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Talking points out the window as pollies switch from postmodern to the surreal

”We just have to bind together as a party and get on with it!”: Joel Fitzgibbon made quite an appearance on Channel Seven’s Sunrise program. Photo: Jonathan Carroll As the 43rd Parliament lurches towards its nether end, the vibe around the place grows increasingly postmodern. Which is to say – deconstructed, self-referential, culturally relative and, in select cases, more incoherent than the poetry of typewriter-bound monkeys.
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On Tuesday Labor MP and serial Julia Gillard irritant Joel Fitzgibbon began the day with what a jazz cigarette-smoking post-structuralism student would call a very ”meta” television appearance – an interview in which he deconstructed the very process of being interviewed.

Breakfast television host David Koch asked Fitzgibbon about the uniformly disastrous for Labor poll results splashed across three newspapers on Tuesday.

”Joel, Joel, Joel, are you shattered by this?” Kochie asked.

”Hang on, Kochie!” cried the Member for Hunter, with the sort of ebullience and maniacal eye-glint of a man about to go over the top of a rain-and-rat-sodden trench. ”I just brought the manual with me! I’ll see what it says!” he said, and then he held up an actual manual, which looked a lot like the ”talking points” MPs of both sides are issued with daily.

The talking points everybody knows about, but nobody is supposed to talk about.

”It says I should say, ‘Polls come and go but the only poll that matters is on election day!’ ” Fitzgibbon laughed.

In the same interview, Fitzgibbon mentioned there was a seminar being held in Parliament House for retiring MPs and quipped: ”I hope there is not a rush for the door!” Then he pointed out that he had, a few months ago, ”suggested that the party wanted to think about new directions and paths” – a reference to his support for a Kevin Rudd revival, so passive-aggressive it would make your mother-in-law blush.

And then, in a final flourish: ”We just have to bind together as a party and get on with it!”

Just as the Prime Minister’s communications strategy team was about to call in a drone strike, the Member for the Queensland seat of Moreton, Graham Perrett, took to ABC Radio, and operations had to be redirected.

”We are in more trouble than Indiana Jones,” he admitted.

Asked whether he thought Rudd should return as Labor leader to stem the catastrophic electoral tide, Perrett answered in idiosyncratic fashion.

”If my aunt had testicles, she’d be my uncle, wouldn’t she,” he said.

Yes, we suppose she would. We’re just not quite sure where that leaves us, other than in the obvious place – that is, more confused than the gender identity of Graham Perrett’s mother’s sister.

This story Administrator ready to work first appeared on Nanjing Night Net.

Coalition steps back from workplace bullying moves

A law to help employees achieve a better work-life balance could pass Parliament with the Coalition’s support – but only if new powers to tackle bullying are removed.
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Fairfax Media has learned that the opposition will move amendments to the Gillard government’s Fair Work Amendment Bill that would strike out the new anti-bullying powers for the Fair Work Commission and also the increased ability for unions to meet in lunchrooms.

The action comes despite the Coalition declaring last month that it would support the bullying powers – so long as they also covered union conduct and included a ”filter” to prevent vexatious complaints.

Workplace Relations Minister Bill Shorten described the new stance as a backflip by a party ”choosing to play politics rather than to protect vulnerable workers”.

But opposition sources insist the Coalition will still legislate for the bullying powers, as per its policy, if elected on September 14 and had merely proposed simple amendments to allow the government’s own workplace law to pass this month.

The manoeuvring follows Tuesday’s declaration by key independents Rob Oakeshott and Tony Windsor that they would not support workplace changes unless they had bipartisan backing. The hung Parliament means the Labor government needs support from either the Coalition or most crossbench MPs to get laws through the House of Representatives.

The Fair Work Amendment Bill, currently being debated in the lower house, would expand the right for employees to request flexible work arrangements, require employers to consult with employees about changes to regular rosters or ordinary work hours, and adjust the way in which parental leave can be taken.

The bill would also require the Fair Work Commission to take into account the principle of penalty rates for unsociable hours when setting award conditions – a move flowing from the ACTU campaign against ”insecure work”.

The proposed bullying measures, meanwhile, would give Fair Work the power to issue an order to prevent workplace bullying from continuing.

