Mortifying.
This morning the pond cried out for the reptiles to release the Dame Groan kraken.
But she'd been released yesterday, and as is the way with digital fush and chups wrapping paper, she'd disappeared from view long before the pond got around to its herpetology duties in the morning.
Once again the reptiles were ahead of the pond. Of course they were going to release the Groaning as soon as possible. The aged harridan was always on high alert, keyboard ready, dripped in snake venom.
This abject pond failure could not stand.
This most grievous failure had to be rectified ASAP, and if it took a late arvo post, so be it, so here's the kraken, undiluted and mightily flapping her monstrous wings ...
The caption: Treasurer Jim Chalmers fronts the media as the super backflip is revealed. Pictures: NewsWire / Martin Ollman
It was only a three minute read, so the reptiles said, but Dame Groan was righteous in her anger and her indignation ...
It was surely one of the most cynical political ploys in recent times for the Treasurer Jim Chalmers to announce his personal super surrender at the same time the Israeli hostages were due for release.
Let’s face it, Jimbo was forced to raise the white flag on what has been an ignominious period of misinformation and appalling policy.
There was no way that the Prime Minister wanted to have the loud lingering impact of taxing unrealised capital gains hanging around his government like a bad smell akin to rancid meat.
I had thought that the quality of Treasury advice couldn’t deteriorate any further than its nonsensical and unworkable recommendations to impose a tax surcharge on superannuation balances more than $3 million, unindexed.
Sadly, I was wrong: the Treasury’s modelling on the net zero transformation has plumbed new depths.
But getting back to superannuation, one of the rookie errors that was made initially, having decided that superannuation concessions needed to be scaled back – this is just code for more tax revenue which Chalmers desperately needs – was to consult the industry super funds.
Here’s the thing: the industry super funds don’t have many high balance accounts – they are almost all in self-managed superannuation funds.
And here’s another thing: industry super has massively underinvested in their IT systems over the years and so when the funds were asked about how they could implement the new proposal, they gave the simplest answer possible.
Let’s face it, Jimbo was forced to raise the white flag on what has been an ignominious period of misinformation and appalling policy.
There was no way that the Prime Minister wanted to have the loud lingering impact of taxing unrealised capital gains hanging around his government like a bad smell akin to rancid meat.
I had thought that the quality of Treasury advice couldn’t deteriorate any further than its nonsensical and unworkable recommendations to impose a tax surcharge on superannuation balances more than $3 million, unindexed.
Sadly, I was wrong: the Treasury’s modelling on the net zero transformation has plumbed new depths.
But getting back to superannuation, one of the rookie errors that was made initially, having decided that superannuation concessions needed to be scaled back – this is just code for more tax revenue which Chalmers desperately needs – was to consult the industry super funds.
Here’s the thing: the industry super funds don’t have many high balance accounts – they are almost all in self-managed superannuation funds.
And here’s another thing: industry super has massively underinvested in their IT systems over the years and so when the funds were asked about how they could implement the new proposal, they gave the simplest answer possible.
Then came a snap demonstrating how Jimbo refused to follow The Zionist Daily News, Chalmers’ super announcement came as Israeli hostages were due for release. Picture: NewsWire / Martin Ollman
The silly pond had already wasted the immortal Rowe, who would have been right at home in the Groaning ...
This was to take the difference between the super balances in adjoining years and adjust for contributions and withdrawals.
This would include a melange of both realised and unrealised capital gains, but what the heck. These funds essentially operate at the fund level (and pay tax at that level) and don’t really have a handle on the (implicit) portfolios of individual members.
Had Chalmers and the Treasury officials done the sensible thing from the start and asked the groups representing SMSFs and experts such as Geoff Wilson, all the angst and controversy of the past two years could have been avoided.
Angst, controversy
But the industry super funds dislike SMSFs, therefore Labor doesn’t like SMSFs, and Treasury simply doesn’t understand the superannuation landscape. The fact that Treasury couldn’t see the economic damage that taxing unrealised capital gains would entail is staggering. I’m not sure you even need an economics degree to understand that taxing people on paper profits is a highway to lower investment, particularly on start-ups and high-risk projects.
After all, there are some notable examples from overseas where attempts to tax entrepreneurs on unrealised capital gains who don’t necessarily have the cash to pay has led to the emigration of those entrepreneurs or the closure of their ventures.
The reality is that taxing unrealised capital gains is relatively rare across the globe – and for good reason.
