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Keep socialist blog En Passant going - donate now
If you want to keep a blog that makes the arguments every day against the ravages of capitalism going and keeps alive the flame of democracy and community, make a donation to help cover my costs. And of course keep reading the blog. To donate click here. Keep socialist blog En Passant going. More... (4)

Sprouting sh*t for almost nothing
You can prove my 2 ex-comrades wrong by donating to my blog En Passant at BSB: 062914 Account: 1067 5257, the Commonwealth Bank in Tuggeranong, ACT. More... (12)

My interview Razor Sharp 18 February
Me interviewed by Sharon Firebrace on Razor Sharp on Tuesday 18 February. http://sharonfirebrace.files.wordpress.com/2014/02/18-2-14-john-passant-aust-national-university-g20-meeting-age-of-enttilement-engineers-attack-of-austerity-hardship-on-civilians.mp3 (0)

My interview Razor Sharp 11 February 2014
Me interviewed by Sharon Firebrace on Razor Sharp this morning. The Royal Commission, car industry and age of entitlement get a lot of the coverage. http://sharonfirebrace.com/2014/02/11/john-passant-aust-national-university-canberra-2/ (0)

Razor Sharp 4 February 2014
Me on 4 February 2014 on Razor Sharp with Sharon Firebrace. http://sharonfirebrace.files.wordpress.com/2014/02/4-2-14-john-passant-aust-national-university-canberra-end-of-the-age-of-entitlement-for-the-needy-but-pandering-to-the-lusts-of-the-greedy.mp3 (0)

Time for a House Un-Australian Activities Committee?
Tony Abbott thinks the Australian Broadcasting Corporation is Un-Australian. I am looking forward to his government setting up the House Un-Australian Activities Committee. (1)

Make Gina Rinehart work for her dole
(0)

Sick kids and paying upfront

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Save Medicare

Demonstrate in defence of Medicare at Sydney Town Hall 1 pm Saturday 4 January (0)

Me on Razor Sharp this morning
Me interviewed by Sharon Firebrace this morning for Razor Sharp. It happens every Tuesday. http://sharonfirebrace.com/2013/12/03/john-passant-australian-national-university-8/ (0)

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Why the attacks on the disabled, pensioners, the low paid, the unemployed, students, the sick, Aborigines…?

Two items I read today got me thinking, again, about the Abbott government’s ongoing war on social services. Whether it be the low paid, the sick, the unemployed, the disabled, students, pensioners, or Aborigines, to name a few, the Abbott government is unleashing a war on those whom the community supports in some form.

Why?

These attacks are part of a pattern of global attacks by ruling classes, as Allen Myers makes clear in an excellent article called ‘A worldwide attack on social welfare’.

The reason can be found in something Rick Kuhn wrote on Facebook in response to the Bank of International Settlements warning that low interest rates may generate the next financial crisis. He said:

The clearing house for central banks points out that neither increased government spending nor printing money (to which austerity could be added) have restored healthy economic growth and that low interest rates have encouraged another speculative bubble. The underlying problem remains low rates of profit, a consequence of capitalism’s own success in increasing the productivity of human labour.

Marx identified the tendency of the rate of profit to fall as the dagger at the heart of capitalism. The more successful individual capital is, the more of a problem it produces for capitalism. Labor is the sole source of value. The drive for more profit over competitors sees as a generalisation more and more profit reinvested in capital compared to labour and at a greater rate than increases in value extracted from workers. Profit rates fall.

There are counteracting factors to this tendency. Many of them are at work today. Lengthening the working day is one, and that is certainly happening in Australia and elsewhere. Cutting the share of national income going to labour and increasing the share going to capital is another, and that too has been happening over a long period of time in Australia. Cutting real wages is another and that has happened at times over the last 3 decades in Australia, most spectacularly under the Hawke and Keating Labor Governments and the Accord.