Fair Work would be required to start dealing with each case within 14 days, in a move the government argued would give people a new speedy avenue to resolve bullying problems before they escalated in severity.

Business groups have warned the measure would overlap the work of existing state-based health and safety regulators. Last month’s budget earmarked an extra $21 million over four years to help Fair Work deal with the cases.

In a letter to the government on Monday, opposition workplace relations spokesman Eric Abetz pointed to Mr Windsor and Mr Oakeshott’s call for bipartisanship. Senator Abetz flagged Coalition amendments, including the removal of the section dealing with bullying.

”While the Coalition supports measures to stop workplace bullying, the provisions contained within this bill require significant amendment and should be excised until such a time as such changes have occurred,” he wrote.

Senator Abetz also flagged the removal of a section about union right of entry to lunchrooms and the employer paying the costs of union travel to remote work locations.

He stressed the simplicity of the opposition’s proposed changes, which did not involve contentious tinkering with wording but rather the removal of entire sections. With the changes the opposition would support the bill, Senator Abetz said.

But Mr Shorten attacked the Coalition, saying it had previously acknowledged the importance of dealing with workplace bullying.

”They indicated they cared about providing an avenue to victims of bullying, to make sure the issues were resolved quickly and effectively,” he said.

”We now know they were crocodile tears.”

Debate on the bill is due to continue on Wednesday.

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Piercing world record attempt spiked

Brendan Sawczuk was set up to attempt a world record next weekend, but has been forced to reconsider. Photo: DAVE TEASESource: Illawarra Mercury
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A Wollongong man who was poised to claim a place in Guinness World Records says he is devastated at the book’s decision to “rest” the record he was going to break.

Body piercing specialist Brendan Sawczuk spent $3500 on materials ahead of his June 16 attempt on the record, for the most people body-pierced in one hour by one person.

He planned to pierce 120 nostrils in 60 minutes at his Wollongong salon, Pierce Xpress, to beat existing record-holder Rhonda Polley, who pierced 64 people in Melbourne on September 18, 2010.

Guinness approved Mr Sawczuk’s application in January but by late May, when he wrote again to check if Ms Polley’s record still stood, he was told the record had been rested.

“This … means that no-one can attempt this record and become a new record holder and therefore is not a category that we wish to pursue further,” a representative for the franchise wrote in an email.

In a later email, a representative said the decision was made on health and safety grounds but – bizarrely – a new “most people pierced in one hour” record category had been created – the same as the former category but without the requirement for a single person to perform the piercings.

The change meant Mr Sawczuk could still likely break the record, but his new record would be easily beaten by a group of people performing piercings at once.

“They could get 500 [piercers] and … do one each,” Mr Sawczuk said.

Mr Sawczuk, who was preparing sterilised, individualised piercing kits in the lead-up to his attempt, believed the new category posed a greater health and safety risk.

“They’re saying to me they’re worried about one person going quick, yet they’re encouraging multiple people to go quick, doing multiple skin penetrations in the one premises, which is more unsterile,” he said.

“If there was some sort of logical explanation, I could accept it and move on but it’s very contradictory.”

In an email, a Guinness representative told Mr Sawczuk the franchise’s records were constantly under review.

“Whilst we do not think this to be the case, in this instance we have become concerned that the record category, when limited to one piercer, may encourage the applicant to perform the process at a greater speed, potentially at the cost of the quality of aftercare,” the email read.

“We wanted to avoid the record category reflecting the fastest time to undertake a piercing and as such we felt this record category should not be limited to one piercer and should be increased to a team of unlimited size. Having said that, the record category may still be attempted by an individual.”

More than 120 people had volunteered to be pierced as part of Mr Sawczuk’s record attempt.

He said he still planned to make the attempt but it could be delayed as his correspondence with Guinness continued.

Europe heads in the right direction

With Swedish cities roiled for weeks now by rioting unemployed immigrants, many observers see a failure of the country’s economic model. They are wrong. The Swedish/Scandinavian model that has emerged over the past 20 years has provided the only viable route to sustained growth Europe has seen in decades.
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Europeans should remember that perceptions of strength and weakness change fast. In the 1980s, Scandinavian countries stood for chronic budget deficits, high inflation and repeated devaluations. In 1999, The Economist labelled Germany “the sick man of the euro” – a monument of European sclerosis, with low growth and high unemployment.

