Doing a Packer

 

The 'super wars' are heating up, and Labor is well on its way of confiscating more of your superannuation nest egg by taxing it at a higher rate, or forcing you to withdraw it from your super altogether, but there will be unintended consequences.

Remember the Treasurer's Orwellian double-speak? "When I think about how best we can use the budget to support Australians towards a better retirement — one fact stands out. Right now, we’re on track to spend more on super tax concessions than the age pension by around 2050. I'm not convinced that's a sustainable way to get to our destination — good retirement incomes for more Australians, now and into the future."

Super tax concessions are not spent money. It's the people’s money which has not yet been taken away by the government. Welfare and keeping your own money are two completely different things. And why does the greater 'spending' on super than the age pension in 2050 mean super is unsustainable? Wasn’t the whole point of super that it lightened the load on the age pension by encouraging people to take responsibility for their own retirement? Isn’t the huge super system relative to the age pension a sign that the policy worked rather than failed? It certainly isn’t a sign that the super system is unsustainable. How can a retirement savings system be unsustainable by being too big? It can only be unsustainable by being too small. Perhaps the Treasurer means that his budget is unsustainable without a raid on superannuation funds?

You may not be as rich as Packer or be able to employ as many tax lawyers and accountants to minimise your tax as he does, but you don't need to be an Einstein to know where to put all that ex-super money: back into real estate, either into more investment properties cleverly structured to take advantage of negative gearing, or by upgrading into an ever-bigger home which is exempt from both capital gains tax and the pension's assets test, to become one of those "poor" age-pensioners who live on the government pension in a multi-million-dollar mansion.

Kerry Packer, we're hearing you!

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P.S. See also Labor's shell game.

 

This discovery sealed it for me

 

Click on Watch on YouTube to watch the movie

 

Could you image "Casablanca" or "The Third Man" in anything but black-and-white? I love watching black-and-white movies, despite the fact that they often put actors' lives in danger during driving scenes, as they weren't able to tell if the traffic light was red or green.

No such danger in the medieval allegory "The Seventh Seal" which is set in fourteenth-century Sweden during the time of the Black Death, long before motor cars and traffic lights, and tells of the journey of Antonius, a medieval knight, who challenges Death to a game of chess, with his life as the prize. It is one of the greatest movies of all time which established Ingmar Bergman as a world-renowned director.

A regular movie-goer watching this movie may pick up on a few things: the terror, the suspense, the artful composition of the shots. A chess player, though - and that includes me - sees only one thing: that the chess board that decides Antonius’s fate is set up totally backwards.

Here is a correctly set up chess board ...

... .. and here is the (still) correctly set up board early in the movie:

But then things begin to go wrong. You see, when you set up the board, you're supposed to orient it so that the square nearest to each player's right side is light-coloured - the mnemonic "right is light" might help.

The next rule: when you array the pieces, the white queen always goes on the white square, and the black queen always on the black square.

So what do you see halfway through the movie? A black square nearest to each player's right side which changes the game completely!

It also positions the queen on the wrong side of each player's king at the start of the game (always provided the white-queen-on-white-square and black-queen-on-black-square rule is still correctly followed)

And to think that Antonius may have lost his life due to an incorrectly set up chessboard ...

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P.S. Now let me see if Disney got it right in "The Queen of Katwe".

 

I've been to the dentist before, so I know the drill

 

Reading "Islands of Angry Chosts - The Story of the BATAVIA" by Hugh Edwards helped me ignore the sound of the drill as it was applied to someone else's teeth, knowing that as soon as the sound had stopped, I would hear, "Peter, you're next!"

And so I was and, frankly, I didn't mind, as these days the dentist is just about the only place I'm still allowed to open my mouth. Actually, the only pain I felt was not from the drill but from the news that BHP had reported a fall in profits of 32% and a drop in interim dividends to 90 US cents which prompted its shares to drop by more than a dollar. By the time my treatment was done, the shares had recovered - and so had I.

Anyway, to let me go gently into toothlessness, I bribe the dentist with Christmas presents and the occasional bottle of wine, and just now with thirteen books by Enid Blyton which should give his two little daughters, aged just five and six, enough to read until they enter dental college.

