Sunday, 22 April 2012

Incentivising Super

A report in the Australian yesterday detailed looming government plans to weaken superannuation related tax breaks in next month's federal budget.  The existing arrangements were designed to incentivise voluntary saving, particularly among higher earners, so as to reduce the pressure on government finances in future decades.

The finance sector has reacted swiftly to the news, with a number of industry leaders warning of potential damage to the budget bottom line in the future.  The measures currently under consideration by the expenditure review committee would aim to increase revenue by several billion dollars in the short term, undoubtedly in an effort to achieve Labor's promised budget surplus for the coming financial year.

Financial Services Council chief executive John Brogden had this to say:

"It would be very short-sighted for the government to try and pull out more tax now," Mr. Brogden said last night.  "All they'd be doing is leaving future governments with a bigger bill for pensions, healthcare and aged care."

Mr. Brogden has hit the nail on the head.  The objective of these tax breaks has always been to increase the number of self-funded retirees, thereby lowering the financial burden on future governments as the population ages.

Without unambiguous incentives to contribute voluntarily to their super, more Australians will elect to keep their wages in full.  This will inevitably mean more retired individuals on the pension, unable to fund their own care and draining money from other government services.

One could even make the argument that existing incentives for super contributions should be boosted, rather than weakened.  For example, the current system includes a cap on annual concessional contributions - the lower tax rate for voluntary super only applies until a certain point.

If you are fifty years or older, the current cap on annual concessional contributions is $50,000 ($25,000 for younger workers).  It had previously been double that, prior to changes enacted by the current government in the 2009-10 financial year.  So once you have invested $50,000 in your super for the year, the tax incentive disappears and any further contributions are taxed at the regular wage rate.

Why is this?  Surely a government with true foresight would implement policy settings with the intention of maximising voluntary superannuation investment.  All politicians seem to enjoy a good whinge about the difficulties of Australia's ageing population - well, here is a chance to do something intelligent about the situation.

This government has previously demonstrated that it does not quite understand the power of tax incentives, particularly as they apply to wealthier individuals - think of the private health insurance rebate.

David Crowe reports:

Shaping the government strategy is the belief that the investment industry will gain greatly from the increase in the super guarantee levy from 9 per cent to 12 per cent by 2020, letting all workers save more for retirement.

The increase in the levy, incidentally, is funded by employers, which means that it will be subtracted from workers' future wage growth.  But leaving that aside, this increase in the guarantee, coupled with decreased tax incentives, can only lead to greater complacency and a reduction in voluntary contributions.

In reality, the compulsory level of super investment is vastly insufficient to fund anyone's retirement, particularly as the average life expectancy continues to increase.  It is of crucial importance that workers take the initiative and save aggressively for their autumn years, even as that means sacrificing some of their take home pay in the present.

This will not happen if they see no clear, unambiguous incentive.  The tax system should therefore prompt individuals to contribute as much to their own retirement as possible.

Governments should remain eternally mindful of the fact that when they tax super contributions, they are effectively taking money from future retirees.  The less they take now, the less they will be required to fork out in the future.

Wednesday, 18 April 2012

Hurting Your Own Cause

Marriage equality protester Ali Hogg caused a scene in Melbourne over the weekend when she confronted Tony Abbott at a cafe as he dined with a journalist.

Ms. Hogg, with the help of several supporters, shouted slogans at the Opposition Leader, accusing him of bigotry and homophobia.  The activists continued to chant outside the cafe's window after being forcibly removed by staff.

It does the gay marriage movement no favours when protesters act in this manner, ambushing targets and disrupting the lives of bystanders (Mr. Abbott was not the only patron present in the cafe).  Far from spreading sympathy for her cause, if anything Ms. Hogg will have hardened the hearts of anyone who was present over the weekend.

This incident betrays the immaturity and closed-mindedness of many gay marriage activists.  Those who speak out with the loudest voices, forming the public image of the movement, often seem to be those who have devoted the least effort to understanding any positions that may differ from their own.  In Ms. Hogg's opinion, anyone who disagrees with her must be a homophobic bigot.

