich.

    Eloquent 😉

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