Showing posts with label 2016-17 Budget. Show all posts
Showing posts with label 2016-17 Budget. Show all posts

Monday 29 August 2016

Turnbull Government about to walk back superannuation changes and cost federal budget bottom line up to $335 million over first four years?


ABC News, 23 August 2016:

Independent costings suggest the Federal Government could end up losing money out of its proposed overhaul of superannuation changes if a key measure is watered down.
The Government has proposed a $500,000 limit on after-tax contributions to superannuation, in a move it says will save $500 million over four years.

The changes have upset a number of Coalition MPs, with some pushing for the $500,000 limit to be increased.

Analysis conducted by the Parliamentary Budget Office (PBO) — commissioned by the Greens before the Government's proposal was put in place — suggest any increase of that limit could see those budget savings evaporate.

The PBO document from last year modelled the impact of hypothetical caps on superannuation after-tax contributions, ranging from $500,000 to $800,000.

According to the PBO, placing a $500,000 lifetime cap — which the Government is proposing — will see an additional $165 million put into government coffers over four years.
Increasing that cap to $600,000 would see those savings disappear — and end up costing the Government $85 million over the same period.

An $800,000 cap would cost the Government $335 million.....

The analysis did not look at the impact of back-dating the measures to 2007, which is a key part of the Coalition's proposal……

Mr Morrison announced the cap in non-concessional contributions as part of an overhaul of the superannuation system, forecasting it would save $550 million, starting from July 1, 2017.
Mr Morrison has been negotiating with the backbench following concerns raised within the Coalition about aspects of the policy.

On Monday, Mr Morrison resisted rolling-back on superannuation unless savings were found from elsewhere.

"I would find it pretty hard to look my kids in the eye and tell them they have got to saddle a higher debt because someone who had a very big income wanted to pay less tax," Mr Morrison told 2GB.

The changes are yet to pass through Federal Parliament.

Thursday 12 May 2016

Federal Election 2016: looking at the ICIJ Panama Papers searchable database


Some observations after an initial look at the ICIJ Panama Papers searchable database* (which includes Offshore Leaks data), with regard to listings of companies and individuals associated with Australia……

For some who are listed it appears to be a bit of a family affair, for others a lone foray into off-shore company registration.

Some associated with registered companies are investors, while others are active players in the mining, smelting, construction, manufacturing, banking, finance, risk management, insurance and marketing sectors.

There’s the odd investment manager or two, at least one specialist in fine art, some professional property directors and company secretaries, self-employed consultants and a media type.

One of Australia’s rich listers and a National Party politician (appointed not elected) also make appearances on this database.

As does a company which had as directors one multimillionaire former Labor premier of NSW and another multimillionaire who who went on to be a Liberal prime minister – for reasons unknown full details of this company have not been included in the searchable section of the ICIJ database to date.

What there doesn’t appear to be any indication of is that ordinary workers on the average wage went to Mossack Fonceca or other financial advisors to set up a companies in a low taxing jurisdiction such as Panama, the British Virgin Islands, Singapore or Hong Kong.

Off-shore registration appears to be something indulged in primarily by business and industry in this country as well as those with above average to high levels of personal wealth.

The very groups that Turnbull & Co have given company and income tax cuts in the 2016-17 Budget.

Inevitably there are 2014-15 political donors among those listed on the databases and, just as inevitably, there are some who give more to the Liberals and their Coalition partner than they do to Labor.

Before voting on 2 July 2016 readers might consider clicking on the search link at the beginning of this post and typing in a few individual and company names, to see how these might compare with the known interests of election candidates and those political donors included in documents held at the Australian Electoral Commission Annual Returns Locator Service.  

Where people spend, invest or gift their money says something about their personal and professional ethics.  

* It is not asserted by the creators of these databases that every individual or corporation identified has been involved in unlawful tax evasion or any other form of wrongdoing.

