In which the pond tries to overcome the dampness and the tedium of a slog through our Henry and Killer of the IPA...

 

The pond took one look at the reptiles' offering this day, and almost took a sickie...

Not another lead about tax, and the dragging in of green energy, as if the reptiles gave a FF about green energy.

Taking a squiz at the extreme far right of the rag didn't help the pond's mood ...

Et tu Henry? 

You've joined in the tax jihad? 

Is there something in the water cooler that produces the same desire for the very same jihad throughout the hive mind?

The pond's current reality is wet, wet, wet, yet as usual you had to look way down the page to see the reptiles mention it ...

At this very moment it's pissing down, cats and dogs raining down on the roof ...

The pond needed a little humour to balance the damp and yesterday Crikey helped out in... Sky tries to find the guy who did this, Ange channels Keating, and more mainstreaming of racist conspiracy theories, Plus the ever-encroaching presence of AI into everything, everywhere, all at once. (sorry, paywall).

Simple-minded Sharri (full disrespect) struck again:

Bring back Josh? What about freedumb boy?

The pond enjoyed this Crikey survey of assorted lunacies, and urges them to make it a very frequent feature.

Meanwhile, the reptiles were piling on, with Sarah even doing a Little to be Proud of joke ...

Inside story
A Little(proud) farce as Coalition ex-partners try to patch things up
Nationals leader David Littleproud was in the middle of handing out ‘shadow’ portfolios to his country party MPs when Sussan Ley summoned him to her office to discuss a civil war truce.
By Sarah Ison

Geoff was also unhappy ...

Littleproud blinks after one of the biggest tantrums in federal history
David Littleproud, who likes to blame the ‘Canberra bubble’ for his mistakes, walks in the footsteps of legends like John McEwen, Doug Anthony, Tim Fischer and John Anderson. It is impossible to imagine his predecessors pulling the same clumsy stunt.
By Geoff Chambers
Chief Political Correspondent

Fair dibs Geoff, making life easy for cartoonists is a contractual obligation ...

And just to pander to the pond's current plight, the infallible Pope had him singing in the rain ...

And now, if it must be done, it's best it were done quickly, though the pond is very sulky about the doing of it...

The header, which gives fair warning of what punters are about to suffer: Labor’s superannuation tax is ‘poorly conceived and poorly executed’,With Labor desperately seeking revenues, there must be a material likelihood that the approach will eventually be applied more broadly, increasing the damage it wreaks.

The caption: Federal Treasurer Jim Chalmers holds a press conference at Parliament House in Canberra. Picture: NewsWire / Martin Ollman

The desire to be anywhere else but here: This article contains features which are only available in the web version, Take me there

A five minute read? Oh you howling cats and dogs dropping from the heavens!

The only sport? How might Henry tie in his arcane knowledge to the current matter perplexing the hive mind?

Labor’s proposed new tax on superannuation balances in excess of $3m has rightly provoked a storm of criticism. But there has been less clarity about the nature of the problems it raises.
The tax itself is premised on a misconception: that superannuation is lightly taxed. In reality, superannuation is a form of very long-held savings, with significant restrictions on savers’ ability to make withdrawals before retirement age. A fund’s earnings are therefore repeatedly subject to tax, with each payment eating into the balance that will yield earnings in the future.
Those ongoing reductions create an ever-growing wedge between the amount that is actually in the fund and the amount that would have been in the fund had its earnings been allowed to compound tax-free.

Nope, not a single mention of Herodotus or Thucydides thus far, and the AV distraction maintained the dismal start: Some economists are expressing concern over the Labor Party’s planned tax on unrealised capital gains. The government is planning to tax people on the increase in value of their assets if they have more than $3 million in their super account. Former RBA governor Philip Lowe believes the scheme isn’t a good example of good policy design.

Yet more tears for the 0.5%, the 80k of suffering souls.

The pond suffered too, but the pond lived in hope ...

That wedge, measured as the difference between the amount available on retirement and the amount that would have been available absent the taxes on earnings and on contributions, is the effective tax on superannuation. For example, if the actual balance on retirement is $100,000, and the tax-free balance would have been $200,000, taxes have cost the superannuant $1 for each dollar of retirement savings.
Measured in that way – as Professor Jonathan Pincus has in a recent paper – effective tax rates on superannuation will vary depending on the duration of the savings and on rates of return. It can nonetheless be shown that mandatory superannuation savings are taxed at about the same effective rate as the income taxes applying to middle-income earners, which, given that being forced to contribute imposes costs on savers, is scarcely concessional.
Meanwhile, voluntary contributions are taxed at effective rates well above the effective rates of income tax. If they remain attractive, it is because many other forms of saving are taxed even more heavily.
Moreover, effective tax rates on superannuation are greater yet when account is taken, as it should be, of the transfer payments those who have largely or entirely funded their own retirement forgo, most obviously the age pension and its associated benefits.
As a result, claims that the taxation of superannuation is highly concessional are sloppy at best, incorrect at worst. The case for increasing the tax rate on superannuation is consequently weak; that for subjecting unrealised capital gains to that higher tax rate is even weaker.
There are, it is true, some arguments for taxing unrealised capital gains. By far the strongest is that when gains are only taxed on realisation, the scope to defer the tax liability by holding on to assets creates a “lock-in” effect that makes asset markets less liquid and hence less efficient. And the higher the rate of capital gains tax, the greater are the lock-in effects and the harm they cause.
Clearly, taxing unrealised gains reduces the incentives to defer realisation and hence can make markets work better. But those benefits are more than offset by broader damage to economic efficiency.

