Monthly Archives: July 2019

David Murray says it’s time to tackle superannuation concessions for rich

Financial system inquiry chair David Murray’s report to the government said tax breaks on super and housing needed to be looked at closely in the tax white paper. Photo: SuppliedThe man who the Abbott government tasked with fixing the financial system says political leaders have failed to end Australians’ sense of entitlement when it comes to superannuation concessions and the aged pension.
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While there was an economic case to cap large balances from getting preferential tax treatment, and possibly include the family home in the assets that are taken into account when determining a person’s eligibility for the aged pension, the community wasn’t ready for such massive changes to the superannuation system, says David Murray, the head of the financial systems inquiry.

“There is not a belief set in the community that we have an issue to address,” Mr Murray told Fairfax Media after an SMSF Association conference in Melbourne about the retirement income system.

Mr Murray, a former chairman of the Future Fund, said after 25 years of continuous growth, and generous handouts by various federal governments, the community had gained a sense of entitlement.

And despite comments by Treasurer Joe Hockey and others about ending the “age of entitlement”, politicians had not managed to convince the public why it was necessary to change.

“Until that [voter] belief set changes, it becomes harder for the political system and the politicians to deal with that adjustment that we need,” he said.

Mr Murray’s report to government said tax breaks on super and housing needed to be looked at closely in the tax white paper, as they were distorting behaviour and posing a risk to the financial system and entire economy.

As Mr Murray’s report and a host of other economists and think tanks have noted, overly generous tax concessions applied to superannuation investment earnings have been primarily benefiting the rich.

Mr Murray’s report also took issue with the fact that super earnings are taxed at 15 per cent in the accumulation phase, but are untaxed in retirement. His report suggested “aligning the earnings tax rate between accumulation and retirement would reduce costs for funds” and “facilitate a seamless transition to retirement and reduce opportunities for tax arbitrage”.

A recent report by the Association of Superannuation Funds of Australia suggested removing the concessional tax treatment for balances of more than $2.5 million. It also said superannuation should not be used as a wealth accumulation or estate planning tool.

Tax Office statistics show almost 300,000 self-managed superannuation funds eliminated or reduced their tax bills through exemptions on super and $2.5 billion in franking credits in 2011-12.

Mr Murray did not advocate a cap level for concessional tax treatment – saying that was best left to experts to model when the cap should apply to super balances – but said one was needed.

He said lower-income taxpayers were missing out on the benefits of superannuation concessions, thereby “subsidising” a tax break for higher-income earners.

“There’s very generous tax concessions in the system, there are very generous voluntary contribution arrangements, and there is no cap on the system,” Mr Murray said.

“So that drives those inequities and the tax arrangements drive distortions across the financial system that affects the economy. Depending on your political persuasion, one or other of our alternative governments in Australia is going to keep picking that up … It’s not a sustainable system. The tax has to be sorted out and the objectives have to be clear.”

Also speaking at the SMSF Association event was Don Russell, once senior adviser to former Prime Minister Paul Keating and one of the architects of compulsory superannuation.

He said there were issues with the concessions being “excessively generous” and there was a need to look at those. But compulsory superannuation was never set up as a mechanism to channel income to lower income earners.

“It’s based around compulsion and you can only do that with a good deal,” Mr Russell said. “You’ve got to have a tax preference to help savings. That’s always going to benefit higher income people because higher income people can save; lower income people can’t save.”

Former Reserve Bank board member and chair of public policy at ANU, Warwick McKibbin, told Fairfax Media after the event that while “there’s a very clear argument” for getting some of the distortions out of the super system which are leading to excesses”, bringing the family home into the assets test, and raising the GST and broadening the base, neither the government nor the opposition had the courage to tackle these issues.

“Every time we see an election result like we did in Queensland or Victoria, we draw the wrong conclusions,” Professor McKibbin said.

“We say, ‘the public voted against this particular policy; that they voted against asset sales in Queensland’. My view is, no, they didn’t vote against that. They voted against the [Queensland] government. I think until that [conversation] changes, politicians will continue to go down this road of not being able to do anything.”

Professor McKibbin said most policies designed to improve economic efficiency and raise money, were by their nature inequitable. “My view is that you need to implement the most efficient ways of generating revenue at the lowest cost, so there are more resources for people to share, and then you do the equity adjustments,” he said.

“It may be that you never get to do some equity adjustments, and that at an individual level the system is not fair. But the system as a whole has to be fair.”

The other issue now being debated is whether the family home should be included in the assets test for the aged pension.