Friday 6 May 2016

Multimillionarie Australian Prime Minister Malcolm Turnbull's 'churn & burn' path for unemployed, low-skilled youth


Set out below are the official bare bones of the Youth Jobs PaTH  internships for unemployed 17-24 year olds that the Turnbull Government is offering from 1 April 2017.

What these bones both reveal and conceal is that in 2017-18 an est. 30,000 young people jobless for six months or more will be set to work between 15-25 hours a week for 4 to 12 weeks in mainly low skilled jobs in supermarkets, cafés,  newsagents or other businesses in order to receive an additional $100 a week in Centrelink benefits - while the erstwhile ‘employer’ pockets $1,000 upfront for so generously offering to accept free labour arranged through JobActive employment service providers.
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The Government will provide $751.7 million over four years from 2016‑17 to establish a Youth Jobs PaTH program for young job seekers aged under 25 years to improve youth employment outcomes. The new pathway is designed to enhance young people's employability and provide up to 30,000 young people each year with real work experience. The pathway has three elements:
Industry‑endorsed pre‑employment training (Prepare) — from 1 April 2017, training for up to six weeks will be provided to develop basic employability skills, including those required to identify and secure sustainable employment.
Internship placements of up to twelve weeks (Trial) — from 1 April 2017, up to 30,000 internship placements will be offered each year to enable businesses and job seekers to trial their employment fit. Job seekers will receive a $200 fortnightly incentive payment and businesses will receive $1,000 upfront to host an intern. Placements will be voluntary and will be organised by employment services providers. Job seekers must be registered with jobactiveDisability Employment Services or Transition to Work, and have been in employment services for at least six months to be eligible for the internship program.
Youth Bonus wage subsidies (Hire) — from 1 January 2017, employers will receive a wage subsidy of up to $10,000 for job seekers under 25 years old with barriers to employment and will continue to receive up to $6,500 for the most job‑ready job seekers. Job seekers must be registered with 
jobactive orTransition to Work, and have been in employment services for at least six months for employers to be eligible for the wage subsidy. Funding for this component will be provided from within the existing funding for wage subsidies.

The program will include an employer mobilisation strategy to encourage participation in the initiative by all employers.
As part of this measure, the Government will also achieve savings of $204.2 million over four years. The design of wage subsidies available through jobactive will be improved to reduce red tape for employers, including by simplifying payments and enabling employers to choose more flexible payment arrangements.
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Wednesday 4 May 2016

Scott Morrison rearranging the on-board leisure activities schedule on the cruise ship Ostentatious Wealth in 2016-17


The Turnbull Government has announced it was not giving tax cuts to those with taxable incomes under $80,000 because these individuals had benefited for carbon tax compensation and tax cuts in the past but was giving personal tax cuts to at least 500,000 people with taxable incomes of 80,000 per annum.

Now let me get this straight – this was the basic scenario, right?

In 2012 the then Gillard Government decreed that there would be a lump sum payment to compensate for the so-called carbon tax. These lump sum payments of $250 for singles and $380 for couples were to cover the first 9 months of the carbon tax for pensioners and others on income support and, the first 12 months for those households receiving  Family Tax Benefit A or B:

Family Tax Benefit Part A recipients will receive up to $110 for each child.
Family Tax Benefit Part B recipients will receive up to $69 per family.
Single pensioners will receive up to $250.
Pensioner couples will receive up to $190 per eligible member.
[Kirsten Andrews, 2 July 2012]

From 1 July 2013 the Labor Government awarded additional carbon tax compensation payments, including compensation payments for households with annual incomes of $160,000.

