Colin McKay writes how some Governments are taking over pension funds to cover their budget bottom lines and how it could happen here.
From the Washington Post, 17 May 2011:
Treasury to tap pensions to help fund government
The Obama administration will begin to tap federal retiree programs to help fund operations after the government lost its ability Monday to borrow more money from the public, adding urgency to efforts in Washington to fashion a compromise over the debt.
Treasury Secretary Timothy F. Geithner has warned for months that the government would soon hit the $14.3 trillion debt ceiling — a legal limit on how much it can borrow. With that limit reached Monday, Geithner is undertaking special measures in an effort to postpone the day when he will no longer have enough funds to pay all of the government’s bills.
Geithner, who has already suspended a program that helps state and local government manage their finances, will begin to borrow from retirement funds for federal workers.
The USA is taking public servants’ pension funds, to pay government bills.
Note that well.
Because just over 3 weeks ago – and 4 days before that Washington Post story hit the wires – our own Senator Barnaby Joyce made a very disturbing revelation (below).
Think it could only happen in America?
From Reuters, 21 October 2008:
Argentina’s center-left President Cristina Fernandez on Tuesday signed a bill for a government takeover of the $30 billion private pension system in a daring and unexpected move that rocked domestic markets.
Hungary is giving its citizens an ultimatum: move your private-pension fund assets to the state or lose your state pension.
Economy Minister Gyorgy Matolcsy announced the policy yesterday, escalating a government drive to bring 3 trillion forint ($14.6 billion) of privately managed pension assets under state control to reduce the budget deficit and public debt. Workers who opt against returning to the state system stand to lose 70 percent of their pension claim.
“This is effectively a nationalization of private pension funds,” David Nemeth, an economist at ING Groep NV in Budapest, said in a phone interview. “It’s the nightmare scenario.”
But Argentina and Hungary are not like us, right? That couldn’t ever happen in a Western economy like ours, could it?
From eFinancialNews, 29 November 2010:
France seizes €36bn of pension assets
Asset managers will have the chance to get billions of euros in mandates in the next few months for the €36bn Fonds de Réserve pour les Retraites (FRR), the French reserve pension fund, after the French parliament last week passed a law to use its assets to pay off the debts of France’s welfare system.
Oh, but that’s France. They’ve got hangover problems from the Global Financial Crisis, right? That couldn’t happen in a really strong economy like ours, one that sailed through the GFC without even having a recession … right?
Wrong.
Poland was the only economy in the European Union to achieve economic growth through the GFC. It then doubled economic growth in 2010. It is the sixth largest economy in the EU, and is considered “Europe’s new economic superstar“.
Despite this apparent success, Poland too has just passed new laws to steal more of its citizens’ private retirement savings.
From Warsaw Business Journal, 9 May 2011:
The government’s controversial pension reform plan, which slashes the percentage of workers’ salaries going to private pension funds (OFEs) from 7.3 to 2.3 percent, became law on May 1. OFEs will start receiving the reduced amounts from June.
The changes mean that the state-controlled social security and pension fund, ZUS, will now receive 17.22 percent of workers’ salaries…
Critics have said the changes were nothing more than some creative accounting by the government to shore up its budget deficit…
And from Global Pensions, 6 May 2011:
It appears moving backwards on pension reforms has become the thing to do on both sides of the Atlantic.
Hungary last year moved much of its private pension assets to the state. Last month, new rules came into effect in Poland diverting 5% of the 7.3% of salary going to private pension funds to the state.
… another recent reversal we’ve seen has come from Latin America. In the 1990s, Bolivia’s decision to move its pension assets from the state to private managers placed it among the most advanced pension systems in the region. However, the current government has decided to nationalise the assets once more claiming it is creating a pension system that is equal for all.
Oh yes, but Poland is really just a Central European economy, not long removed from communism. Something like that couldn’t ever happen in a mid-level, “advanced Western economy” like ours … right?
From Business Insider, 10 May 2011:
Irish Bombshell: Government Raids PRIVATE Pensions To Pay For Spending
“The various tax reduction and additional expenditure measures which I am announcing today will be funded by way of a temporary levy on funded pension schemes and personal pension plans.”