You do not change minds and win hearts by bullying dissenters and rudely disrupting peoples' lives. Ms. Hogg is promoting a good, worthy cause, but her juvenile behaviour over the weekend could only ever have been counterproductive.

Sunday, 15 April 2012

Milne's First Foray

Christine Milne has quickly dipped her toes into the already thriving business of blaming Tony Abbott for everything that ails the Labor government.

New Greens leader Christine Milne says Opposition Leader Tony Abbott is to blame for creating an environment where Labor feels it is locked into delivering a budget surplus in the May budget even though economic circumstances have changed.

Have the Liberals been keen to highlight the government's fiscal excesses over the last four years? Yes. That is the opposition's job, after all.

But the reason that Julia Gillard and Wayne Swan are so politically wedded to the delivery of a budget surplus in May is very simple. They promised it. Over and over again.

When the government's fiscal credibility was thrown into jeopardy by billions of wasted stimulus dollars, Labor told the electorate that it would prove itself.  The budget would be returned to surplus in 2012-13, and that would put the government's economic credentials beyond doubt.

The government will be judged by the measure of performance that Wayne Swan himself has repeatedly laid out. Tony Abbott did not promise the Australian people that Labor would deliver this surplus. Labor did.

Saturday, 14 April 2012

Stale Tactics

Barack Obama, during his acceptance speech at the 2008 Democratic Convention in Denver, Colorado:

"If you don't have any fresh ideas, then you use stale tactics to scare voters.  If you don't have a record to run on, then you paint your opponent as someone people should run from."

You can expect to see this quote again during the general election campaign, and not without good reason. President Obama's own words could become a potent weapon against him.

'Guns For All Mankind'

Politico's James Hohmann is in St. Louis for the National Rifle Association Conference, at which both Rick Santorum and Newt Gingrich spoke yesterday.

Mr. Santorum, who recently suspended his presidential campaign, proudly announced that his sick daughter Bella is now a lifetime member of the gun group.  Bella Santorum is three years old.

Mr. Gingrich, still running, promised that he would submit a treaty to the United Nations seeking to make the right to bear arms, which is enshrined in America's second amendment, a universal human right.

"Far fewer women would be raped.  Far fewer children would be killed... and far fewer dictators would survive if people had the right to bear arms everywhere on the planet."

All of these assertions are simply wrong.  A plethora of studies have shown that higher gun ownership rates lead to higher levels of violent crime, whether one examines the developing world or even the United States itself.

Even were that not the case however, it is interesting to hear a United Nations sceptic such as Mr. Gingrich suggest that a UN decree would have a quantifiable effect on anything.  Are dictators going to start supplying their oppressed populaces with weapons, just because of Mr. Gingrich's petition?

That is of course assuming that his proposal would not be laughed out of the chamber.

The fealty with which conservative Americans in particular defend gun ownership is disappointing. Surely any concerns over the principle of individual liberty are in this case superseded by the moral imperative to limit loss of life due to violent crime.

These same individuals who call themselves 'pro-life' all too often offer enthusiastic support for the death penalty and respond with outrage to any effort to take deadly weapons off the streets.

Mr. Santorum's announcement that he had made his baby daughter a lifetime NRA member earned wild applause from yesterday's enthusiastic pro-gun audience, but for many others it would have been a deeply disturbing moment.

Mitt Romney also spoke at the conference, giving voice to a more moderate pro-gun stance.  His arguments on the issue seem positively mature, juxtaposed with the stubbornly unyielding position of many Republicans - but he is equally wrong.

There will be no lasting gun reform in the United States until conservatives are convinced of the moral imperative.  This argument will have to be made by one of their own - a popular, courageous conservative leader.

We may be waiting for quite some time.

Dr. Brown's Legacy

Dr. Bob Brown's retirement from politics leads one to reflect upon the contribution he has made to the Green movement in Australia.  He can undoubtedly look back upon his career with pride, having successfully created a genuine third force in the parliament.  His commitment to the cause of environmentalism has been unquestionable.