Now, the spectre of devaluation has disappeared from northern European countries. Budgets are close to balance, with less public expenditure and lower tax rates, while economic growth has recovered. The transformation of the old European welfare state started in northern Europe, and is proceeding to most of the rest of the continent.

Today, it is difficult to imagine the mindset that prevailed before Margaret Thatcher came to power in Britain in 1979 and Ronald Reagan in the US in 1981. Thatcher’s greatest achievement was the liberalisation of the British labour market, while Reagan turned the tide with his inaugural address: “In this present crisis, government is not the solution to our problem; government is the problem.” The moral superiority of high marginal income taxes suddenly waned. Free-market ideas took hold.

In northern Europe, the transformation of the welfare state started in Denmark in 1982. In deep financial crisis, traditionally social democratic Denmark elected a conservative prime minister, Poul Schluter, a jovial man with a bow tie. One of his first decisions was to peg the Danish krone to the Deutschmark to stop the inflation-devaluation cycle. The Danish peg – now to the euro – still holds.

Schluter’s second big decision was to deregulate the Danish economy, which now has the world’s largest number of enterprises per citizen. But he left the country’s high taxes and welfare state in place.

In the early 1990s, Norway, Sweden and Finland experienced a horrendous real-estate, banking and currency crisis. Output fell and unemployment skyrocketed. In 1991, Swedish voters broke the reign of the Social Democrats, electing a coalition government under conservative prime minister Carl Bildt, who called his program “the only way”. Bildt tried to follow Schluter’s lead, but, in 1992, Sweden was forced to devalue – though his deregulation of markets did work well.

Sweden’s greatest achievement was a gradual cut in public spending by no less than one-fifth of GDP from 1993 to 2007. Meanwhile, Sweden’s public debt was reduced from 73 per cent of GDP to 39 per cent, while taxes have been cut repeatedly. The Social Democrats returned to power in 1994, but they accepted Bildt’s new fiscal policies, and carried out a revolutionary pension reform in 1998 that tied benefits to payments.

In parallel with the Scandinavian crisis, communism collapsed in eastern Europe in 1989 and in 1991 in the Baltic states. Poland’s first post-communist finance minister, Leszek Balcerowicz, showed an amazed world how communism could be abolished and a market economy built almost instantly. The rest of central Europe and the Baltic states followed his lead.

Former Estonian prime minister Mart Laar was the most radical European reformer. In 1994, he introduced a flat personal income tax, a policy most eastern European countries have since adopted. In 1999, when Laar became prime minister again, he abolished the tax on corporate profit, which was harming entrepreneurship. As a consequence of the ensuing tax competition, corporate tax rates have fallen to 15 to 25 per cent in most European countries.

More broadly, Estonia has revolutionised public finances. Since 1992, it has maintained a more or less balanced budget, with hardly any public debt. It slashed public expenditure and capped spending at 35 per cent of GDP – the same level as in the US.

As free-market thinking has taken hold and similar reforms have proliferated, the social welfare state is being transformed into a social welfare society.

The systematic reforms in Britain, Denmark, Sweden, Poland, and Estonia have much in common. First, all were caused by a profound crisis of the social welfare state: falling output, rising unemployment, large budget deficits, inflation and devaluation. Without severe crisis, no significant reform was likely.

Second, a change of government prompted reforms and gave them democratic legitimacy. Reform does not require a state of emergency, as is often argued.

Third, reforms require a strong leader. No major reform has been undertaken through consensus.

Finally, fundamental reform of the social welfare state requires leaders who embrace free-market ideas. Rethinking requires a new ideology, and, after one country has shown shows the right direction, neighbours often follow.

Europe has now reached the point at which most of its laggards are prepared to accept the social welfare society. This humane European capitalism is now hastening towards crisis-ridden southern Europe.

Anders Aslund is a senior fellow at the Peterson Institute for International Economics in Washington, DC, and author of How Capitalism Was Built.

© Project Syndicate, 2013.

