In
2015-16 there were an est. 326,000 to 337,000 households out of 8.9 million
households which could be classified as the richest Australian households based
on income and/or wealth, according to the Australian
Bureau of Statistics.
Wealth
in this cohort starts at $10 million and rises, with average weekly incomes starting
at a little over $5,000.
The
Guardian, 18
March 2018:
The
richest 20% of Australians hold about 40% of the national income but nearly 65%
of the national wealth, and a majority of the wealth is held by those over 55.
And our tax system is designed to help them not only keep it, but to garner
more and then give it to their children (who then garner more and then give it
to their children, who then ...)
Our
retirement system is based around tax-free holdings of wealth – through the
family home, which is exempt from capital gains tax, and tax-free income from
superannuation.
With
those exemptions comes revenue forgone, and the cost of paying for our ageing
population is an issue that is hitting us square between the eyes.
The
prime earning age for workers is between 25 and 54. Between those ages, you are
no longer studying, and not really thinking about retirement. These workers not
only power much of our production, but also our tax revenue.
And
right now the cohort is shrinking.
Currently
just 41% of the population is aged between 25 and 54. The last time it was that
low was in 1987, when the first baby boomers were entering their 40s.
Back
then, it wasn’t a problem because only 10.5% of the population was aged over
65. But now those 40-year-old baby boomers are retiring and those over 65
account for 15.5% of our population.
That
jump is the equivalent of about 1.2 million extra people aged over 65 – people
who mostly don’t work (and nor should they be expected to), or pay income tax,
but whose pensions and services need to be paid for by the revenue derived from
those prime-aged workers.
So
what is to be done?
You
could – as is the government’s current policy – increase the retirement age to
70 (this policy is still on the
Department of Human Services website). That might be fine for someone like
me typing away at a desk but not for many others.
You
could “crack down on welfare cheats”. The problem is, despite protestations
from the government and conservative media, there aren’t many of those.
On
Friday, the government announced that it had saved $43.4m – $17.8m in this
financial year – from “more than 1,000 wealthy welfare cheats”. That’s from a
$46.1bn annual budget for Newstart, DSP and Family Tax Benefit
(and the aged pension is another $45.4bn).
Or
you could, as the ALP is doing, seek to find extra revenue by cutting out rorts
that were designed as electoral sweeteners and favours to the Howard-Costello
key demographic.
When
this imputation cash rebate was introduced, not many were affected but like any
good tax rort, accountants soon caught wind. Add in the
2006 decision to make income from superannuation tax free for those
over 60, and suddenly you had a lot of people with a high actual income but
very low or zero taxable income taking advantage of it.
Further
add in this weird belief that the retirement nest egg must not be touched, and
you get a lot of idiotic reporting – such as in the Herald Sun, which had
the case
study of a woman with an income of $160,000, who we should feel sad
for because she will lose her $12,775 rebate. She could, of course, sell some
of her shares, but that would actually be using superannuation for its purpose
and not as a tax-free inheritance fund.
So
it is a smart and needed policy, but also a dangerous one because it affects an
area shrouded in confusion and thus very much susceptible to fear-mongering……
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