The pond's hope was dashed - not a single mention of the venerable Bede - and then the reptiles compounded the suffering by dragging in Dimitri, Eminence Advisory’s Dimitri Burshtein says the Albanese government’s super tax is addressing the “thin end of the wedge” – labelling it a wealth tax. The Albanese government has declared its controversial superannuation tax is a matter of “fairness”, despite some state politicians being exempted from the policy. Sky News Sunday Agenda revealed that former state premiers and state parliamentarians on the old pension scheme will be exempt from the 30 per cent tax.

That's possibly the worst, the most banal graphic of all time. If it's not AI, someone should take the entire graphics department out for a re-education campaign.

Speaking of AI, the pond was delighted by another Crikey segment in the aforementioned link ...

Everybody loved the yarn ...

Back to the drudgery, back to doing hard yard reptile chores, with not a single relieving historical reference in sight ...

In assessing that damage, it is useful to start from the fact that an efficient tax system – that is, a tax system that does not distort investment decisions – would treat capital gains and losses symmetrically. Such a system would not, in other words, change a fair bet, in which the upside and downside risks cancel out, into one not worth taking. Our current system for taxing capital gains does not respect that neutrality condition; the proposed change greatly aggravates the asymmetry, since net gains are taxed immediately (and at a high effective rate) while any credit for net losses is deferred, potentially indefinitely. Indeed, it is because the change heavily penalises gains, while preventing savers from easily withdrawing the funds that are taxed at the higher rate, that its projected revenues are so large.
The effect of that asymmetry in the treatment of gains and losses is to distort two sets of decisions: those of savers, who will shift their portfolios towards lower-risk classes; and those of firms, which, if they are to attract funding, must offer higher and more certain returns by avoiding high-risk investments. Moreover, the adverse impact will be greatest on investments that involve a small chance of extremely high returns along with a substantial chance of incurring losses.
Now, the efficiency of a market economy relies on the incentive investors have to hunt out projects that are likely to be especially profitable, while abandoning those that are not. Equally, an economy’s dynamism depends on the willingness of financial markets to underwrite investments that involve high risks but could yield high returns.

Still not a single mention of great philosopher minds, just a snap of the usual villains, Prime Minister Anthony Albanese and the Treasurer, Jim Chalmers. Picture: Getty Images

What a complete disappointment. Is there any hope of redemption?

That the US high-technology industry blossomed after the Reagan tax reform, which drastically cut capital gains taxes and reduced the asymmetry in the treatment of capital gains and losses, is consequently no accident. Labor’s proposed changes do the exact opposite and will, as the volume of savings they affect rises, crimp investment not only in start-ups but also in risky mining ventures and in those parts of farming that are exposed to volatile world prices.
Nor do the distortions end there. As well as opting for relatively safe investments, savers will shift from less liquid to more liquid assets, for two reasons: so as to more readily meet their tax obligations; and because the market price of highly liquid assets is easier to determine, reducing the risk that they will be incorrectly overvalued by the ATO.
That effect will compound the bias against investments that are difficult to value because they are innovative or otherwise cutting-edge, further dampening our economy’s capacity to seize emerging opportunities.
Finally, there is no obvious reason for taxing unrealised capital gains in one savings instrument and not others. With Labor desperately seeking revenues, there must be a material likelihood that the approach will eventually be applied more broadly, increasing the damage it wreaks.
The many complex transitional issues the shift from taxing only on realisation to taxing unrealised gains creates for taxpayers – not least because of the need to find the funds required to pay the increased taxes – will add the immediate costs of financial stress and perceived unfairness on to that longer-term damage.
In short, this tax is poorly conceived and even more poorly executed. So fundamental a change warrants rigorous economic analysis; if any has been carried out, it is being kept tightly under wraps. Instead, the Treasurer, in seeking to justify it, has struggled to go beyond “soak the rich” rhetoric at its tawdriest.
Reading those statements, which are as confused as they are convoluted, it was hard not to be reminded of Richard, son of Nigel, who in AD1170 was both Bishop of London and a talented chancellor of the Exchequer. “The greatest skill of the Exchequer,” he wrote, “lies not in calculation, but in judgment.” That, unfortunately, is precisely what this proposal lacks.
Henry Ergas will give the Rule of Law Institute’s annual Robin Speed Memorial Lecture in Sydney on June 12.