This compensation meant that:

*Households receiving Family Tax Benefit A received $87.60 "clean energy supplement" per year for each eligible child aged under 13. Those with eligible children aged between 13 and 19 gained $113.15 in carbon tax compensation.
*Those who qualify for Family Tax Benefit B received an extra $69.35 carbon tax compensation if their youngest child was aged under five, which includes $69.35 for the carbon tax. If the youngest child was aged between five and 18 their top up was a $51.10 clean energy supplement.
*About 281,000 self-funded retirees who receives the seniors supplement got about $350 a year for singles and $530 a year for couples with their next quarterly payment. 
*More than 360,000 students and young people with a disability looking for work or in training received a lump sum payment. The amount varied depending on individual payments but was worth up to $130.
*An est. 3.5 million pensioners received a further boost totaling $88 for singles and $130 for couples paid out through fortnightly installments. 

The Labor Government also planned compensatory tax cuts from 1 July 2015 which went ahead because the Senate refused to allow the Abbott Government to remove them.

These tax cuts were; worth about $83 a year for people earning $25,000 to $65,000 and about $13 a year for people earning over $80,000 [The Australian, 9 July 2014].

Since then the Abbott-Turnbull Government budgets have whittled away at the real value of pensions and associated benefits and allowances, kept unemployment payments below poverty levels and restricted eligibility for Family Tax Benefits by lowering the FTB B threshold from 150,000 to $100,000 and removing FTB B from children 6 years of age and over.


In this 2016-17 budget Turnbull & Co are rewarding those currently earning $98,200 pa and over (of which $80,000 is considered taxable income) with a tax cut worth an est. $314 a year, with the possibility of this rising to $324 on 2 July 2016. While those with a taxable income of more than $180,000 will no longer have to pay the 2% Deficit Levy which for a person on $250,000 a year means a tax deduction of $1,400 over two years [Financial Review, 4 May 2015].

At the same time the 2016-17 budget allows those individuals in these income ranges to keep contributing to their superannuation post-retirement because the work test for superannuation contribution has been removed, i.e. the provision that the person must have worked for at least 40 hours over 30 consecutive days in the financial year you wish to make a contribution.

Negative gearing and capital gains tax advantages remain for those who wish to minimise taxable incomes between 80,000pa and $180,000 and over, however there are some changes to superannuation  including the amount of tax-free income which can be salted away in their superannuation funds - with a $1.6 million cap on the total amount of superannuation that can be transferred into a tax-free retirement account.

All this budget last measure does is give those with more than $1.6 million in their retirement account the option to either transfer the excess back into an accumulation superannuation account taxed at a low 15% or withdraw the excess amount from their superannuation. Which of course leaves these individuals free to purchase negatively geared property and further reduce their taxable incomes, or salt the excess away in investments registered in low-taxing jurisdictions such as the Cayman Islands.

As the budget papers assure the electorate that less than 1 per cent of those with superannuation accounts will be affected by superannuation cap changes, in all likelihood they will have little impact on wealth accumulation by the top 25 per cent of Australian income earners.

This whole exercise has been a political pea and thimble trick in which Scott Morrison has been careful to disguise as much as possible that he has merely rearranged the on-board leisure activities schedule for those travelling on the cruise ship Ostentatious Wealth and left the rest of the Australian population stranded on the shore.

Monday 25 April 2016

Australian Federal Election 2016: can the Turnbull Government afford to aggravate aged pensioners in an election year budget?


Meme found on Twitter*

With less than a month to the release of the 2016-17 federal budget papers the Guvmin Gazette begins to use the tired old ploy of pointing a finger at the working poor, unemployed, single parents, aged and disability pensioners.

Using the journalist’s own calculation of the number of persons “wholly dependent” on Centrelink and Dept. of Veterans’ Affairs cash transfers reveals an unimpressive 27.8% of the 16,405,465 citizens the Australian Electoral Commission calculated were eligible to vote on 31 December 2015 and, even if one reworks the journalists numbers based on citizens who had actually registered to vote by the end of December, the percentage only rises to a still unimpressive 29.2%.

Because there is no clickbait story in those percentages, the final percentage figure is boosted by adding numbers allegedly representing both public sector employees and low paid private sector workers. This enabled the newspaper to erroneously headline the article as One in two voters is fully reliant on public welfare.