But the Irish had a really big housing bubble, didn’t they? No way anything like that could happen here … right?
From the Sydney Morning Herald, 4 March 2011:
Australian house prices remain the most overvalued in the world, according to the latest quarterly ranking of global house prices by The Economist magazine.
But our housing market could never fall. Not like it did for Ireland … or the USA … or the UK … or Spain … right?
From AAP, 29 April 2011:
Capital city home prices have posted their biggest quarterly fall in at least 12 years, as more stock in the housing market allows prospective buyers to wait for bargains, a survey shows.
Capital city dwelling values fell by a seasonally adjusted 2.1 per cent in the first quarter of the year, according to the latest RP Data-Rismark Home Value Index.
The quarterly change was the steepest since the index series began in June 1999, RP Data research director Tim Lawless said.
And from the Sydney Morning Herald, 17 May 2011:
Real estate slump will leave banks in pain too
Australian real estate, long the subject of global concern, bears all the symptoms of a market that simply has run out of puff.
Ever since America’s housing bubble burst in 2007, setting off a chain reaction in Britain and across Europe – which then infected the global financial system – international pundits have been warning of a similar catastrophe here.
Do you remember what our government did the last time our real estate market began to fall sharply?
It was during the 3-month peak of the GFC, in late 2008 / early 2009:
The Labor Government guaranteed to use taxpayers’ future earnings to underwrite our banks’ trillions in foreign liabilities. Poured $20 billion in borrowed money into Residential Mortgage-Backed Securities (RMBS). And borrowed billions more to prop up the housing market. How? By bribing thousands of young people into massive debt, thanks to the government’s double-trouble First Home Owners Grant.
But there’s nothing really to worry about, because we’ve got the “strongest banking system in the world”, right? Even if the property bubble does pop, our government would never need to go looking for even more money, to bail out our banks … right?
On 17 May 2011, leading credit rating agency Fitch’s downgraded 54 ‘tranches’ of Australian Residential Mortgage-Backed Securities, indicating that “cash-strapped borrowers and tight-fisted mortgage insurers are a greater threat to Australian banks than previously thought“.
The next day, another leading credit rating agency Moody’s downgraded our Big Four banks.
From the Sydney Morning Herald, 18 May 2011:
Moody’s Investors Service has downgraded the long-term debt ratings of Australia’s big four banks to Aa2 from Aa1, citing their relatively high reliance on overseas funds rather than local deposits.
Moody’s explanatory paper effectively stated that our banks are Too Big Too Fail. That the Big Four’s liabilities must continue to be supported by the Australian Government Guarantee For Large Deposits And Wholesale Funding that Labor “decisively” introduced (like Ireland) in response to the GFC. And if the guarantee is removed, Moody’s indicated that the Big Four’s long-term debt ratings will be downgraded by at least two further ‘notches’.
Meaning?
Moody’s has just placed our government on notice. Australian taxpayers are now effectively on the hook – permanently – to bail out our banks when our housing bubble bursts.
Exactly the same thing that happened in the USA, UK, Ireland, Spain et al.
Don’t believe that we have a housing bubble? Think the nightmare housing-driven bank collapse scenario that is throttling the rest of the Western world won’t ever happen here?
Fine.
If the housing-collapse trigger event is not enough to bother you, then take a moment to think about derivatives.
Those “exotic” financial instruments that were at the heart of the Global Financial Crisis. The ones that famously prudent investor Warren Buffet referred to as “a mega-catastrophic risk”, “financial weapons of mass destruction”, and a “time bomb”, way back in 2003.
The same kind of exotic instruments that lauded economist Saul Eslake also referred to just a few days ago, in an argument with me on my blog over my criticism of his public lobbying for a carbon dioxide “pricing” scheme (emphasis added):
“And while it is true that banks might make money from an emissions trading scheme, they could just as likely lose (as many banks have done from trading other ‘derivatives’”.
Do our banks have much exposure to derivatives now – even before an emissions trading scheme is introduced?
