Retirement income policy and the taxation of superannuation in Australia

Superannuation is a form of savings for retirement. The savings are invested and earn income, but the proceeds are generally not available until the beneficiary reaches retirement age} The federal government's retirement income policy has three components, two of which relate to superannuation: the age pension, which provides income support to men aged 65 and over and to women aged 62 and over.2 The pension is means tested and does not depend on previous labour force participation or individual contributions; a compulsory superannuation scheme (under the Superannuation Guarantee Charge (Administration) Act 1992 (SGA Act)), which requires contributions to be made by employers on behalf of all employees, whether full-time, part-time or casual;3 and encouragement, through the taxation system, of voluntary contributions to approved superannuation funds.4 In May 2002, the government released a report, the "Intergenerational Report", 5 which identifies issues associated with Australia's ageing population and considers the fiscal implications of those changes. The Report noted that a steadily ageing population is likely to place significant pressure on government finances. It also noted that one of the key priorities for ensuring fiscal sustainability should be "maintaining a retirement income policy that encourages private saving for retirement and reduces the future demand for the Age Pension". 6 The main way the government has sought to encourage that private saving is through the tax system, primarily by the use of tax concessions. Over the past 20 years, however, the taxation of superannuation has grown in an extremely ad hoc manner and is now inequitable, inefficient and overly complex. This article suggests that the taxation of superannuation in Australia is in urgent need of a complete review. The article further asserts that, if an appropriate framework can be devised, changes could be introduced as budgetary pressures allow.

The eradication of compulsory retirement and age discrimination in the Australian workplace : A cause for celebration and concern

Earlier this year the Age Discrimination Act 2004 was passed by the Commonwealth government. This paper provides an overview of the Age Discrimination Act 2004 and critically examines whether it is likely to be successful in eradicating compulsory retirement and age discrimination within the workforce. Empirical studies suggesting that law reform alone is insufficient to eliminate ageist employer behaviour are discussed as is the need for public awareness campaigns. Given that compliance with the law is closely linked with normative belief, this paper also considers whether a moral duty to refrain from age discrimination can be grounded within the natural law ethic.

Does financial education influence retirement savings? An examination of Australian employees

In order to ensure a financially secure retirement, Australians will need to plan and save for their retirement many decades before they retire.

The age pension, paid for out of Commonwealth government taxes is currently the backbone of the retirement system, but will not replace as much pre-retirement income in the future as it does today. Given the shift from the defined benefit style to the accumulation style, superannuation funds involve considerably more uncertainty, and as such, one might have thought that individuals would be saving more on their own. But personal saving outside of superannuation plans is virtually non-existent. Combine the retirement income crunch with the dramatic increase in life expectancy, and the need for careful retirement planning and sacrificing current consumption for later consumption becomes imperative for ensuring the financial security of older Australians. The hard question is whether individuals will be prepared to make the necessary sacrifices today to ensure a more secure financial future in retirement? This paper explores the willingness of individuals to make these sacrifices, and whether financial education can influence individuals in this difficult decision.

Modeling and analyses of the retirement of deteriorated structures

With the increasing stock of aging structures, the strategy to model and analyse the retirement of deteriorated structures is becoming a challenging research field. As the converse of construction of new projects, the retirement of constructed facilities puts forward some new management and economics themes as well as environmental issues or adds some new contents even though the same issues are faced in construction. This research aims to model and analyse the maintenance and demolition activities of constructed facilities from economic and environmental perspectives. Both cost and carbon dioxide of maintenance and demolition activities are formulated based on those of construction activities and applied to an empirical study on deteriorated bridges. Further modelling and analysis is investigated to elaborate the demolition stage of a structure. The developed modelling and analysis methodology may enable the decision maker to determine the retirement strategy for a deteriorated structure.

Land retirement: a biodiversity policy for the rangelands of Western N.S.W.

In this article we examine land retirement as a biodiversity policy option for the rangelands of Western NSW, a region seriously under-represented in biodiversity provision. We argue that the use of policies that rely on moral suasion, education and minimal costsharing will not yield the level of on-farm biodiversity provision demanded by society. Instead, a much greater commitment to the use of monetary incentives to induce the voluntary cooperation and production of biodiversity is required. The analysis explains the importance in policy design of determining transparent, meaningful and achievable objectives in delivering cost-effective environmental outcomes. We propose a land retirement
policy that rakes account of environmental, economic and political criteria. Finally, our land retirement proposal is supported quantitatively by benefit-cost analysis.