At last, and a nice try, a cunning ploy, what with that mention of Richard, son of Nigel in AD1170, but it came way too late, and was far too little. 

The hive mind proved far too strong this day for our Henry's desire to reference past giants, and there was simply no way to segue to the immortal Rowe, offering this Little to be Proud of joke ...

Oh it's always in the details ... and it takes some skill to nuke priapism while sticking Barners in the ute...

And so to the bonus, and just like our Henry the pond wouldn't have bothered, except it's Killer of the IPA, and the pond is contractually required to visit the killing fields...

The header: How low rates fuel Victoria’s borrowing binge, Victoria is becoming the Greece of Oceania and, like Greece, which a decade ago came close to default, was allowed to borrow at very low rates despite its obviously out-of-control behaviour.

The caption: Treasurer Jaclyn Symes speaks at the Melbourne Press Club Budget Lunch. Picture: Supplied

The enormous desire to be elsewhere, repeated yet again: This article contains features which are only available in the web version, Take me there

The pond hasn't the slightest interest in what followed, and couldn't summon the strength to feign it:

Maybe if, or when, a Liberal premier ever comes to power on Spring Street, he should “do a Jack Lang” and refuse to pay back some of Victoria’s burgeoning public debt.
That might sound crazy but it takes two to tango.
Labor’s destructive borrowing binge, much of it brought about by insane Covid-19 policies and building vast and dubiously beneficial infrastructure for “trains to nowhere”, was made possible by institutional lenders, local and foreign, who were happy to shovel billions of dollars to the renegade state.
And why wouldn’t they? Victoria’s AA credit rating from S & P hasn’t changed since 2020, when its net debt was lower than $40bn.
The interest rates Victoria has been borrowing at throughout its spending bender have hugged those of the federal government the entire time.
Despite being the most indebted sub-national jurisdiction across 17 developed nations, according to S & P, Victoria can still borrow for 10 years at less than 5 per cent, and only 0.8 percentage points more than Canberra can.
Victoria is becoming the Greece of Oceania and, like Greece, which a decade ago came close to default, was allowed to borrow at very low rates despite its obviously out-of-control behaviour.

The reptiles slipped in an AV distraction featuring Bev chatting with lovely meter maid Rita, Victorian Liberal MP Bev McArthur says the recovery of Victoria’s crippling debt should not come from those in desperate situations. This comes as a new land tax is introduced in the state. “It shouldn’t come from those who are in the most desperate situation,” Ms McArthur told Sky News host Rita Panahi. “They’ve just foisted a new property tax on Victorians, every Victorian, every household in Victoria will have a 100 per cent increase. “Businesses and enterprises will have a further much higher increase, and farmers was 189 per cent increase down to 150 per cent.”

All the pond wanted to do was to revert to something fun, something light hearted, like the one celebrated at the aforementioned Crikey link ... with the Price is Wrong in fine form ...

That link to "some confusion" is buried behind the paywall, but the pond can do a spoiler, showing that it led to this ...

What a lost chance ... Sky Noise down under to hand on a daily basis ...

But now back to the current burden of ploughing through Killer of the IPA, doing his very best to Sky Noise Victoria ...

The free market hasn’t provided much discipline because there hasn’t been one. Lenders know full well that the commonwealth government in Australia would ultimately be responsible for Victoria’s debt, just as the European Union was in Europe.
Bank regulations ascribe a “zero risk weight” to state government debt too, meaning banks that loan to states don’t have to maintain a cent of capital against any state bonds they hold.
Victoria is a safer investment, apparently, than a homebuyer with 90 per cent deposit.
It can be fun to mock Victoria’s fiscal plight elsewhere, but all of us are ultimately on the hook.
Everyone knows the federal government, which isn’t technically obliged to intrude, would never let a state default. Victorian voters appear to know too, given they have not, apparently, given two hoots about the debt.
The left-wing apparatchiks that still run Australia’s second-biggest state know their behaviour has been generously subsidised by all Australians.
Victoria’s borrowing binge has been vertiginous. Net debt has exploded from $23bn in June 2019, to $155bn this year, and is on track for $194bn by 2029, according to the latest budget papers.
Annual interest expenses have jumped from $2.2bn in 2020, to $7.6bn this year, a much more modest jump given the ultra-low interest rates prevailing during the Covid period.
The Treasury has pencilled in $10.6bn a year by 2029, which would soak up almost a quarter of the state’s taxation revenue by then, but what if interest rates unexpectedly rise, or the property market crashes for whatever reasons, crushing the state’s stamp duty-dependent income? Servicing Labor’s crushing debt could become very difficult, especially if the debt projections prove optimistic, which looks likely.