Sure do.
Prepare to be shocked.
According to RBA statistics at December 2010, Australia’s banking system has $15 Trillion in Off-Balance Sheet “Business”, versus a mere $2.66 Trillion in On-Balance Sheet “Assets”.
And exactly what kind of “business” makes up 92.3% of that “Off-Balance Sheet” $15 Trillion – more than 10 times our nation’s annual GDP?
You guessed it. Derivatives. Those “financial weapons of mass destruction” which so nearly blew up the whole world in 2008-09.
Finding it a bit difficult to get your head around these huge numbers? Pictures often help.
Take a look at this simple chart comparing our “safe as houses” banks’ On-Balance Sheet “Assets” (blue line) – which are 66% loans – versus their Off-Balance Sheet “Business”, 92.3% of which is derivatives (click to enlarge):
Still feeling confident about our banking system?
There’s more.
Australia’s banking system only just dodged a bullet in 2008-09, thanks almost entirely to the government (taxpayer) guarantee which is still in place today.
“Almost” entirely thanks to the government guarantee, you say?
That’s right. Something else helped save our banking system too.
The Australian public remains blissfully unaware that during the GFC, two of our Big Four banks, and our very own central bank, the RBA, all obtained secret emergency loans from the US Federal Reserve – which is simply printing new money, Zimbabwe-style.
From Business Spectator, 3 December 2010:
National Australia Bank Ltd, Westpac Banking Corp Ltd and the Reserve Bank of Australia (RBA) were all recipients of emergency funds from the US Federal Reserve during the global financial crisis, according to media reports.
Data released by the Fed shows the RBA borrowed $US53 billion in 10 separate transactions during the financial crisis… according to a report in The Australian Financial Review.
NAB borrowed $US4.5 billion, and a New York-based entity owned by Westpac borrowed $US1 billion, according to The Age.
If you think “it could never happen here”, if you think that our government would never take away your super to pay for its massively wasteful spending, its crappy “investments”, or to bail out our Too Big Too Fail, very recently downgraded, multi-Trillion derivatives-laden banking system, then it’s time for you to think again.
Were you one of the many who ridiculed Barnaby Joyce’s warnings in late 2009, about the possibility of a US debt default (“Barnaby Warns Of Bigger GFC“)?
That’s coming to pass right now. Trying desperately to avoid a default is the reason why the US Treasury has now resorted to stealing federal workers’ retirement savings, to pay government bills.
So pay close heed to another prescient warning from Barnaby, given on 13 May 2011:
On Tuesday night’s budget, Labor sneaked in an Amendment of the Commonwealth Inscribed Stock Act 1911. Here is the most telling statement for where our nation is going under this Green-Labor-Independent Alliance. Under Part 5 Section 18 subsection 1 “omitting ‘$75’ and substituting ‘250’ ”.
Now that is in billions ladies and gentlemen and it is real money that really has to be paid back. If we have all this money stashed away under the lower net debt figure that is always quoted by Labor, then why not use some of this mystery money to pay off what we owe to the Chinese and others who we are hocked up to the eyeballs to.
The reason why we can’t is at least $70 billion that makes up ‘net’ debt is tied up in the Future Fund and student loans.
!??!
That is exactly what is happening in America. Right now.
And Barnaby is warning that it could happen here too.
The first steps in that direction have already begun.
From Global Custodian (Australia edition), 11 May 2011:
The Gillard government’s 2011-12 budget has proposed a raft of initiatives aimed at encouraging superannuation fund and private investment in infrastructure projects.
In light of the botched “school halls” program, and the stalled white elephant NBN – which so far has only achieved a 12% takeup rate, versus their predicted 58% – would you really trust this government to wisely and prudently invest your super in Government infrastructure projects?
Others have their doubts.
From The Australian, 12 May 2011:
The government’s plan to use tax incentives to encourage superannuation funds to invest in new infrastructure could be thwarted by inadequate returns on projects and a reluctance by the states to take on project risk, experts say.
First, a little “encouragement” for super funds to invest in government spending programs.