 

 

I grew up with Struwwelpeter and never read any Enid Blyton books. If I had, I might've noticed some subtle changes; for example, in the Magic Faraway Tree series, Fanny is now Frannie and cousin Dick is now cousin Rick, and Dame Slap, a teacher who used corporal punishment, was updated to Dame Snap, a teacher who would only yell at children.

Enid Blyton's books have been far more extensively edited: "mother and father" have become "parents" (presumably to allow for same-sex "parents"); the word “fat” has been cut from every new edition of relevant books as has the word “ugly”; Augustus Gloop in Charlie and the Chocolate Factory who used to be "enormously fat" is now just "enormous"; in The Twits, Mrs Twit is no longer "ugly and beastly" but just "beastly"; in The Witches who are bald beneath their wigs, this paragraph has been added: "There are plenty of other reasons why women might wear wigs and there is certainly nothing wrong with that".

References to "female" characters have disappeared, with Miss Trunchbull in Matilda, once a "most formidable female", now described as a "most formidable woman"; Charlie and the Chocolate Factory’s Oompa Loompas who were once "small men" are now "small people"; the Cloud-Men in James and the Giant Peach have become Cloud-People; and the word "black" has been removed from the description of the terrible tractors in 1970s "The Fabulous Mr. Fox" - the machines are now simply "murderous, brutal-looking monsters". To paraphrase Henry Ford about his Model T, you can mention any colour as long as it isn't black!

By the time we've sorted out our new politically-correct language and how many genders there are and which toilet each of them will be using, we will be so f#*&ed up, no enemy will bother to invade us and we can all safely sit on our beaches and lick the good ol' Gaytime icecream which, unlike the COON cheese and thanks to lengthy consultations with the LGBTQIA+ community, could keep its name. If I had enough teeth left, you'd see me smiling through clenched ones.

 

The smiling cow with perfect teeth, displayed on my dentist's front desk

 

But back to books: I also lashed out on a copy of "The Righteous Mind - Why Good People are divided by Politics and Religion" and "Fields of Blood - Religion and the History of Violence" (both of which are on archive.org - is there anything left that's not on archive.org? - but you know me: I need to hold the book in my hand, feel its texture, turn the pages, smell the ink) and Sean Dorney's "Papua New Guinea - People, Politics and History since 1975", by which time I had already left.

And while I still had my hands in my pocket, I also bought "The Lives of Others" and the National Geographic Channel documentary "Secret Life of Pearls - Journey of the Australian South Sea Pearl" which is about the Paspaley pearl farms off the Western Australian coast but could just as easily be of Paspaley's pearl farms in the Torres Strait where I lived and worked in 1976. I've just found this shorter version on YouTube:

 

 

If you're watching this, Victor Aung, I hope it brings back memories!

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The Shiralee

 

 

I'm amazed at how many Australians have not heard of - or perhaps forgotten - some of the most quintessential Australian movies - or have I become more Australian than the quintessential Australian?

"The Shiralee", based on D'Arcy Niland's book by the same name, is one such movie. It's the story of the itinerant rural worker Macauley - sometimes described as a 'swagman' or 'swaggie' - who suddenly finds himself taking responsibility for his child. Having returned from 'walkabout', he finds his wife entwined in the arms of another, and so he takes his four-year-old daughter, Buster, with him. The child is the 'shiralee', an Aboriginal word meaning 'burden'. In their time together, father and daughter explore new depths of understanding and bonding. The barren landscapes of the outback are central to the swagman's love for his country and provide a backdrop to the richness of his developing relationship with Buster.

Of course, there's nothing like curling up with D'Arcy Niland's book ...

 

To read the book online, click here

 

... but if you're more visually than cerebrally inclined, you'll find both the 1957 movie version with Peter Finch and the 1987 remake with Bryan Brown faithful screen adaptations of this wonderful book.

 

The original black-and-white movie from 1957 starring Peter Finch

 

D'Arcy Niland wrote another masterpiece, "Dead Men Running", which was made into a TV mini series in 1971. I wasn't in Australia then and so I missed it. If you can find it on YouTube or on DVD, please let me know.

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I'm super angry

Chris Bowen outlining Labor's policy on franking credits on Q&A four years ago.

 

Remember Labor's Chris Bowen wanting to abolish franking credit refunds four years ago? Retirees were outraged. He replied, "If you don't like our policies, don't vote for us". We took his advice and we kept our franking credit refunds.