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ASIC slammed over CBA failure

ASIC has been lashed over its failure to investigate the claims of whistleblowers at the centre of Commonwealth Bank’s financial planning scandal in a heated exchange during a Senate estimates hearing.
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Nationals senator John Williams slammed ASIC deputy chairman Peter Kell over a 16-month delay between the time whistleblowers first approached the corporate regulator and ASIC’s belated move to seize the files of CBA financial planner Don Nguyen.

The hearing follows a Fairfax Media investigation that found the CBA had concealed improprieties by a top financial planner who once controlled about $300 million in retirement savings on behalf of at least 1300 clients.

The misconduct by Mr Nguyen, who has been banned by ASIC for seven years, allegedly includes forging client signatures, creating unauthorised investment accounts and overcharging. Some clients lost more than half their life savings, forcing them to seek assistance from Centrelink as they battled with CBA for compensation.

Senator Williams compared the case to that of insolvency practitioner Stuart Ariff, who was jailed for six years in 2011 on fraud charges. ”To me this sounds like Stuart Ariff mark two,” Senator Williams said. Whistleblowers contacted ASIC by fax about Mr Nguyen’s activities on October 30, 2008, but ASIC did not investigate the allegations until the whistleblowers visited ASIC’s offices in early 2010.

Fairfax Media found bank staff took part in a cover-up that allegedly included the falsification of documents after Mr Nguyen left the bank in an apparent bid to stall or limit compensation amounts.

”I believe in that fax it said there was some urgency in ASIC securing the files as they are being cleaned up. Why did it take ASIC 16 months to follow up on that fax, and numerous emails from the whistleblowers, to act in relation to the Commonwealth Financial Planning files?” Senator Williams asked.

Mr Kell declined to comment on the timing of ASIC’s investigation but defended its handling of what he said was a ”large and complex matter”.

”It has been a landmark achievement that has completely changed the way the bank does business.”

He said leadership of the bank’s financial planning division ”was changed wholesale” and $23 million had been recovered for 202 investors.

He refused to say whether ASIC would refer to police the allegations that signatures had been forged on some documents.

Senator Williams responded: ”There are $1.3 trillion in superannuation funds in our nation, and this nation is going to rely on good, sound, clean advice for financial planning. You are the corporate watchdog, and I expect you, if you see wrongdoings and criminal acts, you report them.”

[email protected]南京夜网.au

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Stocks set to follow Wall Street lower

Join the Markets Live blog from 9.30am
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Australian shares are set to open on a down note after the Aussie dollar fell and Wall Street was down on concerns the Fed may begin trimming stimulus measures later this year.

On the ASX24, the SPI futures contract is 14 points lower to 4884. The Aussie dollar was buying 96.57 US cents, down from 96.8 late yesterday, and down sharply from 97.9 in offshore trade early on Tuesday. It was also buying 96.54 yen, 73.73 euro cents and 63 pence.

Economic growth in the first three months of the year is expected to have been boosted by resources exports and strong consumer spending. The figures, due for release at 11.30am, are expected to show the economy grew at 0.7 per cent in the March quarter for an annual rate of 2.7 per cent, a Bloomberg survey of 25 economists found. This would be considered a strong result given the impact of the high Australian dollar and fall in investment in the mining sector during the first few months of the year.

What you need to knowSPI futures are 14 points lower at 4884The $A is lower at 96.57 US centsIn New York, the S&P500 was 0.55% lower at 1631.38 In Europe, the FTSE100 rose 0.51% to 6558.58China iron ore added $US4.70 to $US116.60 a metric tonne Gold fell 1% to $US1397.34 an ounceWTI crude oil lost 14 cents to $US93.31 a barrelReuters/Jefferies CRB index lost 0.34% to 285.94

Making news today

In economics news:ABS national accounts, including gross domestic product for March quarterAiG-CBA Performance of Services Index (PSI) for May

There is no major company news scheduled for today

Analyst rating changes:Oceanagold cut to hold at InvestecBillabong cut to sell at Deutsche BankSeven West Media raised to strong buy at BBYCochlear raised to neutral at Macquarie

How we fared yesterday

Australian shares finished 0.3 per cent higher on Tuesday, ending a three-session run of losses as Wall Street gains overnight bolstered sentiment and firmer metals prices underpinned miners.