Then, when the costs blow out, or when the government debt becomes unmanageable … or when the banks need bailing?
“No super for you!”
Barnaby is the only one on the ball.
And, he is the only politician in Australia with the honesty, decency, and courage, to (once again) try to forewarn the public about the risks of debt, and where this debt train is taking us.
Still not convinced there’s anything to worry about?
Then consider the words of Labor’s PM-in-waiting, the Minister for Financial Services and Superannuation, Bill Shorten. He already thinks of your super as a “significant national asset” … a kind of “sovereign wealth fund”.
From Shorten’s op-ed published in The Australian, 4 May 2011:
Superannuation is our sovereign wealth fund
This week marks 12 months exactly since the government announced plans to take compulsory superannuation from 9 per cent to 12 per cent.
… our superannuation savings place Australia fourth in the world. Its $1.3 trillion in funds under management through superannuation significantly boosts national savings and provides greater retirement security for millions of Australians. Superannuation is also a significant national asset because it strengthens our financial sector.
Superannuation “strengthens our financial sector”? Can you see where this is going?
Shorten and his cohorts already have their eyes on our $1.3 Trillion in super savings. In Labor’s view, your retirement savings are “our sovereign wealth fund”.
When our Too Big Too Fail, derivative-laden banks inevitably run into trouble again – as indeed they are right now with a falling housing market – you should have no doubt that our government will follow the lead of the USA, France, Ireland, Poland, and all the rest, and simply take your super to prop up our “financial sector”.
After all, they have “guaranteed” our banks. Your future taxes … and if necessary, your super … are the collateral for those guarantees.
But if the Coalition wins government everything will be fine, right? They’re far better economic managers, right? We can all trust the Liberal Party not to put their hands on our super, to pay down Labor-incurred debts … right?
Wrong.
Just this past Friday 3 June 2011, the Liberal Party announced a new policy that they will take to the next election. Loaded with weasel words, it is yet another harbinger of the super theft to come, sneakily disguised as a helpful “reform”.
From the Liberal Party website:
Further relief for small business
The Coalition will relieve the red tape burden from Australia’s small businesses by giving them the option to remit the compulsory superannuation payments made on behalf of workers, directly to the ATO.
Small business will be given the option to remit superannuation payments to the ATO at the same time as they remit their PAYG payments.
This will require only one payment to one agency – rather than multiple cheques to multiple superannuation funds. The ATO will be responsible for sending the money to superannuation funds directly.
Can you see the cunning plan here?
Billions and billions of dollars in compulsory superannuation payments, going directly from our employers’ bank accounts to the government’s tax department , every 3 months. And we have to simply trust the government of the day, that every cent of it will immediately be passed on to our private super funds. Not siphoned off into special “investments”, or government accounts. Or simply “sat on” for a month or so, in order to prop up the government’s weekly cashflow needs.
Oh, but not to worry … it will just be an “option” for “small” businesses to do this, of course.
Right. If you believe that, then I’ve got an air-backed derivative called a “carbon permit” to sell you. Ever heard the old saying, “It’s the thin end of the wedge”?
A final thought.
Our government is presently considering the Garnaut proposal for introduction of a carbon dioxide “pricing mechanism”. A key part of this proposal that has (surprise surprise) drawn strong public support from economists employed by the banking sector, is the suggestion that the billions of dollars raised should be administered by an “independent” Carbon Bank. One that …
…could be allowed to borrow money to invest in renewable energy projects against the future revenue of Labor’s proposed carbon tax and emissions trading scheme.
In other words, a Carbon Bank run by unelected, unaccountable parasites – chosen from the banking sector, no doubt – with the government … meaning taxpayers … acting as the final guarantor for any losses made on their “green” “investments”.
Does that prospect concern you?
Can you see where this is all heading?
We have a government that has already racked up nearly $200 billion in gross debt.
Is running a “forecast” $50 billion annual budget deficit.
Is presently borrowing at a rate of over $2 billion per week.