This would include a melange of both realised and unrealised capital gains, but what the heck. These funds essentially operate at the fund level (and pay tax at that level) and don’t really have a handle on the (implicit) portfolios of individual members.
Had Chalmers and the Treasury officials done the sensible thing from the start and asked the groups representing SMSFs and experts such as Geoff Wilson, all the angst and controversy of the past two years could have been avoided.
Angst, controversy
But the industry super funds dislike SMSFs, therefore Labor doesn’t like SMSFs, and Treasury simply doesn’t understand the superannuation landscape. The fact that Treasury couldn’t see the economic damage that taxing unrealised capital gains would entail is staggering. I’m not sure you even need an economics degree to understand that taxing people on paper profits is a highway to lower investment, particularly on start-ups and high-risk projects.
After all, there are some notable examples from overseas where attempts to tax entrepreneurs on unrealised capital gains who don’t necessarily have the cash to pay has led to the emigration of those entrepreneurs or the closure of their ventures.
The reality is that taxing unrealised capital gains is relatively rare across the globe – and for good reason.
For no particular reason, at this point the reptiles inserted a series of front pages.
Perhaps they thought it showed how good they were at coverage.
To the pond it looked more like the hive mind in jihad action, an extended crusade, helping explain why herpetology studies can lead to terminal boredom and why there should be a rival course in studying how paint dries...
The pond realises that once again Dame Groan's groaning will quickly vanish into a blogger late arvo void, but at least the pond has attempted to do the right thing by more diligent students ...
If Chalmers’s super proposals had stood, there was also a fear that the principle of taxing unrealised profits would be extended into other areas.
The last thing Australia needs at this point is any additional deterrents to business investment given our appalling productivity performance.
There is still a lot of water to go under the bridge on this super surrender.
Indexing the $3 million is a good idea, although the indexation factor should really be the average returns on balanced funds rather than the CPI.
Don’t hold your breath on this one: using the CPI will drag more people into the higher tax net.
The second $10 million threshold is simply there to raise some more revenue for a desperate Treasurer.
Complications remain in terms of implementation, with multiple accounts being one of them. It’s inevitable that the Australian Taxation Office will have to be involved.
The tax treatment of those on defined benefits remains a mystery, in part because there is no actual balance to tax.
‘Abysmal public policy’
There is no scope for the tax to be paid other than by the beneficiaries directly which is in contrast with those on accumulation schemes.
There is also the point that as those beneficiaries age, the implicit value of their superannuation entitlement falls.
The last two years has been a tawdry period for abysmal public policy formation.
Having been told in the 2022 election campaign that there would be no changes to the taxation of superannuation, the ill-considered new tax on large balances was announced out of the blue.
I wouldn’t be holding your breath in relation to Chalmers’s pledge about no further changes.
Treasury has long taken the view that the tax concessions in the super system are too large and favour wealthy, high-income individuals.
The fact that a careful calculation of the tax burden on superannuation would account for the cumulative nature of the taxes as well as the fact that money is locked up until preservation age is clearly beyond the wit of Treasury officials.
But these same officials stumbled badly by recommending taxing unrealised capital gains.
Without the intervention of the Prime Minister who was responding to the cacophony of complaints – think Paul Keating, Bill Kelty and many others – it might have been another story. A lot of egg on Chalmers’s face is a price worth paying.
The last thing Australia needs at this point is any additional deterrents to business investment given our appalling productivity performance.
There is still a lot of water to go under the bridge on this super surrender.
Indexing the $3 million is a good idea, although the indexation factor should really be the average returns on balanced funds rather than the CPI.
Don’t hold your breath on this one: using the CPI will drag more people into the higher tax net.
The second $10 million threshold is simply there to raise some more revenue for a desperate Treasurer.
Complications remain in terms of implementation, with multiple accounts being one of them. It’s inevitable that the Australian Taxation Office will have to be involved.
The tax treatment of those on defined benefits remains a mystery, in part because there is no actual balance to tax.
‘Abysmal public policy’
There is no scope for the tax to be paid other than by the beneficiaries directly which is in contrast with those on accumulation schemes.
There is also the point that as those beneficiaries age, the implicit value of their superannuation entitlement falls.
The last two years has been a tawdry period for abysmal public policy formation.
Having been told in the 2022 election campaign that there would be no changes to the taxation of superannuation, the ill-considered new tax on large balances was announced out of the blue.
