Welcome to Firstlinks Edition 339

Need to be a bit more careful about your statistics – presuming New Zealand is in fact part of the developed world – NZ’s population growth rate in the year to June 2019 was 1.7%... a bit higher than Australia…with all the resultant similar positive and negative impacts with most staying In Auckland.

Fast growing population but:
1. insufficient water to sustain it. Oh yes we can build 20 x desalination plants around the country.......the stupidity which passes for planning as big business gets its wish for a bigger market!
2. worsening climate change and more greenhouse gasses, so worsening fire seasons and other catastrophes to come moving forward.
3. cost of upgrading and replacing infrastructure. Where do you ever see this well published by the right wing Press doing the bidding of its big business contributors.
4. a multicultural society which may have worked in the past but which will result in a civil war. 
The planet does not need and cannot sustain the population we already have. Why more? To satisfy greedy big business wanting more customers? Is that any valid reason the destroy what we all hold precious? Apparently so.

One of the great things that FirstLinks does is to educate and inform people.

However I wish to highlight some unfortunate choice of language which has the potential to misinform and it is something that arose in several of my discussions/debates on the franking credit issue last year.

‘An even bigger impact this decade will come from the ageing Baby Boomers, the youngest of which is already 55 (and the oldest is 73!). By 2030, most Boomers will have transitioned into retirement. Not only will this cause a major workforce (and tax payment) exodus, it signals greater drawdowns on pensions and health, and will put further pressure on policy change. For example, while the Labor franking policy is buried for now, the ATO recently advised that over one-third of company tax is returned to shareholders as franking credits.’

But ALL company tax was collected from ASX companies. There was no leakage back to some shareholders. This is a very important point.

All taxpayers are required to pay tax in accordance with their individual income circumstances. Taxpayers include those who are still in the workforce and many who are not.

Some taxpayers (retired or otherwise) own shares in public companies and qualify for franking credits to avoid paying tax twice on the same profit/earnings. This was bipartisan policy – probably because it was fair.

By presenting this statistic in a piece on retirees a reader might also form the view that retirees are the sole beneficiaries of franking credits which we both know is not the case.

Perhaps a more accurate final sentence of your paragraph might have been:

The ATO has recently advised that the aggregate value of franking credits available to taxpayers (retired or otherwise) is equivalent to around 30% of the aggregate annual amount of company tax.

The broad thrust of your piece inter alia is the need for reform in the area of retirement incomes policy. Agree 100%.

I think we should revisit the mistaken policy change of 2007 which relieved retirees of paying income tax on pension income. We heard no complaint at the time from those on defined pensions (many in excess of $100K) who suddenly had a tax windfall which had not been planned or anticipated.

While reversing this will take some political courage, it seems fairer that those retirees earning pensions of (say) $75 K or more pa (however sourced) should be obliged to pay a special (low-say 5%) rate of income tax on each dollar earned in excess of this amount.

Modelling would determine the appropriate threshold and tax rate. There might be some grumbling but at least these people have the capacity to pay and it is not the 30% slug on a much smaller and often lesser paid retiree population that was taken to the election by the ALP.

Keep up the good work,