And – like an America’s “Mini-me” – has now moved to raise our debt ceiling by another $50 billion (ie, a 25% increase), to a new record quarter of a Trillion dollars.
This is the same government of completely unqualified economic incompetents behind a string of costly disasters – killer ceiling insulation, overpriced school halls, “green scheme” rorts, subsidised Toyota hybrids (that noone except government is buying), the problem-plagued Nation Bankrupting Network … and their latest rort-ridden debacle, “free” set-top boxes.
Do you honestly believe that this government would not end up burying taxpayers with even bigger losses from their carbon dioxide “air tax” scheme too?
Do you honestly believe that this government would never follow the lead of Argentina, Hungary, Bolivia, France, Poland, Ireland, and now the superpower USA … and steal your super to pay for massive debts that they have racked up?
These are just some of the many sound reasons why Senator Joyce has persistently tried to raise public awareness of the real and grave peril of ever-increasing government debt and deficit, in a (supposedly) post-GFC world.
Your retirement savings depend upon your taking notice of his warnings.
Barnaby is right.
If like me you are under 50 years old – indeed, if you are under 60 years old – then I’m willing to bet you all of my super that you will never see all of yours.
And unlike our bank(st)ers and government … I never bet.
Colin McKay is a small business owner who understands the vital importance of prudent financial management in every business and household, and wonders why we permit government and the banking system to play by different rules. He believes in the virtues of minimal government and zero debt, and has a deep interest in monetary reform.
Great post! If it wasn't for the Dodd-Frank Act we wouldn't have know of the "safe" Australian banks borrowings during the GFC. So much for ASIC, eh? Let's face it, there's only so much money to go round and the temptation of the trillions invested in worker's super funds will get the better of the Govt one day - sooner, rather than later.
Posted by: Medusa Knows | June 4, 2011 at 09:44 PM
A brilliantly constructured article - well done ...
Why is it that we don't see this type of investigative reporting in the mainstream media outlets?
Could it be that Edirors and their employers have a vested interest in keeping real news like this type of story out of the public domain?
Keep up the good work ...
Posted by: The EYE-BALL Opinion | June 4, 2011 at 09:58 PM
Excellent article. Gillard's destruction of Australia is too extreme to be incompetance, it must be deliberate.
We need Barnaby to replace Hockey, and then Swan.
Posted by: Anton | June 4, 2011 at 10:53 PM
Let's not forget how the Australian superannuation industry came into being. It was an invention of the Hawke/Keating Labor government and was set up so that the new "Industry Super Funds" could be run by the unions! The unions fund the Labor Party and Hawkie wanted to ensure a continuous flow of funds to keep the unions alive and buoyant so they in turn could fund the Labor Party.
Their mechanism was Industry Super Funds - managed by the unions. Those Industry Super Fund ads claim no fees or commissions but they do not disclose the generous benefits that the unions extract from their members.
How easy would it be for a bankrupt Labor government to access these Industry Super Funds that are controlled by the unions?
Posted by: Hugh | June 5, 2011 at 10:21 AM
This is a good post, Colin. Only for the Dod-Frank Act no one would know of the "safe" Australian banks borrowing during the GFC. How could that have happened? And what is the debt now? The banks won't suffer, they get their money in spurious ways.
As you say, "there's only so much to go round and the temptation of the trillions invested in workers' super funds will get the better of the govt one day." The way things are going my guess will be that it will be sooner rather than later as you say.
Then how will retirees live? The govt. cannot afford to pay billions more for pensions and will cut down on payments, or even endeavour to cut out the pension entirely. Or perhaps they will decide to euthanise those over 65!! Those who have paid taxes all their lives and saved through superannuation to be self-sufficient on retirement will be on the bread line with this government as will all Australians.
Posted by: Georgina | June 5, 2011 at 02:12 PM
It's good to be wary of governments and their intentions, but this is drawing a long bow. First, Australia's debt is much less than that of the countries mentioned. Second, we have a constitutional safeguard against confiscation of property without compensation.
And let's not forget the short, three-year electoral cycle.
We have lots of things to complain about, including poor fiscal management, but this would not be high on my list.