I wouldn’t be holding your breath in relation to Chalmers’s pledge about no further changes.
Treasury has long taken the view that the tax concessions in the super system are too large and favour wealthy, high-income individuals.
The fact that a careful calculation of the tax burden on superannuation would account for the cumulative nature of the taxes as well as the fact that money is locked up until preservation age is clearly beyond the wit of Treasury officials.
But these same officials stumbled badly by recommending taxing unrealised capital gains.
Without the intervention of the Prime Minister who was responding to the cacophony of complaints – think Paul Keating, Bill Kelty and many others – it might have been another story. A lot of egg on Chalmers’s face is a price worth paying.
The French clock man? The pond has just the right visual distraction for him...
The header: Super backflip spares self-managed funds from pain,Treasurer Jim Chalmers' backdown on the super tax reveals how sustained pressure from industry experts and everyday Australians forced a rare policy reversal.
The caption: The Keating intervention will have played a big role in Anthony Albanese’s intervention to save his Treasurer Picture: NewsWire / Martin Ollman
Sheesh, what's a snap of Albo doing over a mention of the French clock man?
Couldn't the reptiles have dug into their archives for him as he was flying over the dead heart on his way to Paris? Why not one of those snaps of him in PNG?
Never mind, the reptiles rated this a five minute read, and again the pond will present it unencumbered by biblical exegesis ...
Suffice to note that Mein Gott was also suffused with righteous triumphalism ...
Australia dodged a bullet as a result of the backdown by Treasurer Jim Chalmers on his unindexed tax on unrealised gains on superannuation balances above $3m. Comments from readers of The Australian played a big role in showing how disastrous the tax would be and ways to overcome it.
My first detailed comment on the impact of the tax was back in May 2024, with many more to follow.
Chalmers was lucky. Had the coalition bothered to understand the impact of his mistake the election would have been much closer.
In backing down, the Treasurer is now recognising the importance of self-managed funds in the mobilisation of capital for family business, farms and around half the number of listed ASX stocks.
Many trustees of self-managed funds allocate a portion of their capital to new family businesses and smaller stocks on the ASX.
But few self-manged funds would have allocated capital to their farms or high-risk emerging enterprises when they had to pay tax on unrealised gains and because the tax was not indexed, middle Australia would have over time been hit.
My first detailed comment on the impact of the tax was back in May 2024, with many more to follow.
Chalmers was lucky. Had the coalition bothered to understand the impact of his mistake the election would have been much closer.
In backing down, the Treasurer is now recognising the importance of self-managed funds in the mobilisation of capital for family business, farms and around half the number of listed ASX stocks.
Many trustees of self-managed funds allocate a portion of their capital to new family businesses and smaller stocks on the ASX.
But few self-manged funds would have allocated capital to their farms or high-risk emerging enterprises when they had to pay tax on unrealised gains and because the tax was not indexed, middle Australia would have over time been hit.
At this point the reptiles interrupted with a reminder of that jihad, that crusade, that had also littered the Groaning.
No point in going the whole hog, just a reminder...
Preening self-satisfaction done, Mein Gott quickly wrapped up his coverage, safe in the knowledge that the righteous had triumphed ...
The Treasurer’s estimates of amounts set to be raised were simply wrong. He did not understand that there would have been falls in investment in superannuation and a different investment policy for trapped money.
The whole issue became a live political affair when Paul Keating entered the debate.
The Keating intervention will have played a big role in the Prime Minster intervening to save his Treasurer.
But apart from myself, in the trenches from the early days were SMSF Association chief Peter Burgess and Geoff Wilson, chairman of Wilson Asset Management.
Chalmers will be wiser from the experience, and it should be remembered he did convince the community that a 30 per cent tax rate on balances above $3m was reasonable. A 40 per cent tax on balances balance above $10m will not raise a lot of money because amounts above $10m will be withdrawn.
This is one of the rare issues where the community, including readers of the Australian, played a huge role in changing policy. A rare event.
At this point Mein Gott did a segue into another matter ...
Australian rare earths strategy
The pond didn't want to intrude, and neither did the reptiles because there were no visual distractions or interruptions.
It 's enough to note that Mein Gott was in "must" mode.
This is a key to any member of the commentariat baying on the sidelines.
...those 10 words must be accompanied
...our Prime Minister must remember
...Australia must also accelerate
...Albanese must explain
There's a lot of mustiness in the air, and Mein Gott also went full listicle, and correspondents are reminded they must read and comment, provided they can dig through all the valuable rare earth...