Much of the manoeuvring of this Abbott government has been to put greater downward pressure on wages. Dumping the unemployed off the dole for six months, forcing the disabled to work, increasing the pension access wage to 70 are all about forcing desperate people to work for lower wages and drag down other wage rates or slow their increase. Sacking tens of thousands of public servants throws many onto the rubbish bin of unemployment and that too puts downward pressure on wages as more workers compete for fewer jobs.

Another is to cut taxes (on both capital and if needed on workers, but I don’t have the time to go in depth to go into the arguments here.) This frees up more surplus value to be distributed in the form of profits, interest and the like to capital rather than in taxes to the State, and puts less pressure if taxes on workers are cut for capital to pay increased wages.

With less revenue, the State winds back its spending on social services, be they direct payments to the working class (e.g. the dole, disability support pension, family tax benefits, youth allowance) or indirectly through cuts to public services like health, education and transport and support systems like Aboriginal support services, women’s refuges, pensioner concessions, and on and on it goes.

20,000 workers at the bust the budget union rally in Melbourne on 12 June

That is why the attacks on the poor, the low paid, the disabled, the unemployed, pensioners, students, Aborigines and others are a class issue which requires a class response.

That is why I say the best way to fight back is stop work to stop the bosses’ budget.

Bust the budget rallies are being held across Australia this coming Sunday, 6 July. Make them the first step in a major industrial campaign to stop Abbott attacking us and to send a warning to Labor to abandon its attacks on us when it is in government.

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Comments

Pingback from Why the attacks on the disabled, pensioners, the low paid, the unemployed, students, the sick, Aborigines…? | OzHouse
Time June 30, 2014 at 10:11 pm

[…] Jun 30 2014 by admin […]

Comment from Lorikeet
Time July 1, 2014 at 7:41 am

John, I think it is all part of the ongoing move towards setting up a corporate neo-communist regime. If big companies don’t pay their taxes, revenue falls, social welfare and government spending are cut.

Further inroads into our national economy are caused by handouts to the rich e.g. PPL schemes, which force more women out to work while paying corporates to care for their children, and increasing competition for work, thereby driving wages further down.

This also helps corporates to gain control of the property market, as does poor access to housing loans created by short contracts and part-time work replacing security of tenure and full-time permanent jobs.

At least part of the solution lies in a steady u-turn and windback to a fully government funded pension system, giving the grossly misnamed Superannuation system a miss. I believe the huge sums controlled by corporates are driving global economies down, and giving poor returns on people’s life savings as they continue to use profits to build their empires throughout the world.

What do you think?

Comment from Ross
Time July 1, 2014 at 9:38 am

I think you’re right Lorikeet. Super has been a big con and just another pool of money they can milk via their derivative scams.

In the last collapse many people lost 50% of their super. The share market since 2008 has been propped up with QE. Guess where most of your super is ? It won’t come back this time.

When the banking system creates money called QE ,they are depreciating workers ages and savings and then asking for principal + interest.

Now our resource sales to China has waned, our Govts do not have the income to repay debt that was created from nothing. This is why austerity is the solution for the Coalition. They want to drive wages much lower so we can compete with China and improve their profits.

In 1955 a US GMH worker earned $35 per hr indexed for inflation. A Walmart earns $7.50 today with enormous efficiencies in computers, robotics and transportation, where did all that wealth go due to these new efficiencies ?

Comment from Lorikeet
Time July 1, 2014 at 5:36 pm

Yes Ross, many years ago, a friend told me she thought we were becoming little more than a warehouse distributing foreign made goods.

To answer your question, I think the wealth went towards extending corporate empires in the third world.

A friend says he believes that interest rates in Australia have remained low for a very long time because the government gave our economy a soft landing after the GFC.

I’d say that is just one tine of a multi-pronged fork. Another is keeping interest rates so low that people will not withdraw their funds from superannuation. Maybe some will even put some of their money back in.

