Latest news with #GrattanInstitute
The Guardian
a day ago
- Business
- The Guardian
Cameron doubts he'll ever reach $3m in super. So how do young people feel about Labor's plan?
Cameron Upton has been working since he turned 16, and at 22 has just $4,000.92 in his superannuation account. The Canberra university student believes there is little chance his account will ever breach the $3m mark above which Labor plans to double the tax rate on earnings to 30%. 'That is so dramatically unobtainable for a large swath of the population that they shouldn't even be worrying about it,' says the 22-year-old, who checks his balance regularly and discusses fund options with his friends. 'It is important that we do think about the risk, but I feel like this is so [high] in the far-flung reaches of great wealth. 'I basically know no one who would be affected.' The government's plan has been met with fierce criticism from the opposition and some commentators. The AMP economist Diana Mousina's back-of-the-envelope calculations that a 22-year-old on an average wage would end up retiring with a $3m balance sparked headlines such as 'Why your kids will pay Chalmers' 30pc tax on super'. By the time millennials are starting to retire in 2055, just one in 10 workers would have accumulated balances over $3m, Grattan Institute modelling has found. Mousina projects that will rise to 30-40%, or about a third of the population, by the 2060s. In mid-2022, the typical 25- to 29-year-old Australian had a super balance of just $17,000, Australian Taxation Office data shows. Phy Mei Liu, a 27-year-old from Melbourne, has more than double that – and is keenly aware it's higher than others her age. She says those in the $3m-plus bracket should welcome the chance to pay up. 'I would actually be very glad to pay that tax, because I know that it's funding the solutions,' she says, pointing to government spending on health, education and climate change as top priorities. 'It's a privilege to pay tax in a country like Australia.' Liu, who says she was paid none of her super entitlements during three years' working part-time in hospitality, knows her super growth would slow if she took time off work to have a child. Families can be $30,000 poorer in retirement than they would be if superannuation was paid on parental leave, advocates have estimated, though new entitlements paid from July may narrow that gap. Sign up for Guardian Australia's breaking news email A researcher in gender equality, Liu has seen the heightened risks of homelessness and health issues older women face due to systemic issues in retirement savings. Anyone with a seven-figure super balance is in a different boat, she says. 'Super was never meant to be a tax haven, but it [has] been used as such by wealthier people,' she says. Grattan Institute analysis has concluded that 'tax-free retirement earnings turn super into a taxpayer-funded inheritance scheme', in part due to tax breaks where high earners bypass the 45% income tax rate by contributing from their wages to superannuation, where they pay a 15% rate. Labor says its proposal to raise that 15% rate to 30% above the $3m threshold would affect 80,000 people, representing the top 0.5% of super balances. But in avoiding the 45% rate higher earners otherwise pay, they would still benefit from favourable tax conditions. Essential polling in 2023 found 18- to 34-year-olds supported the tax changes nearly as much as older Australians did, despite more of them believing they had a chance of accruing a $3m balance. One-third (34%) of the younger bracket thought they might end up paying the tax, more than double the share of 35- to 55-year-olds who said the same. Sign up to Breaking News Australia Get the most important news as it breaks after newsletter promotion Luke, a 22-year-old software engineer who has already accumulated about $20,000 in super, may reach the $3m threshold but isn't worried about paying more. 'If it does affect us, we're going to be in a really good position anyway,' says the Sydney local, who asked for his surname not be shared. 'I want to live in a country where the people who are well-off can support the people who need more help.' Even if young Australians are willing to contribute, many may not end up paying the tax. Critics of Labor's plan say younger generations will shoulder the biggest tax burden as wages and super balances inflate. Brendan Coates, an economic policy director at Grattan Institute, says that claim is 'nonsense'. About one in three workers will have super balances above $3m by 2065, according to Mousina's modelling, which assumes above-average earnings and working years but less-than-typical wages growth, fund returns and contributions. Kayshini Logeswaran, a 27-year-old financial analyst, wants the super system to be more equitable, as long as tax changes focus on those who can afford it. '[This] doesn't really impact those who are in more of the low- to middle-income threshold, which I think is good, however, over the long run [it could] be a burden,' she says. 'The cost of living is putting pressure on a lot of families … so maybe there can be strategies in place to actually alleviate that tax pressure.' But Coates is more interested in those affected in the next decade – the vast majority of whom will be older and wealthier, he says. 'This is one way we can ensure that older Australians are paying their fair share,' he says. 'Younger Australians [otherwise] are going to be on the hook for budget repair and the cost of an ageing population on their own.' The number of workers who would have to pay the tax would also be limited if the fixed $3m threshold was indexed upwards. The treasurer, Jim Chalmers, has said he expects a future government would lift the new tax's threshold; Coates believes an increase would likely be necessary by 2040 to avoid contradicting an existing cap on the tax-free transfer of super balances. The tax is due to come into effect on 1 July and is budgeted to raise $2.3bn in 2027-28, out of the $700bn or so the federal government collects annually in revenue. Liu sees it as a 'first step' towards a more even playing field for young workers. 'We're finally rebalancing the scales a little bit and closing that intergenerational gap across wealth,' she says.