When Australian Prime Minister Anthony Albanese meets US President Donald Trump, Albanese should open the conversation with 10 simple words - “Australia can solve the western world’s heavy rare earths crisis”.
As I set out below, those 10 words must be accompanied by eight actions and a confession. Among those action plans is the combination of Australia’s world-leading mining technology and a looming analysis of 29-year-old drill cores (drilled by BHP looking for gold) which could quickly break the Chinese stranglehold.
And our Prime Minister must remember that Trump now knows the difference between his “critical minerals” problems and the more serious heavy rare earth crisis.
Almost every day Trump is reminded of the heavy rare earths’ crisis via Russia’s mass firing of rockets and drones at Ukraine which is made possible by Russia’s unlimited access to the heavy rare earths terbium and dysprosium from China.
The ability of The US and Europe to respond is curbed by China’s clamps on supplying terbium and dysprosium. China’s refinery network controls some 99 per cent of the market. Heavy rare earths are also essential in a wide range of industrial applications outside defence.
If Australia can break the China stranglehold we will create a new source of resource prosperity for the nation.
The confession to Trump: Australia has become a hidden contributor to China’s global monopoly of terbium and dysprosium. China extracts heavy rare earths from pig iron slag obtained via Australian iron ore.
One of Australia’s heavy rare earths deposits is Northern Minerals’ Browns Range in WA 750km south of Darwin near the NT border.
Chinese investors had a major investment in the Northern Minerals and while the Australian government has ordered that Chinese equity in Northern Minerals be sold, a substantial part of its stock has been sold to interests linked to groups in Hong Kong.
As I set out below, those 10 words must be accompanied by eight actions and a confession. Among those action plans is the combination of Australia’s world-leading mining technology and a looming analysis of 29-year-old drill cores (drilled by BHP looking for gold) which could quickly break the Chinese stranglehold.
And our Prime Minister must remember that Trump now knows the difference between his “critical minerals” problems and the more serious heavy rare earth crisis.
Almost every day Trump is reminded of the heavy rare earths’ crisis via Russia’s mass firing of rockets and drones at Ukraine which is made possible by Russia’s unlimited access to the heavy rare earths terbium and dysprosium from China.
The ability of The US and Europe to respond is curbed by China’s clamps on supplying terbium and dysprosium. China’s refinery network controls some 99 per cent of the market. Heavy rare earths are also essential in a wide range of industrial applications outside defence.
If Australia can break the China stranglehold we will create a new source of resource prosperity for the nation.
The confession to Trump: Australia has become a hidden contributor to China’s global monopoly of terbium and dysprosium. China extracts heavy rare earths from pig iron slag obtained via Australian iron ore.
One of Australia’s heavy rare earths deposits is Northern Minerals’ Browns Range in WA 750km south of Darwin near the NT border.
Chinese investors had a major investment in the Northern Minerals and while the Australian government has ordered that Chinese equity in Northern Minerals be sold, a substantial part of its stock has been sold to interests linked to groups in Hong Kong.
Part of the Northern Minerals proposed production at Browns Range is contracted to be refined at the Illuka Resources refinery set to be completed next year at Eneabba but the Chinese may want a share of the Northern Minerals output shipped out of the Chinese leased Port of Darwin.
One of the reasons why Australia can solve the US heavy rare earths crisis is that after 20 years of research the Morgan family controlled Haoma group developed the so called Elazac process to overcome poor gold, silver and platinum recovery rates from Bamboo Creek ore using cyanide and other conventional extraction methods.
Haoma Mining was delisted from the ASX in 2018 for breaches of the market operator’s listing rules. Its auditor, BDO, in August, cast doubt over its ability to continue as a going concern given it is dependent on the financial support of a related party.
In solving that problem via Elazac it was much easier for Haoma to extract terbium and dysprosium concentrate.
Albanese must explain Australia’s eight steps to change the China heavy rare earths dominance. He will no doubt also have plans for other critical minerals.
One of the reasons why Australia can solve the US heavy rare earths crisis is that after 20 years of research the Morgan family controlled Haoma group developed the so called Elazac process to overcome poor gold, silver and platinum recovery rates from Bamboo Creek ore using cyanide and other conventional extraction methods.