Excerpts from that article in The Australian on 16 April 2016:

Nearly half of voters in the looming federal election will rely ­entirely on government payments for their incomes, confront­ing Scott Morrison with a demographic and political powder keg as he frames a May 3 budget ­relying on spending restraint to rein in the deficit.

Analysis by The Weekend Australian has revealed that more than 44 per cent of voters, almost 6.4 million people, are ­either public sector employees (1.89 million) or wholly dependent on federal government pensions, allowances and parenting payments (4.48 million). The figure grows further when private sector workers who receive more in welfare than they pay in tax are added.

The Coalition holds seven of the 10 most welfare-dependent seats in the nation while Labor holds three……

The figures have emerged as Patrick McClure, whose review of the welfare system for the Abbott government called for drastic simplification of 75 federal payments and supplements, said about three quarters of his review had still not yet been taken up.

The extent of reliance on ­government payments for voters’ incomes has emerged as the ­Coalition and Labor are locked in a political battle over the Treasurer’s insistence that the government will rely on spending restraint and expanding the economy rather than lifting the overall tax burden to cut the deficit.

Ratings agency Moody’s raised the stakes ahead of the budget, ­declaring this week that the failure of the political system to ­deliver genuine spending restraint suggested the government had to consider tax increases to close the deficit gap. Mr Morrison stood firm yesterday, maintaining his position that “the government is not looking to increase the tax burden on the economy’’…..

The Nationals appear to be the most vulnerable to a crackdown on welfare and government spending.

The Weekend Australian’s analysis of social security by federal electorate shows the junior Coalition partner holds half of the 10 most welfare-dependent seats (which even excludes family tax benefit payments, which can be held concurrently with other payments). The 10 seats have between 40,000 and 50,000 wholly welfare dependent voters out of a total electorate of about 105,000 voters. Another three are held by Labor and two by the Liberals.

Those relying on government payments in Nationals seats tend to receive age and disability pensions while Labor seats are disproportionately home to family tax benefit recipients. Liberal seats tend to have a higher proportion of holders of the Commonwealth Seniors Health Card (a benefit for older Australians not eligible for the Age Pension). The unemployed (receiving Newstart or Youth Allowance (Other) recipients) are relatively evenly spread.....

What the article also doesn’t say is that average social assistance in cash transfers is much wider than the categories stated and government money received by individuals with their own incorporated business income comes in at est. $73 per week per person, according to the Australian Bureau of Statistics.

On the NSW Far North Coast the largest single group of persons eligible to vote and receiving federal government cash transfers in June 2015 were aged pensioners.

Broken down by federal electorate** the numbers are:

Cowper (Nationals seat) – 23,261 persons
Page (Nationals seat) – 22,512 persons
Richmond (Labor seat) – 21,238 persons
TOTAL – 67,011 persons.

Australia-wide the total number of aged pensioners as of June 2015 was 2,486,195 individuals  of which an estimated 646,000 are currently receiving a part-pension.

All of these people have relatives and a significant number would be full or part-time carers of their older family member.

The Australian is right in one respect – that’s a demographic and political powder keg facing both the Prime Minister and Treasurer in an election year.

However, backgrounding the Murdoch media with ideology-based statistical spin is not going to impress voters after that particular strategy was worked to death during the Abbott leadership years.

Footnote

* It is possible (based on the American experience) that around 5% of Australian online users 65 years of age and over use Twitter.

** In the NSW Northern Rivers region aged pensioners (potentially eligible to vote in June 2015) by local government area (LGA):

Ballina LGA – 6,636 persons
Byron LGA  – 3,059 persons
Clarence Valley LGA – 9,341 persons (9,304 of these individuals living in Grafton City & region, Maclean, Yamba and Iluka)
Kyogle LGA  – 1,357 persons
Lismore LGA – 5,389 persons
Richmond Valley LGA – 3,778 persons
Tweed LGA – 16,229 persons
TOTAL – 40,400 persons.