Despite the franking credit debate being at the forefront of Labor's election loss, it's amazing how many people didn't understand what it was all about. Even my dermatologist didn't understand. After I had explained it to him, he went and invested in shares paying fully franked dividends. I am happy for him - although not so happy that he charged for the time it took me to explain it - and I'm happy to explain it again to the cabinetmaker in the pool and anyone else who wants to listen.

Here we go: Let's assume a very simplistic example whereby you hold shares in a company which pays company tax of 30% on its earnings. The remaining 70% are distributed as dividends. So if you receive (say) $10,000 in dividends, then this amount is "grossed up" again to its pre-company tax level of a 100% (remember that the $10,000 you receive represents only 70% of the company's pre-tax profit!) or $14,285.71.

Therefore, you are being taxed on an income of $14,285 even though you only receive $10,000 in cash. So how much tax do you pay on an income of $14,285? (assuming you have no other income) $1,408.45, that's how much. However - and this is where the franking credit kicks in - you receive a credit for the tax the company paid, namely $4,285.71 which is offset against your tax assessment which in this particular example means that you receive a tax refund of $2,877.26.

So, whenever your own tax rate is below the company's tax rate of 30%, you will receive a refund. If your investment is in a superfund which pays only 15% income tax, you have half the franking credit refunded to you. If your superfund is in pension phase, you have ALL the franking credit refunded to you. Three cheers for franking credit refunds!!!

 

From the DAILY TELEGRAPH of 22 February 2022
As they write, "If the Albanese government were something you bought in the shops rather than voted for at the polls, regulators would be circling with writs for misleading and deceptive conduct."  

Labor went into the last election without any policies, least of all one as controversial as abolishing franking credit refunds; in fact, on the election campaign trail last year, the then not-yet Prime Minister Anthony Albanese insisted changes would not occur under a Labor government. "We've said we have no intention to make any super changes", he said in May last year. He has once again provided the answer to the perennial question "How do you know when a politician is lying?" The answer is, of course, "When his lips are moving".

One thing you must never do is to trust Labor because, like a dog with a bone it can't leave it alone, they are at it again and anyone hoping superannuation regulations will remain unchanged again in the next Federal Budget on 9 May 2023 is likely to be disappointed. They've done enough jawboning to indicate they're ready to target high balances in super. This is despite the superannuation system introduced by Labor thirty years ago in 1992 encourages savers to use the wonders of compounding to build up such large amounts.

There's been a lot of talk of introducing a cap of $5 million. Labor needs some political wins to rein in the budget deficit and the 11,000 Australians with more than $5 million in superannuation are an easy target. That was in 2018 and it’s more likely 20,000 or 30,000 now.

When Chris Jordan, the Commissioner of Taxation, was asked at a conference how members had accumulated such large amounts in their Self-Managed Superfunds (SMSFs), he said balances were usually accumulated for over thirty years or funds held one or two investments that had done extremely well. He called the large SMSFs "accidents of history" and added, "Don’t design the system for the last worst person.”

You don’t need to be Einstein (who never actually said that compound interest is the Eighth Wonder of the World, but let’s go with it) to use a calculator and work out the dramatic impact of compounding. Anyone with a good income and spare savings who decides to invest in equities in superannuation for decades will accumulate large amounts of money. Every kid should be taught the power of compounding at school.

 

The Power of Compound Interest and the Rule of 72 The Rule of 72 is a quick, useful formula that is popularly used to estimate the number of years required to double the invested money at a given annual rate of return. Simply divide the annual rate of return into 72 to give you the approximate number of years it takes to double the investment. Alternatively, divide the number of years into 72 to give you the required annual rate of return. The Rule of 72 dates back to 1494 when Luca Pacioli referenced the rule in his comprehensive mathematics book called Summa de Arithmetica. Pacioli makes no derivation or explanation of why the rule may work, so some suspect the rule pre-dates Pacioli.

 

Sure, $5 million is a lot of money but it does not take vast wealth to accumulate such an amount with consistent investment over long periods. Consider how many working-class people now own $3 million homes in the western suburbs of Sydney by committing to a long-term savings pattern over thirty years called – wait for it ... it’s a devious scheme that should be capped – 'paying off your home'. And many also qualify for the age pension!

I haven't heard Labor repeat the same arrogant line "If you don't like our policies, don't vote for us", but I hope their invitation still stands!

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