The S&P/ASX 200 index tacked on 12.5 points, after a volatile morning session, to finish at 4,900.8. The benchmark fell 0.8 per cent to its lowest close in four months on Monday.

BusinessDay with agencies

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Smith promises Blues a taste of their own medicine

Queensland’s critics may suggest the Maroons are getting a bit long in the tooth but they aren’t too old to learn some new tricks, even from New South Wales.
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The early verdict on the Maroons team for game was that it was light on muscle from the bench, with no specialist frontrowers being held in reserve.

But Queensland captain Cameron Smith said the inspiration for the mix of Ben Te’o, Matt Gillett, Corey Parker and Chris McQueen partly arose from the Blues, whose smaller bench forward have proven troublesome to the Maroons in recent clashes.

And while Queensland has moved towards a more mobile approach for 2013, the Blues have taken a step back towards a more traditional interchange platoon, featuring a utility in Josh Reynolds, backrower Anthony Watmough and powerhouses Trent Merrin and Andrew Fifita.

Laurie Daley’s vision of how he wants the Blues to play clearly differs from Ricky Stuart, who went into game three last year with Tony Williams, Ben Creagh and Luke Lewis alongside Watmough, whose speed and impact have been difficult to handle for the Maroons.

Smith said he had complete faith in the bench to compete physically and hoped the more mobile additions would turn the table on the Blues late in the halves.

“I know in previous years we’ve gone with three really big blokes who can get us going forward. But these guys, they can push up if we need them to and they’re all backrowers,” Smith said.

“It’s what NSW has done over the past couple of years and we’ve probably found that they’ve troubled us a bit with those smaller guys and more leg speed and lateral movement.

“I’m really happy with the bench that we’ve got. They’re pretty dynamic there. Hopefully they can have an impact on the game.”

A faster ruck speed would help the Queenslanders deploy players like Te’o and Gillett more potently. NRL referees have watched the ruck like a hawk this season but Smith was unsure how much latitude there would be in Origin, where the whistle is typically used more sparingly.

“I guess we’re going to have to see the referees in the first 10 minutes or so to see what they are allowing. State of Origin, traditionally, is a little bit slower. They allow a little bit more work on the ground,” Smith said.

“As long as it’s the same for both teams, I’ve got no dramas. But I think both players and fans would like to see a free-flowing game rather than referees pull their whistle out every two minutes.”

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The man behind the Maroons’ magic

Mal Meninga Mal Meninga
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The puppet master … Queensland’s players say coach Mal Meninga has perfected the art of motivating his charges. Photo: Andy Zakeli

Billy Slater with his 1959 Queensland counterpart, Frank Drake. Photo: Peter Psaltis

It has been suggested that Mal Meninga is to rugby league coaching what John Buchanan was to Australian cricket, although with much more substantial thighs.

In Meninga’s possession is that rarest commodity in sport; not only a group of outright champions but a champion side. Honestly, how hard can it be?

Buchanan was famous for delving into the philosophical and encouraging his players to read extracts from The Art of War. But on the field, the get-out play didn’t require a PhD in psychology: “Warnie, you bowl at that end, McGrath you bowl from the other.”

Similarly for Meninga, the virtuosity of his squad has seen his contribution steadily diminished, or even criticised by some NSW observers as token. Surely coaching football isn’t that difficult when you can just throw it to Greg Inglis, or Billy Slater, or Darren Lockyer, or Johnathan Thurston.

Ask Queensland’s players and they’ll tell you the truth couldn’t be further from the perception. Far from a rent-a-legend that bellows a rousing pre-game call to arms, Meninga has become a master motivator and manipulator capable of extracting the last molecule of competitive edge from his playing staff.

With Origin now played by increasingly elite athletes and almost nothing between the sides, it matters. His players say it has been a huge part of their domination of the interstate series, which could stretch to eight-in-a-row should they triumph on Wednesday night and beyond.

“He was a player. He knows what made him tick and what makes us tick. He’s very good at doing those things and he thinks it’s very important for us to know the history of this jersey,” said Queensland lock Ash Harrison.

“He never ceases to amaze me with what he comes up with. He seems to push the right buttons every time. It’s one of the things he’s very, very good at.”

