|Latest Pickering images – 3 New Cartoons added 27th Mar 2013 – see image links to the left.
The debate building about Superannuation and the Governments intent to try and draw more revenue to balance their Gonski, NDIS and other new policies still to be announced in the run up to the next election, will most probably be Gillard’s last hooray …
Is this the face of evil …
Superannuation has been a kicking ball of every Government since its was introduced in 1992.
Howard did the most damage when he allowed payments of up to $1 million tax free to individual accounts in the last year of his Prime Ministership. Yes – that favoured the wealthy and some $50 billion was transferred to Super in the last few months of 2007 financial year.
Sadly for those who got greedy in the want to save the 15% tax, some sacrifice of $7.5 billion in Government revenue, the GFC took a larger chunk in the revaluation writedowns through 2008 and 2009. They would still be sitting on losses now depending on which type of fund they invested in.
When Keating restructured the new superannuation rules, he ensured the 15% up front tax gave the Government a large chunk of the compound factor of new superannuation funds. Previously that 15% was not paid until the superannuant retired.
Over a 40 year superannuation plan, that 15% represent some very big numbers. In a ‘EYE-BALL Guru’ post in Oct 1995 – linked here – the compound effects was explained – it reappears below:
The effects of compound Interest …
… Let’s assume a working career of 40 years with salary paid fortnightly – also assume a constant yield of 10% on the superannuation contributions and the interest dividends are paid fortnightly – and let’s use the 9% superannuation levy against a gross fixed income level of $50,000 p/a over the 40 year work employment period.
This produces an end of term SUPERANNUATION Fund value calculation as follows:
- Example 1: =FV(10%/26,40*26,(9%*50000)/26,0) = $2,393,137.85.
[That is to say that if all the 9% contribution all went into the superannuant’s holdings – that being annual $4,500 p/a contribution – [i.e. 9% of $50k] – this represents a total contribution by the employee of $180,000 – i.e. 40*$4500 = $180,000. when the compound interest factor is applied this $180k becomes almost $2.4 million when a 10% yield is applied and paid and re-invested fortnightly.]
Now – lets apply some reality – the Government decided it wanted to snatch 15% of the 9% contribution up front – the price of doing business one might say. The Government then tries to take another 15% at the end of the annuity if it can and all under a so called superannuation ‘tax’ levy.
When the up-front 15% is applied to the calculation over the course of the employed period i.e. 40 years – the end result becomes the following:
- Example 1: =FV(10%/26,40*26,((50000*9%)-((50000*9%)*15%))/26,0) = $2,034,167 – a ‘tax’ earn for the Government of $358,970
If we were now to apply the 15% retirement or lump sum tax levy when the working career is finished – the total up-front and lump-sum taxes collected by the Government equates as follows:
- Example 1: =(FV(10%/26,40*26,((50000*9%)-((50000*9%)*15%))/26,0))*15% = $305,125 – or a total tax collected during the 40 year term of $664,095 against a salary sacrifice of =50000*9%*40 = $180,000
[To be sure there are no tricks in these numbers please feel free to copy and paste the formula’s into an Excel spreadsheet to verify the numbers.]
To summarise further – if you earned $50k p/a for 40 years paid fortnightly – you would hand over $180k or 9% of your salary for super contributions. The compound earnings effect of the 10% on those funds – allows the Government earns off the tax paid on your contributions a some of $664k. $305k of that amount paid is tax, and the balance investment forgone if those funds were still in your account.
That $664k represents 27.8% of what the fund would have been worth if no taxes were paid during the 40 year term of the annuity and before any lump-sum taxes were levied.
So you tell me who this Superannuation rort benefits most? The Government has earned itself a $664k tax collections from a single employee over the 40 year term of the superannuation fund.
In anyone’s language that is creative accounting and financial management the likes that have never been explained or exposed in a public way before. Least not to my knowledge. It’s a Ponzi scheme if you want my honest opinion.