If the government eventually decides to income and assets test people’s homes (disability pensioners are likely to be the first affected), they will probably have to sell up and put the money into super before receiving any kind of income support.

Or perhaps they will simply be forced into an early retirement (regardless of age) and have to live off reverse mortgages on their homes.

Comment from Kay
Time July 2, 2014 at 6:58 am

Lorikeet

You choose to ignore the fact that the best place for money (apart from the family home) is in superannuation! The world is full of superannuants who can attest to this. It is the most effective way of saving for the future. And you are determined to ignore the fact that within superannuation, you can choose to invest in a very wide range of options from low risk/low return (cash increased only by the interest rate) to high risk/high return (100% shares). So your argument of “keeping interest rates so low that people will not withdraw their funds from superannuation” makes zero sense! If only you would put your intelligence (you have told us many times that you are a genius) towards the task of understanding superannuation.

Comment from Lorikeet
Time July 2, 2014 at 11:06 am

I am not ignoring anything, Kay. I was talking about bank interest rates.

I understand the big picture where the financial system is concerned, and it doesn’t only comprise superannuation.

Nor does the big picture contain only people living off government superannuation pensions, but people of varying ages and stages, with varying personal and financial circumstances.

I agree with the CEO of the National Seniors of Australia that some superannuation income streams should be taxed.

Why would someone decide to pull their money out of superannuation at age 60 (paying no tax) and then put it into a bank account where the interest will be taxed, especially if the interest rates continue to be pathetic?

If they needed the money to pay off their mortgage, maybe that would make sense.

I am unsure as to why you are being allowed to engage in personal attacks on this blog yet again.

I politely suggest that you look a bit more at the multi-pronged interactive financial agenda and try to look beyond your personal circumstances.

Comment from Chris Warren
Time July 2, 2014 at 11:30 am

Kay

Why are you so rude.

Even if interest rates were zero, people would still find superannuation attractive because of tax benefits and safety in diversification.

Comment from Chris Warren
Time July 2, 2014 at 11:53 am

Lorikeet raises an interesting issue.

Only Capital demands “interest”, and it is paid out of wealth produced by workers but not given to them as wages or pensions.

It is similar to rents, in fact, interest is rent-of-Capital.

However under socialism, investment funds can increase wealth with the increase being available to boost wages and to accumulate savings even if interest rates are zero (or close to).

In fact how else can the so-called “circular flow” actually balance unless returns to Capital are zero, and all savings go directly to produce real growth under the control of cooperative enterprises and their networks.

Comment from Kay
Time July 2, 2014 at 3:51 pm

Lorikeet

In superannuation, earnings are taxed at 15% (even the interest on cash) while it is in the accumulation phase. This may be a higher tax rate than interest earned in the bank for people on low incomes. But with interest rates very low, very little interest is earned in any case, and very little tax is paid.

But, in the superannuation income phase, earnings are not taxed at all – as you say – an incentive to live off your own funds. There is now no age at which you are forced to swap to income phase, as you can withdraw lump sums from either phase above preservation age. But clearly the zero taxation rate on the income phase encourages you to take a regular income (which must comply with age-rated minima, and cannot be ceased once it is started).

The government clearly engineers things towards your paying your own regular retirement income. To start taxing the income phase could further encourage people to blow lump sums, then apply for the aged pension, something the government does not want. Perhaps the government could consider taxing lump sums from an income stream (to further discourage lump sum withdrawal), but that could be hard on people needing to finish paying off their family home mortgage, or needing it for big medical bills. The favourable tax treatment on superannuation is a two-pronged issue – it deprives the government of some potential revenue by forgoing tax in the income phase, or by taxing at only 15% on earnings in the accumulation phase (a much better tax rate for higher income earners), but it saves expenditure long term by not having the person pick up an aged pension. Favourable tax treatment on super is common throughout the world for the same reason.