He leaves on a high note, having taken his party to a position of real power in the minority Gillard Government.  The defining policy of Ms. Gillard's tenure thus far, the carbon tax, is a direct result of the Greens' influence.  Bob Brown did, at least in this instance, completely out-negotiate the so-called 'great negotiator'.

But what of the Greens' fate now, in the aftermath of their founder's departure?  Dr. Brown was a savvy and talented politician.  His successor, Christine Milne, is not in the same class, and she struggles to present herself so endearingly to the public.  

Waiting in the wings are two ambitious Senators who represent the next stage in the Greens' evolution.  Sarah Hanson-Young and Lee Rhiannon are a different political breed to Dr. Brown and his former deputy - while environmentalism has been at the heart of the Greens' philosophy thus far, for this next generation of leaders it plays only a complementary role in a wider platform of economic socialism.

There is a real risk that Bob Brown's exit will presage the waning of his party's power, much in the same manner as Cheryl Kernot's departure doomed the Democrats.  

The Greens must now fight internally to remain the unthreatening environmental party that was exemplified by Dr. Brown's public image.  The extremism of Senators Hanson-Young and Rhiannon can only hurt the party's cause in the future.

Thursday, 12 April 2012

Opposition Leader Obama

"We are up against decades of bitter partisanship that cause politicians to demonise their opponents instead of coming together.  It's the kind of partisanship where you're not even allowed to say that a Republican had an idea - even if it's one you never agreed with.  That kind of politics is bad for our party, it's bad for our country."

Candidate Barack Obama said a lot of sensible things.  His rhetoric stressed the importance of a unified America - not red states and blue states, but united states.  His speeches decried the hyper-partisanship that had come to typify American politics.

Four years, it would seem, can make all the difference in the world.

President Barack Obama will soon seek re-election, and the most striking aspect of his second term agenda thus far is that it does not exist.

Mr. Obama, a sitting executive with a full term of experience, is not travelling the length and breadth of the nation spruiking the successes of his tenure thus far.  Nor is he providing an uplifting vision for the future.

No, the President seems to think that his time would be better spent savaging his political opponents.

Most recently, Mr. Obama launched a blistering attack on the House Republican budget, which was crafted in an effort to address the nation's snowballing debt crisis.

The national debt, which has expanded at an unprecedented rate under the current President, is driven in large part by an increasingly steep growth in entitlement spending.  The Congressional Budget Office predicts that by the middle of the century entitlements will consume all tax revenue, leaving aside no funds to provide other essential government services.

Mr. Obama has offered no comprehensive plan to address the national debt.  He has made no contribution to the debate over entitlement spending, beyond excoriating any plan put forward by Republicans.

This is not leadership.  It is not even 'leading from behind'.

Say what you will about Mitt Romney and Paul Ryan, they have at least displayed enough political courage to address the looming debt crisis in a meaningful way.  They are prepared to take potentially unpopular proposals to the American people and argue their case.

Meanwhile, the man who was elected in 2008 to lead the nation through the most troubled of times seems content merely to stand back and criticise.  To engage in the very hyper-partisan attacks that, not so long ago, he decried.

"Over time, our weather forecasts would become less accurate because we would not be able to afford to launch new satellites.  That means governors and mayors would have to wait longer to order evacuations in the event of a hurricane."

Is this really what we want from the President?  For him to travel across the country, spreading the generationally important message that his political opponents threaten the accuracy of weather forecasts?

No, Mr. Obama was elected to lead.  If the President truly believes that Republicans will take America down a path of 'social Darwinism', then he should present us with an alternative vision. Tell us how he will address the national debt without reforming entitlements.  How he will drive economic growth while raising the tax burden on business.

For President Obama to prove that he deserves a second term, he must cast aside the invective of recent weeks and meet Republican policies with his own, better ideas.

He can either claim the mantle of leadership, or he can shrink into a sad caricature of the partisanship he promised to sweep away four years ago.

Saturday, 7 April 2012

Abbott and Homosexuality

A fascinating report in the Australian today reveals that one of Opposition Leader Tony Abbott's sisters, Ms. Christine Forster, declared her homosexuality four years ago.