On Monday, the parliamentary secretary to the Treasurer, Kelly O’Dwyer, said the issue should be debated following the upcoming release of Treasury’s intergenerational report, which forecasts major government spending over 40 years. But Social Services Minister Scott Morrison has ruled out including the family home in the assets test.

Shadow treasurer Chris Bowen said there was a need to ensure high-income earners “pay a fair share of their tax on superannuation”.

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Hungry snakes take to Forster’s beaches

A brown snake seen on the beach at Forster. Photo: Edweena Singh The brown snake seen in the water at Forster. Photo: Edweena Singh
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The brown snake in the water at Forster. Photo: Edweena Singh

Snake swims between the flags

Brown snakes just seem to love the beach at Forster on the NSW Mid North Coast.

Last month, Great Lakes Advocate reader Olivia Moffatt took a picture of a brown snake that emerged from the water at One Mile Beach, right between the flags..

Now, Edweena Singh’s photo of a brown snake enjoying the sand and water of Wallis Lake just across from the popular Memorial Drive foreshore has caused a stir on the newspaper’s Facebook page.

“It was on the middle island under the bridge where people swim to and park their boats,” Ms Singh said.

“I don’t know what type of snake it was, just that it was greyish brown.”

However, snake expert John Smith said he was pretty certain it was a brown snake.

“It’s more than likely a brown snake – it’s the only thing it could be at that size and colour,” he said.

“There is a sea snake that’s similar in colouring but it’s a bit thicker in the body.”

Mr Smith, 67, has been handling snakes since he was a teenager and working with them in the Forster area for the past 15 years.

“I can identify most snakes,” he said.

He said the breed normally does not like the water.

“They’re more of a dry country snake. That one at One Mile last month was more than likely spooked into the water.”

It had been a “good” season for snakes, particularly blacks, he said.

“We are getting a hell of a lot of those and they’re all big – lots of six-footers. It could be because of the humid weather – the hotter it is, the hungrier they are, but it’s unusual to get so many big ones like this.”

 

Ms Singh’s pictures got people talking and sharing their own photos of close encounters with snakes.

One that caused a huge reaction on the Great Lakes Advocate Facebook page was from Jody Bosley Cruse, who found a large diamond python on the doorstep at her Tuncurry home recently.

People were keen to know what she did.

Reader Nichole Parkes posted: “Omg how did you react when you saw this? I know I would have been having kittens because damn that’s a big one.”

Ms Cruse replied: “He wasn’t killed – my neighbour who is familiar with removing snakes came in and removed him and my hubby drove him further away to release him back in the bush.”

Sue Beere was, horrified saying simply: “I’d have to move out if I saw that anywhere near my home.”

Great Lakes Advocate

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‘Living her dream’: Family visit scene of Josie Edden tragedy

Family visit scene of Josie Edden tragedy Tributes at the scene where Josie Edden was killed. Picture: Penny Stephens
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Tributes at the scene where Josie Edden was killed. Picture: Penny Stephens

Tributes at the scene where Josie Edden was killed. Picture: Penny Stephens

Tributes at the scene where Josie Edden was killed. Picture: Penny Stephens

Friends at the scene where Jodie was killed on Tuesday. Picture: Penny Stephens

Newcastle’s Josie Edden. Picture: Supplied

TweetFacebookThe parents of Josie Edden have made an emotional visit to the Melbourne site where their only child was killed on Tuesday morning.

Bouquets continue to pile up on the corner of Collins and Spencer streets where the 23-year-old cafe managercrossed against a flashing “don’t walk” signal, tripped and fell in the path of a garbage truckat about 6am.

She had been on her way to work at Code Black Coffee, making the same trip she would have made countless times before.

Her boyfriend Drew Ridley encountered the horrific scene after receiving a call from concerned co-workers telling him that Ms Edden had failed to turn up to work.

Drew’s father Glen visited the site with Ms Edden’s parents, Liz and Paul, on Wednesday and spoke on behalf of the grieving families.

“They’ve just come down to sort out Josie’s things, to have a look at the site obviously, and to spend some time with the people that Josie worked with because they knew nothing of her life in Melbourne,” he said.

“They’re from Newcastle so she led a life that they were completely unaware of.

“Everybody loved her… She’ll be very sorely missed.”

He said it had been overwhelming for her family to see that so many friends, customers and colleagues had been visiting the site of Ms Edden’s death.

“Everybody loved her … She’ll be very sorely missed”. Picture: Penny Stephens

“Customers and employees were just constantly coming through,” he said.

“She was so well liked and well known and they just couldn’t believe how popular their daughter was.”

Josie had met Drew, her “soulmate”, in Melbourne a couple of years ago after making the move from Newcastle to pursue a career in hospitality, Glen Ridley said.