Posted by: DavidLeyonhjelm | June 5, 2011 at 04:02 PM
Struth I hope that this article is wrong........but somehow I'm not so sure it is.
This is extraaordinarily worrying.
Posted by: CynicalGoatWA | June 5, 2011 at 07:18 PM
Second, we have a constitutional safeguard against confiscation of property without compensation.
Let's see how this goes with IP and trademarking on cigarette packets.
Posted by: Michael Sutcliffe | June 5, 2011 at 08:59 PM
David, can you please refer me to which Section of the Constitution you believe provides a safeguard relevant to this scenario?
I've been having a browse, the only thing I can find that's even close to relevant is Chapter IV, Sect 85.
But, its quite specific context is Fed/State relations, (ie), it is only a safeguard protecting a State from the Federal Government acquiring the State's property, unless compensation is made -
http://www.austlii.edu.au/au/legis/cth/consol_act/coaca430/s85.html
I've not found anything yet that protects citizens' private monies from being "borrowed", or indeed, "acquired" outright.
Posted by: Barnabyisright | June 5, 2011 at 09:26 PM
"And let's not forget the short, three-year electoral cycle."
David, perhaps you missed the point raised in the article, vis-a-vis the likelihood that *both* major parties have their eyes on our super.
Labor introduced legislation less than a month ago in the Budget that appears to be leaning distinctly in that direction. Allied with Shorten's published views ("our sovereign wealth fund"), I think there's plenty of cause for concern wrt the left of the political spectrum.
And Friday's policy announcement by the Libs is, IMO, even more obviously troubling. It really is a policy that aims to have govt - the ATO, no less - getting their hands on super monies *before* the private super industry does.
I fear there's little to reassure in our 3 year electoral cycle, if (as seems clear to me) *both* major parties are moving distinctly in the same direction.
Posted by: Barnabyisright | June 5, 2011 at 09:34 PM
"Second, we have a constitutional safeguard against confiscation of property without compensation."
David, that's done us a lot of good, hasn't it? Just ONE example: Federal Government forces states to pass native vegetation laws (to meet Kyoto Protocol targets), states don't have compensation measures, farmers' land gets "taken" without compensation.
Australia is in big trouble. Of course, you won't hear that from the official economists...it's all good, mate! Just keep spending!
(Colin, thanks for the article.)
Posted by: Janet H. Thompson | June 5, 2011 at 09:57 PM
Some more news regarding the economic decline of the welfare infested west. The recently released jobs data from the USA were "disappointing". The full story would have been "upsetting"
http://www.weeklystandard.com/blogs/half-last-months-jobs-came-single-employer-mcdonalds_573220.html
According to the unemployment data released this morning, the economy added only 54,000 jobs, pushing the unemployment rate up to 9.1 percent. However, this report from MarketWatch suggests the data is much worse than that
-Half the "new jobs" in the USA were at McDonalds. And they still hanen't staffed their Mt Isa store yet.
"progressive" job creation in action
Posted by: Anton | June 6, 2011 at 12:11 AM
Michael Pascoe spoke at the Pastoralists and Graziers Association annual convention in late February. Like Chris Caton at the WALGA conf a couple of years before, he basically said that anybody who thought creating money out of thin air would lead to inflation was an idiot.
When I asked him about the Federal Reserve money transferred to the RBA, NAB and Westpac, he flippantly said, "Well, if the US is lending money at very low interest rates, why wouldn't you take some? They probably turned around and lent it out at a significant profit. I'd be surprised if they haven't paid it back already. Yaddy yadda...."
Posted by: Janet H. Thompson | June 6, 2011 at 12:38 AM
LoL
Posted by: SignedIn | June 6, 2011 at 01:08 AM
It's S51 (xxxi). The acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws.
http://www.aph.gov.au/senate/general/constitution/par5cha1.htm
Janet, it's true the federal government can by-pass this if the states can be 'persuaded' to cooperate. But so far that's been rare.
Posted by: DavidLeyonhjelm | June 6, 2011 at 10:36 AM
Thanks David.