… continues …
There is a cost to society when the Government imposed the 15% upfront levy. It has forced people to work longer and/or accept reduced superannuation pension income. This then falls on the Government to assist with the aged pension supplement. In effect the Government screwed itself by being greedy fuckers. It’s unsustainable and the only thing that can be guaranteed is that there will be many more changes to superannuation policy before you get to serve your 40 year working life.
Now and under great pressure to find the funding for her Gonski and NDIS and other policy plans – Gillard wants to get her hands on the wealthy superannuants and tax them at a higher rate than the 15% – that is what is being floated to gauge response.
Howard did a bad thing when he helped out the wealthy to avoid tax on up to $50 odd billion of taxable income that was transferred to super in the 2007 year. Gillard is going to try and strip some of that tax back.
How is this different to a levy imposed under the Cyprus bail-out when they commissioned a levy on large Bank deposits?
We are closer to the abyss than any of us thought …
To turn to another subject – there have been two very enlightening post’s by Larry Pickering in recent days – here is a snippet from both of them with links to the whole story.
Date: 28th Mar 2013:
“THE LABOR PARTY I LOVE” by Julia Gillard
Actually the Labor Party Julia “loves” is the same party she vowed to infiltrate for the sole purpose of imposing the Communist agenda of her Socialist Forum. Those who do love the Labor Party are those Gillard has systematically killed off. Well done Julia!
Make no mistake, unless Julia Gillard experienced an epiphanous rebirth on the eve of her election to Parliament, the blood of the radical Communist Left still runs deep in her veins.
Of course she denies any meaningful connection to the Socialist Forum, “I just did clerical work, posting letters and stuff, you know”, she claimed.
When asked on Q&A if the Socialist Forum was a Communist organisation, her terse reply was, “Of course not!”
In fact the Socialist Forum was an ultra radical breakaway group of the Communist Party of Australia.
But Julia forgot there are minutes of Socialist Forum meetings that show she was a driving force behind the subversive organisation.
The infamous Taft brothers, Jenny Macklin and Julia’s bed partner, Michael O’Conner (now of the CFMEU) along with other devotees, avowed the following resolution:
“… the Socialist Forum being a defacto continuum of a section of the Communist Party of Australia be interpreted as a political party competing with the ALP… it is not possible for any member of the ALP to simultaneously belong to the Socialist Forum.”
The above resolution was drafted by John Alford, Julia Gillard and Mark Taft. Mmmm, just posting letters were we, Ms Gillard?
… continues …
Dated 27th Mar 2013:
MCTERNAN IS GILLARD’S MAN… in more ways than one
The bitter back bench leaks have started already and the rumour is, from more than one quarter, that our lovely Julia has a new partner.
Apparently there was a huge blue at The Lodge over Tim Mathieson’s recent Richmond exploits and a small matter of a raft of traffic fines in a Commonwealth car.
Let’s face it, Tim was an embarrassment and the wily McTernan has apparently stepped in to take up the slack.
Julia had never heard of him until he was recommended by a staffer.
One phone call to the UK and one interview later, a smitten Julia offered him the taxpayer-funded job of Communications Director.
McTernan is a backstreet intellectual brawler. One of his favourite quotes is: ”When your fist is down your opponent’s throat, they can’t say bad things about you.”
He sees politics as a contact sport and last year he instructed Ministers to “brutalise” their political opponents, quoting Sean Connery in The Untouchables: ”If they pull a knife, you pull a gun,’ and ”If they put one of your men in the hospital, put one of theirs in the morgue.”
Gillard was in awe of a thuggish charm that has consistently overridden her better judgment because McTernan has done her no favours at all, not in a political sense anyway.
It seems McTernan’s advice has led Gillard down more blind alleys resulting in more disasters than any Prime Minister in history.
Yet she clings to him with a passion that transcends her terminal polling, which he is mostly responsible for.
Failing some other attraction he would have been packed off back to the UK 18 months ago.
McTernan’s style prompts Julia to reminisce her union days of gangsters and goons. It excites her.
The PM’s Office denies the tryst.
… continues …