Haoma Mining was delisted from the ASX in 2018 for breaches of the market operator’s listing rules. Its auditor, BDO, in August, cast doubt over its ability to continue as a going concern given it is dependent on the financial support of a related party.
In solving that problem via Elazac it was much easier for Haoma to extract terbium and dysprosium concentrate.
Albanese must explain Australia’s eight steps to change the China heavy rare earths dominance. He will no doubt also have plans for other critical minerals.
Here comes that promised dot point listicle:
The eight steps are:
- Clean up the Northern Minerals situation, accelerate production and send all its heavy rare earths to the Illuka refinery. But be careful. Much of the Browns Range ore is underground which is more costly to mine than its surface material
- Do everything possible to maximise heavy rare earth production at the Illuka refinery via the company’s beach sands mining related stock piles.
- The current pilot plant of Haoma is producing gold and platinum from the Bamboo Creek tailings dump using the Elazac process. The plant should be expanded more rapidly and the terbium, and dysprosium concentrates sent to. Iluka or the US for refining. But beware---China will also almost certainly bid for the material
- In addition to the Bamboo Creek tailings Haoma has a major area of prospective heavy rare earth ore in the Bamboo Creek Valley .Analysis of bulk samples from the valley measured Terbium grades, ranging from 2,000ppm to 4,400ppm. These Terbium grades are much higher than other Australian mines.
BHP exited but Haoma kept the BHP drill hole samples and will soon conduct Elazac Process ‘trials’ and other tests to determine whether the drill cores duplicate the results from the recent samples taken from the Bamboo Creek Valley. If they are looking at a world changing deposit. These need to be accelerated
- Australia must also accelerate development of its clay deposits. Victory Minerals deposits has discovered terbium in clay deposits which are similar to those mined by China. Australian Rare Earths has clay based rare earths deposits on the South Australian and Victorian border but they are not as rich in terbium. Clay deposits are much cheaper to mine and treat than hard rock
- Australia needs to look at other areas of the Pilbara where heavy rare earths can be extracted
- Finally, given the deposits in Brazil, Greenland and Ukraine Australia should seek price guarantees in its US deals.
These are exciting times. They remind me of the early days of the iron ore boom when in the 1960s mining heroes like Ian McLennan, Russel Madigan and Maurice Mawby changed the outlook of the nation.
The pond must now leave the excited Mein Gott, raving about exciting times ...
Mein Gott -
ReplyDelete>> Comments from readers of The Australian played a big role in showing how disastrous the tax would be and ways to overcome it.>>
I’d reword that as “Comments from readers of The Australian played a big role in showing how greedy and entitled they are and that they would do anything within their power to continue to root the system”.
With such readers, what need does the Lizard Oz have for economics scribblers? Fortunately, the main value of the Dame’s comments are the pure bile and loathing of her “fuck the lot of you” attitude, while Mein Gott proves comedy relief, fulfilling the same function as the likes of Smiley Burnette or Gabby Hayes in old B Westerns.
🤠🤠🤠
DeleteNow there's a parallel the pond can relate to ...
Sooo good to see the high regard our Dame has to express for Paul Keating. Now.
ReplyDelete🐸 She couldn't hold it in. It was a hoppy toad, and just had to pop out...it just took a very long time in the popping ...
DeleteDP wrote -
ReplyDeleteBTW, presume you are also a fan of those two tidy taut movies by Monte Hellman, Ride in the Whirlwind, and The Shooting, which are almost - and the pond can think of no higher praise - Ranown ...
PS have driven much of Route 66, and still drink tea out of a cornball tourist trap mug, which sits alongside my FBI mug, acquired long before it was being run by Keystone Kash ...
Hi DP,
Yes I have seen both of those spare Jack Nicholson/Millie Perkins oaters, good stuff.
Too bad Jack didn't do more Westerns, now that it seems his career is over there
won't be any more.
It's cool you have a Route 66 mug, but nothing screams style and panache like a
Jersey Turnpike mug. Just saying.
GrueBleen, thank you for the info regarding resolving posting issues.
"Pain, the most constant and faithful of all companions, one gets used to it".
Ben Gazzara (Run For Your Life)
Jersey Mike - always good to have comment from you, but even more so as people (or AI?) seek new ways to complicate life for actual humans on this planet.
DeleteChadwick,
DeleteThanks buddy. Every day I look forward to DP's musings and yours and all the others
that post comments. I can't count the number of times I have copied and shared
the posts with friends and relatives.