For no particular reason, the reptiles slipped in a snap featuring The site of the new Suburban Rail Loop (SRL) station in Clayton, Victoria. Picture: VIC Government / Facebook

The pond would have liked to have seen mention of an ongoing, never ending joke ...

Never mind, back to slagging off Victorians in Killer IPA style, though really since Comrade Dan disappeared it's never been quite the same ...

Labor clearly isn’t serious about changing its ways, and a state election next year is unlikely to induce fiscal rectitude.
The public sector wage bill has been rising at 7 per cent a year since 2015.
Following this week’s budget Treasurer Jaclyn Symes has laughably suggested she might trim the public sector headcount, which grew 20 per cent (around four times population growth) over the four years to 2024 to 325,000 – that is, by 1200 jobs.
The Allan government appears determined to press ahead with what will end up as one of the great white elephants of infrastructure history – the $200bn- plus Suburban Rail Loop, which will eventually connect Melbourne’s sparsely populated outer suburbs with heavy-duty trains.
At least the CFMEU workforce will be kept in highly paid work for decades. Indeed, The Age recently pointed out that holding a stop-go sign attracts the same salary as a school principal.
Just as Lang found out in the 1930s, no Victorian premier would be allowed to default, even if she or he tried.
But shouldn’t lenders have exerted some discipline on Victoria? Lending to an out-of-control state government shouldn’t be entirely risk-free.
Until it was disbanded in the 1990s, the commonwealth co-ordinated state borrowings through a Loan Council.
Victoria suggests that might be worth reconsidering, lest other states seek to copy Victorian Labor’s electorally winning formula in coming years.
Even though Victoria’s creditors will get their money back, Victorians could still be in for some pain.
Republican president Gerald Ford famously told New York City, teetering on bankruptcy in the 1970s, to “drop dead”, before ultimately green-lighting a bailout.
In the meantime, the city slashed public sector pay, stopped subway and garbage collection services, and sold real estate.

There came another AV distraction, keeping the Sky Noise down under meme afloat, with Victorian Treasurer Jaclyn Symes discusses the state's economic position after handing down her first budget. "Our economic strength in Victoria is great, it is going from strength to strength – we are seeing business investment, we are seeing more job creation, and I want to see that grow," Ms Symes told Sky News Australia. On Tuesday, the Victorian Government handed down a highly optimistic State Budget, which flies in the face of perceptions that it's financially dragging its feet compared with other states. Though the budget forecasts a surplus of $600 million next year and surpluses beyond that, Victoria's debts escalate from $155 million this year to $194 billion by 2028-29.

At last the final gobbet ...

Victoria doesn’t have many businesses left to sell after previous privatisation rounds, although the MCG would surely go for a song (perhaps not the Suburban Rail Loop).

Go for a song? Is Killer suggesting that the MCG would be very cheap? And the Suburban Rail Loop would be very dear? Or is he just arse about in the usual Killer way?

Never mind, sorry to intrude ... we're talking eight centuries of folly here ...

We should pity the next Coalition premier of Victoria, who won’t be able to initiate much-needed tax relief without pushing debt still higher.
Perhaps defaults will become fashionable again. In earlier centuries advanced nations did it hundreds of times, including France, Spain and Germany, as economists Carmen Reinhart and Kenneth Rogoff lay out in their magnum opus, This Time Is Different: Eight Centuries of Financial Folly.
Japan’s long-term bond rate surged to a 25-year high this week, as the once powerhouse nation’s world-beating debt burden took its toll on investor confidence.
Days ago, even the US, the backbone of the global financial system, lost its AAA credit rating from Moody’s.

Say what? Did Killer just mock King Donald, his tariffs and his great big beautiful bill?

Apologies, but the pond must seize the chance for a few distractions ...

And so to a few final words from Killer ...

Most advanced and developing nations have taken on massive debts in recent decades, despite slowing population growth that makes them harder to service in the long term.
Interestingly, both the US and Victoria are incurring interest costs equivalent to about 10 per cent of their revenues. The US can still borrow more cheaply than Victoria though. Perhaps market discipline isn’t entirely dead!
Adam Creighton is the chief economist at the Institute of Public Affairs.

That last line! Entirely silly! And the emphasis doesn't stop it from sounding silly!! Once again Killer's flourish goes for a song ...

And so to something the reptiles can never mention and which means the pond ends with yet another attempt to remedy, to rectify, a reptile day in which talk of ethnic cleansing and genocide is washed from the record ...