At the Queensland team reveal, now a full-scale gala dinner instead of a media-only event in a dingy hotel space, Meninga was at his best. He had assembled members from the 1959 side, the last team of northerners to win prior to the Origin concept proper in 1980.

Players like Noel Kelly and Frank Drake stood alongside their current-day counterparts as the 2013 side was announced on stage. It was a gesture Meninga had been cooking up since last November.

“Besides his coaching philosophies, Mal provides a really good environment for people to express themselves and play their best football,” said Maroons halfback Cooper Cronk. “The one thing he always does well is he makes us respect the past.

“I’ll be honest – I know about Origin from the ’80s but didn’t know much about it before then. When I was told that stat about the first successful Queensland team between that period of ’59 and ’82, I was blown away.”

Meninga has been a picture of relaxation and calm this time around. Zen master Buchanan would be impressed. But as in previous years, behind the scenes, Meninga will have rabbits in his hat.

In series past, when he’s said publicly that NSW taunts mean nothing, he has then showed his players footage of the offending quotes to fuel the fires. He’s had articles pasted on walls and footage of some of the best Origin biffo on rotation.

The now annual trip to regional towns like Emerald, Bundaberg and Roma has also given players an in-your-face reminder of what the game means to people in the regions. With many of his players growing up in bush towns, it’s not just the fans that benefit.

All of that adds to the unique mix, says Sam Thaiday, but the main ingredient is the man himself. Imposing, deeply respected and an unabashed personification of every Queensland cliché NSW detests, Meninga’s influence over his players is profound.

“If you want to know how good he is as a motivator, you just have to listen to him speak,” Thaiday said.

“We’ve got quite a mix in the coaching staff. We’ve got Steve Walters, who’s a bit of a character, Alfie [Langer] who likes to sling a bit on everyone. But as soon as Mal talks, everyone goes quiet in the room.

“It doesn’t matter if he’s talking about footy or whatever, everyone shuts up and listens. All of the boys have a great respect for him. Everything he says is gold to us.”

And Cronk, whose own philosophical ramblings reached cult status this week, put to bed once and for all the notion that Meninga is just along for the ride while assistants like Michael Hagan do all of the technical work.

“He’s very much the coach of this football team. But he is also the figurehead. He sets the example and creates a great environment that allows us to go out and hopefully play well,” Cronk said.

Harrison, a perennially underrated player who grows an extra leg in Origin football, said Meninga’s mystical touch extended well beyond game plans.

“We all just want to play for him. And that’s half the battle won.”

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There’s no super secret – it’s all in the mix

Illustration: Michael MucciQ I’ve never really understood super – my fund has 40 per cent invested in growth and 60 per cent in balanced. Is this a good idea or should I have it all in growth?
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A The essence of superannuation is that it is not an asset class like property or shares, but merely a vehicle that lets you hold assets in a low-tax area. Therefore, whenever you make the decision to invest, a major question to ask yourself is whether that asset is best held inside super or outside super. The right asset allocation for you depends on your age, goals and risk profile – a good adviser will be able to help you decide which mix is right for you.

Q I am 65, recently retired, and will be going on an aged pension. I have $55,000 in super. I believe this would be taxed at 16.5 per cent for the first $41,000, with the balance as a taxed component, so I would have to pay $6765 tax on the $55,000. Do you think I should pay the 16.5 per cent tax and put the balance in a fixed-term deposit at 4 per cent or roll it over into the allocated pension fund, pay 15 per cent tax and an annual fee, and have to reduce the amount by withdrawing 3.75 per cent each year? I am leaning towards the fixed-term deposit as I would not have to reduce the amount each year and would get interest.

A Based on the information you have provided, it would appear that you lose 15 per cent no matter which strategy you adopt. In view of the relatively small amount you have in superannuation, it may be easier to simply withdraw it and invest outside the superannuation system.

Q I would like to invest in silver bars for my daughter’s university costs. It would be in her name and she has four years of high school left. What are the tax implications if we bought now and were to sell before she starts university?