I fear you place too much faith in the abundant weasel words contained within the Constitution, and this sect. in particular.
For example - "have power to make laws for the peace, order, and good government of the Commonwealth with respect to..".
The ultimate catch-all clause. The only real prerequisite is that the government deems that its action is necessary for "peace", "order", and "good government".
I've no doubt that a cry of "Government will break down (go broke) if we don't do this", or in a lesser extreme, "This is the wisest way to safeguard citizens' retirement savings against sharemarket volatility" ... or similar "spin" ... would be considered by politicians (backed by their Constitutional lawyers) as befitting the scenario of taking (or 'borrowing') your super.
Example 2 - "The acquisition of property on just terms from any State or person for any purpose in respect of which the Parliament has power to make laws".
Need I say more?
Posted by: Barnabyisright | June 6, 2011 at 11:00 AM
I don't mean to be rude, but your lack of understanding of the law is showing.
"Just terms" cannot be overridden by the "peace, order and good government" term. They have equal standing.
You are right to be suspicious of the government and its intentions. I share it. But if you waste time and effort on things that are unlikely to occur, you may miss things that are a more more clear and present threat.
Posted by: DavidLeyonhjelm | June 6, 2011 at 11:51 AM
David, with respect, I fear it is yourself who may be showing lack of understanding of the law. And reality.
First, I did not say that "just terms" can be overridden by "peace, order and good government".
Second, you are wrong. "just terms" is merely a (potential) condition that must be met. IF the govt is challenged on Constitutional grounds .. always a tough ask.
Simply put, if the govt decides that X is necessary .. for "peace, order and good government" ... then it is subsequently bound only to ensure that its actions (claimed) to aim at achieving that, are being done on "just terms".
So the definition of "just terms" is the only basis of potential argument preventing their actions.
Do you honestly believe that an argument of (eg) "We're only 'borrowing' it, 'temporarily'", or "We will give a govt pension in exchange" - (ie), *exactly* the kind of pretexts given by the other govts cited above, would not be presented as the "just terms" basis, in response to any Constitutional challenge?
Read the links in the article above, and you'll see that in Poland, for example, the issue of Constitutional breach has been raised by critics.
But the possibility of it being unconstitutional certainly didn't prevent the government from just going ahead and doing it anyway -
http://www.wbj.pl/article-54432-pension-reform-law-comes-into-effect.html
Posted by: Barnabyisright | June 6, 2011 at 01:01 PM
David @15, you said, "Janet, it's true the federal government can by-pass this if the states can be 'persuaded' to cooperate. But so far that's been rare."
The imposts upon private property have been anything but rare. Just the Native Veg rules have affected thousands of property owners. MSM just won't touch it.
I appreciate your input.
Cheers,
Janet
Posted by: Janet H. Thompson | June 6, 2011 at 01:07 PM
Out of interest, I asked a Melbourne-based barrister to the High Court (who has expertise in Constitutional law) about this today, and cited S51(xxxi).
He firmly assured me that the Constitution provides no safeguard whatsoever against the government taking our super, as per the article.
Posted by: Barnabyisright | June 6, 2011 at 07:49 PM
Good article, but the whole thing can be put more succinctly:
"If a government has to get more money, the only place it can get it from is from those people who have some. And they will."
There are five ways a govt can get money:
1. earn it (publically owned utilities and services). With the trend to privatisation, this goes away.
2. borrow it. Comes a point when you've borrowed too much. (This is a tax on future earnings.)
3. PAYE. (This is a tax on current earnings.)
4. tax past earnings. (Essentially a wealth tax.)
5. print more.
When you've done (2) a lot, (5) is not really viable any more as your overseas borrowings are in overseas currencies, and hedged. Printing causes massive inflation, and in real terms can't pay off external debt. At that point, (5) is a last-ditch staving-off-the-inevitable-collapse for a few months or years at most while hyperinflation occurs.
(3) becomes nonviable after a certain point. You can't tax people more than 100% of what they earn, that is (4).