In 1992, Forster returned with her husband to Australia where they raised four children a stone's throw from her elderly parents on Sydney's north shore.  Her home served as a meeting place for gatherings of the extended family.  To outsiders it seemed a comfortable, conventional suburban existence, but in 2008 Forster made the agonising decision to come out as a gay woman.  She'd met Virginia Edwards when they were parents with sons the same age at the local parish school.  They forged a friendship then fell in love.

Mr. Abbott is of course a strident defender of traditional marriage, and he is a favourite target for ridicule over the issue of homosexuality.  His Q&A appearance during the last election campaign highlighted the awkwardness of this debate for Mr. Abbott in the public arena:

The questioner in this video openly accuses the Opposition Leader of harbouring fear and ignorance of homosexuals, and of denying them proper dignity and respect.  Host Tony Jones rather smugly suggests that if only Mr. Abbott 'got to know' some gay men, he could change his opinion.

We now know that the issue of homosexuality was much closer to home for this man than anyone realised at the time.  Questioned by the Australian's Kate Legge, Mr. Abbott recounts his own personal reaction to his sister's decision:

Abbott says he was "absolutely flabbergasted" by the end of Forster's longstanding marriage because he'd always thought it was "a fantastic partnership".  But his sister felt he understood the turbulent and distressing crisis she was going through.  He listened sympathetically.  He offered counsel when it was sought and he didn't make judgements.
"These things happen," Abbott tells me.  "The marriage ended.  For Chris it was replaced by something else that is marvellous.  She has regrets but she did something brave, authentic, something she felt had to be done.  I can respect that even if I can't in every sense understand it... I've come to the view over the years that the only side you can take is that which tries to maintain relationships.  Getting judgemental in ways which damage relationships does no one any good.

It is impossible to entirely comprehend the ordeal that Ms. Forster would have undergone as a result of her decision to come out, particularly within the context of an intensely Catholic family and community.  Mr. Abbott, his wife Margie and their three daughters were the first members of Christine's extended family to welcome her and her partner as a couple into their home.

The Opposition Leader has also worked hard for four years to keep his sister out of the public spotlight, despite the fact that his relationship with her could have helped to soften his image as an outdated social conservative.

In 2010 he persuaded a newspaper editor to drop a story about Forster's sexuality out of concern for his sister and her family.  Their welfare has dictated his response above any vanity for his own image.  Suffering insinuations that he remains quarantined from the breadth of humanity was a small price to shoulder.

This episode serves to highlight the deeper character of a man who is too broadly caricatured in the arena of public discourse.  It is reminiscent of an earlier controversy in 2005, which has largely been forgotten since Mr. Abbott assumed his party's leadership.

Abbott's girlfriend from university days had got pregnant in 1976 and they'd both assumed he was responsible.  They'd remained friends, stayed in touch and often wondered what would happen if the son they'd put up for adoption ever made contact. When he did, the then Liberal minister did not flinch.  He supported his former lover and welcomed the 'son' into his family.  Abbott's wife Margie was magnificent during the drama.  And when DNA tests later revealed Abbott was not in fact the father, he responded with sensitivity to this twist of fate.

Mr. Abbott to this very day suffers, at least among a significant portion of the public, from a lingering impression that he is a harsh man, lacking in those most basic human values of compassion and tolerance.  He is often caricatured as an unyielding right-wing dogmatist, and is frequently labelled (among other things) xenophobic, racist and homophobic.

Yet an objective appraisal of the evidence leads one to conclude that Tony Abbott is in fact a man of immense character.  Whatever one may think of his policies, or of his rhetorical style, Mr. Abbott is universally acclaimed by those who have known him as a fundamentally decent person.

All of this is not to say that he would necessarily make a good Prime Minister.  Policy, as much as character, would be the determining factor in that regard.  I personally disagree with Mr. Abbott on the issue of gay marriage, and I find it hard to even comprehend the reasoning behind his position on the matter.

But it becomes much more difficult to demonise the man when we are granted such insights into the realm of his personal life.