A For starters, I wonder why you would want to invest in silver – why not gold, platinum or pork bellies? However, if silver is your thing, the profits will be taxed like any other investment asset. If you are carrying on the business of trading in precious metals, any profit will be added to your income and taxed at your marginal rate – if you are an occasional buyer, any profits will be capital profits and you will receive a 50 per cent discount if the asset is held for more than 12 months. These rules do not apply to collectables, which are taxed under a different system.

Q Our 19-year-old daughter has recently received $10,000 in back wages and compensation, which she sensibly wants to invest. We think she should lock it up for a very long period as she still lives at home and already has a small car. She can’t afford to seek help from a financial adviser and has been looking at term deposits. We have often read your advice about managed funds and term deposits but would not know who to contact to look at this form of investing. Any advice you could offer would be appreciated.

A It’s a pity the continuing ”reforms” of the financial advisory system have effectively priced lower-income people out of the market. A good first step for your daughter may be to read a book such as my own Making Money Made Simple and focus on understanding the difference between the way cash, property and shares work, and also the characteristics of short-term and long-term investments. The major benefit of share-based investments is that she can start with just $1000 to get a feel for that area.

Q My wife and I are in our early 30s with two children under five. Our combined annual income is $210,000 and we have a $300,000 mortgage on a home worth $700,000. I feel we should be more proactive in creating wealth but we have been too time poor to act. All our surplus income (after generous living expenses) is used to reduce the mortgage, as we consider a saving of 6 per cent to be better than most investment returns we would receive elsewhere, although this may be ignoring valuable negative-gearing benefits. Do you think we should be investing in shares or investment property, or is it better to reduce our home mortgage?

A I recommend that people try to reach a stage where they can pay $12 per $1000 a month on their home mortgage. On a mortgage of $300,000, this is $3600 a month. Repayments at this level will keep the term to about nine to 10 years, as long as rates stay at less than 9 per cent. Making bigger repayments than this means you are effectively wasting income that could be better placed to build wealth. For example, a spare $1000 a month could be used as interest on a home-equity loan of say $150,000 to buy quality share-based investments.

Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature. Readers should seek their own professional advice before making decisions. Email: [email protected]南京夜网.You can follow Noel on Twitter – @NoelWhittaker

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Pension criteria set to change

Centrelink uses the deeming rules when assessing eligibility for the age pension under the income test. This means assets such as cash in the bank, shares and managed funds are deemed to be earning a certain income. The rates used now are 2.5 per cent and 4 per cent, depending on the amount of financial assets held.
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However, a different treatment is accorded to account-based pensions. For income-test purposes, the amount that is assessed is the gross annual nominated pension payment less a deductible amount – this is calculated according to the recipient’s life expectancy.

For example, if Harry, aged 65, had a superannuation balance of $300,000, and began a pension of $20,000 a year, $16,949 of the payment would be the deductible portion and would be exempt. This figure is calculated as the account balance of $300,000 divided by the life expectancy of 17.7.

This means that only $3051 would be assessed as income for the income test. The rationale is that the $16,949 is a return of capital, and therefore should not be assessed.

If the pensioner chose to take the minimum payment, which would be $15,000 a year, the deductible portion would be in excess of that amount and the entire pension would not be assessed under the income test.

The account balance from year to year is assessed under the asset test.

Last month’s budget announced that from January 1, 2015, account-based pensions would also be subject to deeming and would not be assessed under the present method. Under the new rules, if Harry were single, he would be deemed to be earning $11,319 a year on his super balance of $300,000. The annual pension amount would become irrelevant.

The existing rules will remain for account-based pensions started before that date, unless the pension is commuted so as to start from January 1, 2015. This could occur if a pensioner changed income-stream providers, aggregated accounts for account-based pensions, started a new death benefit pension or added to an existing pension.

According to OnePath, the impact of these changes will depend on individual circumstances. It could include those receiving a defined-benefit pension from a government super scheme, an asset test-exempt income stream, employment or self-employment income, a foreign pension or a disability pension from the Department of Veterans’ Affairs.

The changes, if applicable, will have a bigger impact on non-home owners than home owners. Also, a large number of pensioners could be affected if the deeming rates start to increase – right now the rates are low.

It’s early days yet, but if the proposal becomes law, age pensioners who may be affected should take advice well before January 1, 2015.

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