Agricultural land retirement: lessons from an Australian case study

In this paper, we analyse the case for agricultural land retirement in Australia. For the case study considered, using defined criteria, we demonstrate that land retirement is an effective policy option. This finding depends crucially on the magnitude and sign of the price effect resulting from a fall in wool production because of agricultural land retirement. Uniquely in the literature, we argue that the price effect will positively contribute to a benefit–cost analysis of agricultural land retirement. We detail the necessary conditions that need to prevail for this to occur. We also explain why the expected benefits of land-use change are fewer than might be expected in the case study.

Evaluating the impact of financial literacy programs on the retirement savings of superannuation fund members

Currently, in Australia, the age pension, paid for out of Commonwealth government taxes, forms the basis of Australia’s retirement income system, however, given the reality of an ageing population has compelled the government to undertake a number of measures to shift the responsibility for saving to the individual, forcing them to accept an increasing level of responsibility for their financial decision-making. In the light of the changing retirement environment, it would be expected that Australians’ would ensure that they became financially literate, however, despite the amount of information and advice available in the market place, this is not the case, and they do not appear to be appropriately prepared for their retirement. Recognising the importance of financial literacy, an increasing number of government agencies, employers, superannuation funds and schools are implementing financial literacy programs in Australia. This article provides an overview of the impact that attending a financial education seminar has on the retirement decisions and settings of participants. Evidence is provided from this research that in the short term, providing financial education programs make a difference to an individual’s intended retirement settings. However, the impact of these education programs in changing investment behaviour is less conclusive.

Retirement planning and expectations of Australian babyboomers

The "babyboomer" generation, those who were born between 1946 and 1965, account for over 30% of the population in Australia, and it is no surprise that the government is concerned about the financial implications for future healthcare costs. While many babyboomers are more financially secure than previous generations have been on account of compulsory superannuation contributions made over the past 15 years, there are still some who are financially vulnerable and expect to rely on government pensions and welfare assistance. Changes to family structures and job security also mean that those who are less financially secure will need social support. Using an ecological framework model , we explored the retirement expectations and experiences of some Australian babyboomers through focus groups and individual interviews to identify key issues and their plans to address these issues. Four main themes are reported in this paper: retirement attitudes and expectations, finances, health, and food. The results suggested that for many persons retirement equated freedom. Little future planning was undertaken for retirement other than contributing to superannuation schemes, and expectations were reported in general terms, such as wanting to remain independent and healthy and to have time to socialize and travel.

Book reviews : David Palmer, Ross Shanahan, and Martin Shanahan, eds., Australian Labor history reconsidered

An objective of this collection is to bring the history of the Australian labor movement to international attention. The editors introduce the collection with a brief overview of Australian labor history, emphasizing differences between the Australian and American experiences. The introduction argues that a unique aspect of Australian labor history is “laborism,” which is defined as the central place of the labor movement in Australian culture, as compared with the more marginal position of the labor movement in America. In Australia, this centrality is reflected in the embedding of trade unions and labor in the state through wage-fixing tribunals, a social security system designed to support the families of male wage earners, and the Australian Labor Party's strong links to the trade union movement. The introduction is informative and especially benefits from the insights of David Palmer, an American historian teaching at Adelaide's Flinders University. However, the introduction was apparently written later at the suggestion of an American reader and has thus not been fully integrated into the structure of the book.

The division of labor, capital, communication technology and economic growth : the case of China 1952–99

The implications of the division of labor, capital, and technology for economic growth have long been a fundamental issue in development economics. This paper employs the bounds testing approach to cointegration to examine the relationship between the division of labor, capital accumulation, communication technology, and economic growth for China over the period 1952–99. We find that in the long run, capital stock and the division of labor both have statistically significant positive effects on growth, while in the short run the effects are not significantly positive. Telecommunication technology, rather surprisingly, has a statistically insignificant impact on growth both in the long run and in the short run. Our findings indicate that there exists a long run equilibrium relationship between capital and the division of labor on the one hand, and economic growth on the other, thereby lending support to the division of labor theory of growth.

The valuation of self-funded retirement villages in Australia

Changing demographics will see an increasing demand for self-funded sector retirement villages in Australia. As such, valuers can expect to be more involved in providing valuation advice in this sector, although the central issue remains that retirement villages are complex businesses. They have been described as management intensive operating businesses with a substantial real estate element. As a result the valuation process in this sector requires a different type of analysis, in comparison to the traditional real estate based investment.
This paper provides an analysis of recent trends in the demand for retirement villages and examine current practise with respect to valuation thereof. It emphasises the need for a greater awareness of the ‘business enterprise value’ component and provides a framework within which the components of value can be better understood. The purpose of the paper is to provide a foundation for a greater reliability with respect to valuation advice.