The Age
3 days ago
- Business
- The Age
Let's stop kidding ourselves. Taxes will have to go up
Before the election, the business press was terribly concerned about the decade of budget deficits and ever-rising public debt the Albanese government had clocked up. Something must be done! After the election, however, when the government pressed on with a move to save up to $3 billion a year by making rich men pay more tax on their superannuation, it was appalled. The sky would fall. What the two contradictory positions have in common was that both are criticisms of a government few of its business readers would have much sympathy for. But the episode also shows the way voters' attitudes towards the budget abound in wishful thinking – something the pollies encourage. 'You want more, but don't want to pay for it? Sure, I can do that.' In Treasury secretary Dr Steven Kennedy's speech to the Australian Business Economists last week, he showed a graph of the budget's 'structural' deficit stretching all the way out to 2035-36. (The structural component of the budget balance is the bit that's left after you've allowed for the effect on the balance of where we happen to be in the business cycle of boom and bust.) The structural deficit for next financial year is estimated to be 1.5 per cent of gross domestic product. Kennedy noted that spending on the National Disability Insurance Scheme is expected to reach more than our spending on defence. But he reminded us that (thanks mainly to our good friend Mad King Donald) defence spending is likely to grow a lot in coming years. And that's just the feds. The combined state and territory budget deficits are likely to be 1.8 per cent of GDP in the financial year just ending – which is 1.5 percentage points higher than their pre-pandemic long-run average, Kennedy said. So the states have been really going at it, with their combined debt at the end of this month expected to reach 18.9 per cent of GDP, its highest in the 30-plus years they've had control over their own finances. 'We are sitting on a wretched generational bargain, and it has gone on for long enough.' Aruna Sathanapally, Grattan Institute And yet politicians, federal and state, persist in running election campaigns where they promise bigger and better spending on this, that and the other, without any mention of how it will have to be paid for. Worse, no matter how much they've promised, the Liberals always claim that their taxes will be lower than Labor's, without this having any effect on their spending on 'essential services'. (Perhaps this boils down to a promise not to rely on bracket creep – the 'secret tax of inflation' – quite as much as Labor does.)
Sydney Morning Herald
3 days ago
- Business
- Sydney Morning Herald
Let's stop kidding ourselves. Taxes will have to go up
Before the election, the business press was terribly concerned about the decade of budget deficits and ever-rising public debt the Albanese government had clocked up. Something must be done! After the election, however, when the government pressed on with a move to save up to $3 billion a year by making rich men pay more tax on their superannuation, it was appalled. The sky would fall. What the two contradictory positions have in common was that both are criticisms of a government few of its business readers would have much sympathy for. But the episode also shows the way voters' attitudes towards the budget abound in wishful thinking – something the pollies encourage. 'You want more, but don't want to pay for it? Sure, I can do that.' In Treasury secretary Dr Steven Kennedy's speech to the Australian Business Economists last week, he showed a graph of the budget's 'structural' deficit stretching all the way out to 2035-36. (The structural component of the budget balance is the bit that's left after you've allowed for the effect on the balance of where we happen to be in the business cycle of boom and bust.) The structural deficit for next financial year is estimated to be 1.5 per cent of gross domestic product. Kennedy noted that spending on the National Disability Insurance Scheme is expected to reach more than our spending on defence. But he reminded us that (thanks mainly to our good friend Mad King Donald) defence spending is likely to grow a lot in coming years. And that's just the feds. The combined state and territory budget deficits are likely to be 1.8 per cent of GDP in the financial year just ending – which is 1.5 percentage points higher than their pre-pandemic long-run average, Kennedy said. So the states have been really going at it, with their combined debt at the end of this month expected to reach 18.9 per cent of GDP, its highest in the 30-plus years they've had control over their own finances. 'We are sitting on a wretched generational bargain, and it has gone on for long enough.' Aruna Sathanapally, Grattan Institute And yet politicians, federal and state, persist in running election campaigns where they promise bigger and better spending on this, that and the other, without any mention of how it will have to be paid for. Worse, no matter how much they've promised, the Liberals always claim that their taxes will be lower than Labor's, without this having any effect on their spending on 'essential services'. (Perhaps this boils down to a promise not to rely on bracket creep – the 'secret tax of inflation' – quite as much as Labor does.)