“She heard that Melbourne was the coffee capital of Australia and she was passionate about coffee and food so this is where she came to. [She] was living her dream.

“They were soulmates, they’d have the same ideas. [Drew] is pretty devastated, it’s going to take a while to get him out of this.”

Ms Edden’s parents have released a statement paying tribute to their “loving and fun” daughter.

“She had strong opinions and was a very independent thinker,” they said.

‘Hard to beat’: Toll can’t believe its luck as Japan Post lobs a very sweet offer

Not so Little: Meet the $340m winner in Japan Post’s takeover of Toll
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Serendipity best describes what Toll Holdings shareholders experienced  on Wednesday morning.

Having braced themselves for a poor profit performance and a likely fall in the company’s share price, shareholders in the logistics business must be delighted that Japan Post has pitched a takeover offer that is generous to say the least.

Thus it’s hardly surprising that Toll directors unanimously and heartily endorsed the $9.04 offer, which represented a massive 53 per cent (yes 53 per cent) premium to the pre-offer three-month average trading price.

Making the offer even sweeter, shareholders get their hands on the company’s 13¢ dividend.

Toll chairman Ray Horsburgh described the offer price, which values the company’s equity at $6.5 billion, as “compelling value”.

And while the board remains open to any competing offers, Horsburgh argued it was “such a compelling offer it would be hard for anyone to beat”.

It appears the $85 billion government-owned postal business is heading into the final stages of an initial public offering (IPO) and wants another big business to add to its suite of assets, presumably to offer some earnings upside.

Toll is the lucky product of that Japanese search.

The lure of Toll appears to be its global reach and in particular its Asian network. This network, according to the half year profit announcement on Wednesday, contained its most (almost only) profitable divisions.

Toll Global Forwarding operations improved profit from $13.9 million to $20 million in the six months to December, while Toll Global Logistics notched up an earnings improvement of 11 per cent to around $61 million.

Toll’s push into Asia was unpopular with investors at the time, but was part of the entrepreneurial vision of its previous chief executive (and modern-day founder) Paul Little.

Horsburgh spoke to Little on Wednesday morning with formal notification of the offer (although presumably Little – a 5 per cent shareholder in Toll, which is now worth $340 million – was well aware of negotiations that began last month.  According to Horsburgh, Little had mixed views, but said it was fantastic for shareholders. “Overall he is pretty happy,” says the Toll chairman.

President and CEO of Japan Post Toru Takahashi said: “We believe the combination of Japan Post and Toll will be a transformational transaction for both our companies and we are very pleased we have been able to reach agreement.

“In partnership with Toll we are starting a new chapter of looking outward and becoming a leading global player.”

Where Japan Post has remained focused on its traditional letters business and has not strayed far geographically, it is now using Toll as a launchpad to expand its operations further in Asia, Europe and North America – taking advantage of its skill set, its merger and acquisitions expertise and its contracts and infrastructure.

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Toll Holdings Newcastle roots

Toll Holdings recommends Japan Post takeover bid at $9.04 per share
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Glimpse of Newcastle’s history revealed

TOLL Holdings Ltd, the Australian transport company being chased by Japan Post for $6.5 billion, grew from a company started in Newcastle in 1888.

Back then, Toll was a coal haulage buisiness using horses and carts and founded by Newcastle businessman Albert Frederick Toll.

The company, originally known as A.F. Toll, grew steadily under Albert’s stewardship until his death in 1958 (although some sources say 1960), aged 95.

An early advertising sign for the company – covered by another building from 1937 onwards – was uncovered during demolition work in Watt Street, Newcastle, in November 2009, and featured in the Newcastle Herald.

Albert’s 6th child was the writer Dora Birtles (1903-1992) who wrote four novels, including The Overlanders, and who was also published in the Newcastle Sun.

When Albert died, he left the company to his children, who were already already in their 60s and 70s.

They sold A.F. Toll soon after inheriting to a company called National Minerals for £55,000.

In 1962, Toll was bought by a prominent mining company of the day, Peko Wallsned.

Under Peko Wallsend it grew to become a national carrier under the name Toll-Chadwick, with more than 500 employees and 300 vehicles Australia-wide.

In 1986, it was sold in a management buyout led by businessmen Paul Little and PeterRowsthorn

The buyout team expanded the company dramatically, listing it on the Australian stock exchange in 1993.

The deal made both men rich and Little, especially, has maintained a high profile in Australian business and sporting circles.

Little also has aviation and real estate interests, and has been chairman of Essendon AFL club since July 2013.

Toll’s current chairman is Ray Horsburgh and its managing director is Brian Kruger.