Friday 22 April 2016

So you think Australia is an egalitarian society? Think again.


Based on the World Population Clock as of 16 April 2016, a total of 74 million people (The 1 Per Cent) are said to own approximately 48 per cent of the entire world’s wealth.

In 2015 the Credit Suisse Group calculated total global wealth at US$250 trillion. 

An est. US$7.6 trillion of this was held offshore in low taxing jurisdictions (tax havens) and the majority of offshore wealth is managed by just 50 big banks, with the 10 busiest banks managing 40 percent of these offshore assets, according to Oxfam Briefing Paper 210

How much this represents in lost tax revenue to the countries in which profits were generated is unknown.

However, there is some indication that despite many of the extremely rich having residences in more than one country and often living in constant movement between these homes, they are not above seeking political influence in those countries in which they may not be citizens.

In countries in which they conduct business they are also politically active. In Britain the Sunday Times Rich List for 2015 revealed that: In total, 197 people who have featured in Rich Lists between 2011 and 2015 contributed £82.4m, just under half of the £174.7m donated in private and corporate cash. 25 gave more than £1m. Seven donors gave more than £2m.

What this all means is that by 2015 The 1 Per Cent had amassed US$120 trillion for their own exclusive advantage and use and, of these an est. 7.4 million individuals have the biggest share of that very large slice of the global riches pie.

In that 7.4 million strong group there is old money and new money - heads of royal houses, heirs of fortunes established in previous generations, hedge fund billionaires, investment bankers, oil barons, mining tycoons, industrialists, shipping magnates, the odd digital genius or two, oligarchs, financiers and other disreputable individuals.

Oxfam pointed out in that in 2015, 53 men and 9 women out of these 7.4 million rich individuals had a total combined wealth of $1.76 trillion.

According to the Institute for Policy Studies, by 2015 in America the 20 wealthiest people owned more wealth than the bottom half of the American population combined - that is more wealth than a total of 152 million people in 57 million households.

For the same year, Forbes listed Australia’s 50 richest residents (our very own 0.00020 per cent) as having a combined personal wealth of $85.41 billion - which would roughly equate to 5% of this country’s gross domestic product for 2015.

Also in 2015 news.com.au reported that the chief executive officers of Australia’s biggest corporations earned more than 100 times the annual salary/wage of the average worker - in some cases earning as much as $367,000 a week.

Going into 2015 Westpac Banking Corporation's CEO was already receiving an annual remuneration package worth an est. $13 million.

The gap between the very rich and the rest of Australia continues to grow.

In November 2015 Australian Bureau of Statistics reported that between 2003-04 and 2014-15 the 20% of individuals in the highest income quintile received 42 per cent or nearly half of the total growth in wages and salaries.
In September 2015 The Guardian reported that: The latest figures for Australian household incomes and wealth released last week showed that income inequality has risen in the past two years. The average annual income of the richest 20% rose by 7%, while median households saw their income rise by just 1.3% in the same period.

When one looks for evidence of political influence - it was not unknown for very large political donations from billionaires and millionaires to occur in years past, such as those from Lord Ashcroft and Reg Grundy. While in 2014-15 at least five of the first ten Australian billionaires included on the Forbes Rich List made more modest political donations - between $10,000- $100,000 and predominately to the Liberal-Nationals.

The rich tend to cluster together in life as well as politics. In 2015 Business Insider reported suburban clusters with the highest taxable incomes, of which the following are examples:

* Claremont-Claremont North-Karrakatta-Mount Claremont-Swanbourne, Western Australia, with 10,885 residents having a total combined average taxable income of est. $1.16 billion pa.
* Balmain-Birchgrove-Balmain East, New South Wales, where 10,515 have residents have a total combined average taxable income of est. $1.14 billion pa.
* Middle Cove-Castlecrag-Willoughby-North Willoughby-Willoughby East, NSW, with 10, 295 residents having a total combined average taxable income of est. $1.09 billion pa.
* Darling Point- Edgecliff-Point Piper, NSW, where 5,980 residents have a total combined average taxable income of est. $1.06 billion pa.
* Castle Cove, Roseville, Roseville Chase, NSW, with 8,985 residents having a total combined average taxable income of est. $976.68 million pa.
* Kooyong-Malvern-Malvern North, Victoria. where 7,755 residents have a total combined average taxable income of est. $817.36 million pa.