Sydney Morning Herald
3 days ago
- General
- Sydney Morning Herald
‘Cut the fluff': Fixing primary school maths one problem at a time
Templestowe Heights Primary School principal Rhys Coulson's motivation to overhaul the way his school taught maths came from his son. 'I wanted to avoid my own children struggling when they started primary school,' he said. About a year and a half ago, the school shifted to a model called systematic maths teaching. The results were dramatic, leading not only to an improvement in the school's NAPLAN results – which are now well above average in year 3 and 5 – but to a much more positive attitude among students. 'Children are really confident in mathematics now,' Coulson said. 'Because of that success, it's giving them motivation. The feedback we also get from parents is they can't believe what their child is now learning in mathematics.' A Grattan Institute report says school principals should act immediately to raise primary school maths proficiency. The report offers a step-by-step guide to a systematic and whole-of-school explicit teaching approach. 'Australia has a maths problem, and it starts in primary school,' says Grattan Institute education program director and report lead Jordana Hunter. 'Principals do not need to wait for others to act.' Explicit maths instruction Introduce new material in small chunks with clear, bite-sized learning intentions (eg 'We are learning to share equally between four groups'). Use precise mathematical vocabulary. Provide immediate feedback so students know if they are succeeding. Universal response mechanisms – such as mini whiteboards – can be helpful here. Show non-standard examples and non-examples to aid your explanation. Give students partially completed problems or problem pairs as a way of gradually reducing the amount of guidance. Identify and address misconceptions Systematic maths instruction includes explicit teaching, practising mathematical fluency, and applying what they know. It also aims to build maths knowledge and skills into students' long-term memory so it's easier to solve harder problems. Explicit teaching is a step-by-step teaching approach focusing on clearly explaining mathematical concepts, modelling problem-solving processes, giving students the chance to practice and giving immediate feedback.
The Age
3 days ago
- General
- The Age
‘Cut the fluff': Fixing primary school maths one problem at a time
Templestowe Heights Primary School principal Rhys Coulson's motivation to overhaul the way his school taught maths came from his son. 'I wanted to avoid my own children struggling when they started primary school,' he said. About a year and a half ago, the school shifted to a model called systematic maths teaching. The results were dramatic, leading not only to an improvement in the school's NAPLAN results – which are now well above average in year 3 and 5 – but to a much more positive attitude among students. 'Children are really confident in mathematics now,' Coulson said. 'Because of that success, it's giving them motivation. The feedback we also get from parents is they can't believe what their child is now learning in mathematics.' A Grattan Institute report says school principals should act immediately to raise primary school maths proficiency. The report offers a step-by-step guide to a systematic and whole-of-school explicit teaching approach. 'Australia has a maths problem, and it starts in primary school,' says Grattan Institute education program director and report lead Jordana Hunter. 'Principals do not need to wait for others to act.' Explicit maths instruction Introduce new material in small chunks with clear, bite-sized learning intentions (eg 'We are learning to share equally between four groups'). Use precise mathematical vocabulary. Provide immediate feedback so students know if they are succeeding. Universal response mechanisms – such as mini whiteboards – can be helpful here. Show non-standard examples and non-examples to aid your explanation. Give students partially completed problems or problem pairs as a way of gradually reducing the amount of guidance. Identify and address misconceptions Systematic maths instruction includes explicit teaching, practising mathematical fluency, and applying what they know. It also aims to build maths knowledge and skills into students' long-term memory so it's easier to solve harder problems. Explicit teaching is a step-by-step teaching approach focusing on clearly explaining mathematical concepts, modelling problem-solving processes, giving students the chance to practice and giving immediate feedback.