A Lecture from the Constitutional Law Professor

President Obama, discussing the fate of his trademark health care legislation (currently before the Supreme Court), made these statements several days ago:

"Ultimately, I'm confident that the Supreme Court will not take what would be an unprecedented, extraordinary step of overturning a law that was passed by a strong majority of a democratically elected Congress."
"That an unelected group of people would somehow overturn a duly constituted and passed law." 

It is difficult to believe that the man who uttered those words actually taught constitutional law at a widely respected university.

First of all, it matters not one jot whether the law was passed by a strong majority.  Though, for the record, the President was dead wrong about that as well.  The law scraped through the house by just seven votes, even though the Democrats held a majority of nearly a hundred in that chamber, and it only earned the Senate's approval after weeks of back room dealing.

Aside from such quibbles however, for Mr. Obama to suggest that it would be 'unprecedented' and 'extraordinary' for the Supreme Court to overturn a law passed by Congress is so remarkable as to make one's jaw drop.

I remember learning in middle school, let alone university, that the Supreme Court's role in the American system of checks and balances is to vet laws for constitutionality.  The Court is there for the express purpose of overturning unconstitutional legislation.

Mr. Obama's statements, which he has since tried valiantly to step back from, were nothing short of ridiculous.

The President's remarks have been notably strident and partisan of late.  He should be careful, lest he shed some of his characteristic gravitas.

The Hunger Games

A rigorous debate has broken out as to whether this year's hit film, "The Hunger Games", is appropriate material for the young teenagers who constitute its primary target audience.

Each year, the Panem government forces twelve surrounding districts to surrender a boy and a girl as 'tributes', so that they may compete in a televised fight to the death.  Not only does this ritual serve as entertainment for the ruling wealthy, but it also quells any thought of rebellion among the oppressed workers.

The story's protagonist, Katniss Everdeen, is portrayed as a hero, if an imperfect one.  Having volunteered for the Hunger Games in order to save her sister Primrose from almost certain death, Katniss for the most part does as the ruling class would require:  she appears on their television screens as entertainment, she competes for wealthy sponsors and she eventually does participate in the games themselves, taking several lives in the process.

Is it right to view Katniss as a hero?  Do we want our children to idolise this character?  I would argue that, in fact, Ms. Everdeen can teach the viewer some very valuable lessons.

Firstly, and most obviously, she personifies the principle of self-sacrifice.  In a world where children are randomly taken from their families while their parents stand passively by, Katniss bucks the trend.  When her sister Prim is selected to participate in the games, Katniss steps forward without hesitation to take her place, even knowing that she is in all likelihood signing her own death warrant.

This selfless streak is revealed later in the film as well, when Ms. Everdeen again risks her own life in order to procure medicine for her friend Peeta.

While the movie fails to show it in depth, the book clearly outlines the manner in which Katniss has assumed responsibility for the wellbeing of her family.  With her father dead and her mother paralysed by grief, Katniss takes it upon herself to feed and clothe her sister.  She even places her name in the draw for the Hunger Games many more times than required in return for the food that her family needs.  Responsibility is a quality that all children should be taught to admire.

One could argue that the protagonist's character is nevertheless sullied by the fact that she agrees to participate in the games at all.  She does personally kill three other teenagers.  But it should be noted that she, along with a number of other children, refuse to actively hunt their peers.  The plot is deliberately orchestrated so that any kills by these characters are conducted in the context of defence, rather than attack.  Katniss befriends and protects several of the more vulnerable children, even as they are technically supposed to be fighting to the death.

The competitors are all clearly classed as either 'good' or 'bad' characters.  The 'bad' children are aggressive, and the 'good' kids passive.  Cold-blooded murder is portrayed in a horrific light.  The 'bad' characters focus their energies on combat, while the 'good' children make use of survival skills.

Finally, there is a defining moment towards the end of the film in which Katniss defies the ruling elite, foreshadowing an inevitable rebellion by the districts against the abominable regime.  It is made abundantly clear that the existing state of Katniss' world is reprehensible, and that the Hunger Games themselves are an evil exercise.

Is "The Hunger Games" a dark movie, at least by the standards of its genre?  Yes.  Is Katniss Everdeen a perfect role model?  No.  But this fictional world has a greater story to tell yet, with a sharper underlying tale of morality.  And the hero will inevitably develop further.