BTW where are the “personal attacks” in my comment. I was just pointing out that having interest earned in super or in the bank has a double side to it – depending on your salary/income. And my ongoing concern is your oft-stated opposition to superannuation – implying that it is a bad thing for people.

Comment from Kay
Time July 2, 2014 at 4:11 pm

Chris

“people would still find superannuation attractive because of tax benefits and safety in diversification.” Yes, you are correct – the government clearly wants people to self-fund their retirement through superannuation, and hence the favourable tax treatment as an incentive. As for diversity – yes once again, within super you can choose your level of diversity from none (100% cash etc) to a high level of asset diversity (cash, bonds, fixed interest, property, Australian shares, international shares, infrastructure, etc) – something difficult to achieve by an individual outside of a super fund. For those two reasons, like most other people, I favour superannuation as a saving tool.

I am not at all convinced by your socialist super model though. I would like to see evidence that it actually works. We have plenty of evidence that the current (capitalist) super system works pretty well, although it is multifaceted.

Comment from Lorikeet
Time July 2, 2014 at 7:32 pm

Superannuation is a system which discriminates in favour of the rich, allowing them to minimise taxation. When the Age Pension is phased out, the poor will live in the streets on bread and water, while the rich live high on the hog and go on multiple overseas trips.

It is my belief that the superannuation system is also tied to the global redistribution of populations and wealth, the very system which is leaving Australians without work (or superannuation contributions).

In recent times, Paul Keating has called for the contribution rate to rise to 15%. Only a few days ago, some other numbskull wanted it to rise to 20%. Such a move would see the demise of even more small businesses, leaving corporates as contributors and holders of superannuation moneys.

What will these money hungry bankers do when people are too old or disabled to work? Answer: “Voluntary” Euthanasia Bill being pushed by Adam Bandt from the Australian Greens.

Comment from Lorikeet
Time July 2, 2014 at 7:37 pm

Kay, to my knowledge, my superannuation is not being taxed at all in the accumulation phase, but may be heavily taxed when withdrawn. Maybe this is because it comprises only non-concessional contributions.

Comment from Kay
Time July 3, 2014 at 8:09 am

Lorikeet

All EARNINGS in the accumulation phase of super are taxed at 15%. Earnings include interest, dividends, capital gains etc – depending upon which asset class is included in your chosen investment option. I have my super in two phases – I still have some in accumulation, although I will probably convert that to income phase soon, and some already in the income phase, paying me a small regular, currently untaxed, income. The earnings on the accumulation money are taxed at 15%, thus giving me a lower rate of return for that part of my superannuation. The earnings in my income money are untaxed, giving a slightly higher (by 1% to 1.5%) rate of return. Both pots of money have the same medium-risk asset class combination.

Much of my super savings are also non-concessional – taxed before going into super. The employer component is concessional – taxed at only 15% on entry to the fund. Salary sacrifice wasn’t available long enough before I retired to make that a real option (also concessional contributions).

The tax you will pay will depend upon your age at withdrawal, and other factors. This link explains it all:
https://www.ato.gov.au/Individuals/Super/In-detail/Receiving-benefits/Withdrawing-your-super-and-paying-tax/

Comment from Chris Warren
Time July 3, 2014 at 11:58 am

Kay

Please stop this disruption.

As the basis for socialist superannuation was provided early it is not reasonable for you to say;

I am not at all convinced by your socialist super model though. I would like to see evidence that it actually works. We have plenty of evidence that the current (capitalist) super system works pretty well, although it is multifaceted.

Every relevant statement made by recent Liberals precisely contradict you – they are as at one saying that current superannuation arrangements are not sustainable.

If you have evidence to back up your statement please send it to Joe Hockey and the Department of Finance.

Socialist super is guaranteed to pay a minimum pension of 25% of adult earnings (not average ordinary time earnings) if over 35 years of fulltime work (25-60), contributions between government, enterprise and workers total 20% and the first 2.5% real annual earnings are free of taxes, fees, and capitalist imposts.