(4) is generally avoided if possible because politicians want themselves to be in the category of those with accumulated wealth. But if it's a choice between not doing (4) and staying in power, (4) will come.
Having all your sheep rounded up and coralled in a pen where they can't get out is the easiest way of fleecing them (or turning them into cutlets). For that, read having large amounts of money put into large, easily accessible lumps by legislation, and isolated by law from the supposed owners.
For those who thing it can't happen here, consider this:
1. It's happened before, quite recently - the 15% contribution surcharge. Now that's not 100% of course, but it establishes the principle. Your super is not yours, except under certain very specific circumstances. Outside ofthose, you can sometimes get at parts of it, but at ruinous tax rates.
2. It happened before in the 1940's. Wage earners would see a figure on their pay slips saying how much had been put into an account for their retirement. Thne, that was merged into general revenue and the pension took its place.
The way (4) will be done is
a) Higher taxes on super. Raise the retirement age. Make it harder to get.
b) Reintroduction of death duties.
c) Reintroduction of gift tax.
Posted by: ChrisH | July 1, 2011 at 09:05 AM
Topic: Beware the green government
Hi,
I just could not resist and I had to copy and paste what I had to say about this topic on the other day. I am sorry to upset some greenies again who can not see from the tree (what he/she is hugging) the forest. But I am not sorry if my facts based and life experience story would hurt someone’s feelings who still believe in political spins, lies, mismanagement, squandering the taxpayers money and I am not sorry to put it here again, what I have to say now and again, under this topic.
Maybe if more people will read it more and more will realize the path we are going down in Australia, and we would have a chance to change the this path to an upwards direction, because............
We ain’t see nothing yet.
The greens are holding the balance of power in the senate.
I grew up in an European - previously - communist/socialist Eastern block country. I lived there for 35 years and as an engineering college graduate I was trying to run my own business there in the mid eighties as a self employed.
I escaped from there, with two suitcases, leaving everything else behind in ‘86 and in ‘89 (officially) migrated to Australia hoping that I left behind the years of humiliation, no free speech, lack of freedom, over taxing, (and I could go on) what are the main guidelines of running politics in accordance to the Marxist-Leninist ideologies.
(I know very well what they are because I forcefully had to study them in college and had to have a written a verbal exam about them each semester.)
I see the same Marxist-Leninist ideas - propagated and pushed down our throats by the greens - day after day, week after week since this “unelected” labor government got into power.
I do not want to mention all the disasters this government was “financing” so far in our behalf, from our money.
I just would like to concentrate on and emphasize the Marxist-Leninist communist ideology what they follow and what is the very cause and main reason of everything what is happening to this country nowadays.
This Australian federal government with the help of the greens and independents is trying to force this shameful ideology upon us. They try to implement the same damned policy what failed in the European Eastern Block countries and even failed in its mainland Russia (if you might remember the CCCP or USSR whatever pleases you) as well.
Almost all the Marxist-Leninist communist governments in the World are gone, finished, overthrown. Only few countries left and ruled by a communist regime. Just take a good look at those countries - like China, Cuba, Laos, Vietnam - and especially take an even better look of the lives and living standards of their citizens!.
Would we want the same here in Australia? I hope not!
I see the biggest problem in the Australian voters, with the so called Aussie attitude like “she’ll be all right mate, have a cup of coffee”, or “it could not happen to us, not in Australia, just roll with the punches”.
This attitude does not work anymore!
We have to stand up!
We are - the Australian nation - the employers of those “employees” in the Parliament, not the other way around!
I am not a scare-monger! I’ve seen it, experienced it previously what the communist are capable doing to the economy, to the people, to the country.
Do not forget and keep it in mind always!
If they are taking away our hard earned dollars, by taxing and taxing and taxing us and taking it away on the “share the wealth” basis, and reducing our income to a bare minimum, they take away our freedom too with our money, because we will become nothing else but dependents who are waiting in line for government handouts to survive from month to month.
They would be in full control then and this would be called “totalitarian government”.
We ain’t see nothing yet!
Cheers strovachek
Posted by: strovachek | July 6, 2011 at 08:12 PM