It should be said that there is nothing wrong with an imperfect hero.  Katniss has a wide range of truly admirable qualities:  selflessness, courage, determination, humility, responsibility, compassion, love and undoubtedly many more.  She shows the audience that even in a dark, twisted world without much hope to speak of, a mere frightened girl can change the course of history.

But Katniss Everdeen is human.  She has faults, doubts and moments of weakness.  She is a protagonist with whom our children can identify, and her story is all the more potent for it.

Friday, 6 April 2012

The Forgotten Elephant

Percy Allan, president of the Australian Institute of Public Administration and former head of the NSW Treasury, had some choice words to say about the NBN yesterday.  The project seems to have avoided the headlines in recent times, slipping somewhat under the radar.

That is regrettable.  Such a huge investment of taxpayers' money - the biggest single government expenditure in Australian history - should be subject to the most intense of scrutiny.  Mr. Allan would seem to agree:

"That choice might be to spend $36 billion ripping out copper wire and disconnecting Foxtel cables and starting afresh, which is the proposition we are facing.  But had they examined the need, examined options and consulted they might have discovered cheaper ways to fill the need."
"If a lower than expected proportion of people end up subscribing to it because they don't want to pay Rolls-Royce prices for a Rolls-Royce service, this thing is going to be a financial disaster - watch public opinion then."

Mr. Allan suggests that the Labor Party's image is at stake, not just now, but for many years to come.  The party already suffers from the impression that it is profligate - a stigma that has lasted since the Whitlam government of the 1970s.

Mr. Whitlam may be remembered fondly by many people, but his legacy has contributed significantly to the lingering public impression that conservatives are by default better economic managers.  His government continues to haunt the Labor Party even now, four decades after it left office.

Memories fade, and that impression of profligacy will weaken, with time - provided that Labor consistently bucks the stereotype.  The Rudd and Gillard governments have thus far failed in this regard - and if the NBN goes pear shaped, then Labor will struggle for fiscal credibility for decades to come yet.

Sunday, 1 April 2012

Premature Predictions

Many are asking whether Labor's current electoral struggles are a sign that the party is finished as a force that can win government in its own right.  There is undeniably a trend away from Labor across the entire nation at the moment - crushing defeats in Queensland and NSW, further losses in Victoria and WA, and struggling governments in SA and Tasmania are all testament to this fact. Federal Labor is limping along with a primary vote in the twenties.

The party's recent woes - all the more remarkable considering that Labor held power in all states, and federally, just four years ago - have led a number of analysts to assert that it can effectively no longer win power without allying itself to the Greens.  The nation's oldest political party is hamstrung, bleeding votes profusely from both flanks as it struggles to unite its traditional working class base with the more urban, intellectual hard left.

The Labor Party certainly faces a significant challenge to its identity, that much at least is undeniable.  But to suggest that it is finished as a party that can stand on its own two feet is horrendously premature at best.

Experts and commentators have always been drawn to doomsday scenarios, and the field of political punditry is no exception.  Human nature is full of such curiosities.

Look no further than the aftermath of President Barack Obama's sweeping victory in 2008.  There was at that time something of a consensus in the media that the GOP would be forced to undergo a dramatic transformation in order to maintain relevance for modern times.  Otherwise, the conventional wisdom said, Republicans would be swept away by the political zeitgeist.

It took no more than two years for the pendulum of public opinion to swing back the other way. Now Republicans control the House, are threatening to take the Senate, and have President Obama in a vulnerable position as he seeks re-election.

The lesson here is that such sweeping, hyperbolic predictions should be consumed with a fat grain of salt. Yes, the Labor Party is in the doldrums now, but public support has always ebbed and flowed. Given five years to recover, Labor may find itself threatening to reclaim power in a number of states.  The Greens may have receded back into relative irrelevance, and the pundits may have turned their attention to the Liberals' impending doom.

This is not to say that Labor should ignore the fundamental split in its base, far from it.  But the party must remember that elections are won in the centre ground - and swing voters are a fickle bunch.  The pendulum is always swinging.