With all this conspicuous wealth in the top tier of a supposedly egalitarian society, one would expect that any journey towards the bottom of the pile would be more a gentle downward slope rather than a high drop from a cliff. 

However, in January 2015 there were 795,000 ordinary people at the bottom of that proverbial cliff, without a job and living on about $140 per week, and on any given night an est. 1 in every 200 men, women and children were without a permanent roof over their heads.

So when multi-millionaire Prime Minister Malcolm Bligh Turnbull and Treasurer Scott John Morrison begin to explain on 3 May this year how the approximately 90 per cent of Australian households (who don’t have net worths calculated in double digit millions or billions) should start to live on less or expect diminished public health and education provisions in order ’to assist' the national balance sheet, I strongly suggest that every low-income household in this group consider giving both these gentlemen the raised middle finger.

For the last three years it has been those on the bottom tiers of the wealth pyramid who have borne the brunt of punitive federal budget measures and it is time to say “No more!”.



Tuesday 19 April 2016

Australian Federal Election 2016: is the country really going to the polls on 2 July?


On 18 April 2016 the Australian Senate again failed to pass the Turnbull Government’s Australian Building and Construction Commission (ABCC) bill - this time by two votes.

A fact which gave the prime minister the double-dissolution trigger he was hoping for and an apparently favoured poll date – 2 July 2016.

If this is indeed his preferred date, then the election writs need to be issued no later than 31 May, as there is a mandatory minimum 33 days between writs and polling day.

The 2016-17 budget speech is scheduled to be delivered on 3 May, the appropriation bills are then submitted to the House of Representatives later that same day or the next and read a first and second time.

With the Leader of the Opposition’s budget reply speech expected on 5 May, all appears well with Turnbull’s time table. He has twenty-six days up his sleeve before having to quit governing to enter the official election campaign period.

However…….

The debate on the second reading of Appropriation Bill (No. 1) is known as the ‘Budget debate’ and normally continues over a period of several weeks. The scope of discussion in the Budget debate is almost unlimited because the debate on the main Appropriation Bill is exempt from the standing order (rule) which requires the second reading debate on other bills to be strictly relevant to the bill. The standing order allows debate on appropriation bills to cover matters relating to ‘public affairs’. This is interpreted to mean any matters concerning government policy or administration. [Australian Parliament, Infosheet 10 - The budget and financial legislation]

In 2015 it took forty days for the House of Representatives to finish debating Appropriation Bill (No. 1) -  the bill covering money out of the Consolidated Revenue Fund for ordinary annual services of government.

Government has the numbers in the Lower House and can possibly truncate this debate – but not by much and not without alienating a substantial numbers of voters.

At this point Turnbull’s twenty-six day leeway may be dwindling down to less than 14 days. Still, getting to the 31 May writs deadline with the main appropriations bill passed looks vaguely possible.

But…….

Before they become law the three main budget appropriation bills must be passed by the Senate in the same way as any other bills. [ibid]

Two years ago the Senate took a mere two days to send the main appropriation bill back down to the House of Representatives. Last year the senators took only one day.

This year the 'reformed' Senate may just decide to debate this bill a good while longer and, it will serve the prime minister right if the cross-bench runs him down to the wire on this.

Of course Turnbull could go to an election without money from consolidated revenue being guaranteed for 1 July 2016 through to 30 June 2017.

It’s just that this would be such a slapdash look for a former investment banker who portrays himself and his government as good economic managers.