This produces a guaranteed retirement fund of 10 times annual average wage.

If this is deployed in assets which earn 2.5% then the resultant flow of funds is 25% of an annual wage.

There is no withdrawal of equity, so the pension could be greater if this was factored in. However the assumption of no withdrawal means that the pension lasts forever and everyone has the retire after around 35 years.

If you are “not convinced” you are just pretending or do not understand the necessary high school financial formulas.

Socialist super is the only way workers can defend their aged entitlements.

Comment from Kay
Time July 3, 2014 at 5:31 pm

Chris

If your socialist form of super is so fantastic, it is a puzzle it exists nowhere in the world.

And it is perfectly reasonable for me to say I
“I am not convinced ……”. I think I know if I am convinced or not – and I’m not. For starters, you don’t indicate whether this 20% total contribution goes straight into Consolidated Revenue (like the old Commonwealth public service super fund, and some other European countries like Germany), or whether you expect it to be fully funded and invested (like current superannuation schemes which do not create a future government liability). You seem to suggest fully funded, as you talk about a 2.5% earning rate – a pretty low return. How would you invest it? You seem to object to current investment models. And 25% of adult earnings ($75K) as a pension? – that’s not much to live on – around $19K – given the aged pension for a single person is around $22K. Or do you mean 25% of the income the person received before he/she retired? You also mention “average wage” ($58) as well, so I’m a bit confused. And how much do you imagine the government can afford to contribute anyway? Very little, I expect.

The current super arrangements are not good enough because only employers are contributing. Employees need to start putting in some money too. The government contributes via tax breaks, and the low income super contribution which unfortunately is going to be axed because it was never funded. I thought the Libs were saying the aged pension is not sustainable – which it isn’t.

Australia has many superannuants surviving quite comfortably on their own super. I’m pretty sure they would all agree the system is working pretty well. As time goes on, the percentage of retirees self-funding will increase. What form of income are you living off? I thought (I may be wrong) you mentioned once before that you were a retired public servant – in that case, living off your superannuation. Is that correct? Defined benefit or allocated pension? Or won’t you answer that question?

Comment from John
Time July 3, 2014 at 6:08 pm

Kay, Chris imagines a ‘socialist’ superannuation scheme leaving capitalism in place. There is nothing socialist about it.

Comment from Chris Warren
Time July 3, 2014 at 11:11 pm

Kay

2.5% is a low return but this is all that is required to achieve a pension of 25% average earnings after 35 years.

Due to several factors a socialist economy will have slower but crisis free economic growth rate, not reliant on increased per capita debt or on importing cheap resources from overseas.

25% is a frugal lifestyle but is the current standard for Commonwealth full aged pensions. But it would be a guaranteed minimum. However in practice it could be supplemented by some withdrawal of equity.

I expect that with economic growth around 2.5% it should be easy to invest super funds at 2.5%. During favourable times these figures may be higher.

25% pension is best based on average annual earnings, not just average annual ordinary times earnings. It is independent of any individuals final salary, although beyond this supplements based on factors such as magnitude of contributions or final salary can be introduced. This involves withdrawal of equity or achieving more than 2.5% growth.

Today’s aged pension consists of a base rate plus supplements. 25% determines the base rate before supplements.

I am quite happy living off my super but I know that the contradictions of capitalism have denied this for those currently doing the same work as I once did.

Comment from Chris Warren
Time July 4, 2014 at 8:58 am

yes it leaves capitalism in place in society at large, but not in the superannuation scheme.

It is not a communist scheme, but it is an expression of enclave socialist principles within capitalism.

It draws contributions from those based on capacity to pay and gives entitlements based on need.

This is not capitalism.

Comment from Kay
Time July 4, 2014 at 9:20 am

Thanks, John. That clarifies things somewhat.

Comment from John
Time July 4, 2014 at 9:41 am

Well it is if the wage system remains and is the basis for re-distribution.