THE House of Representatives Standing Committee on Economics today presented the report of its inquiry into the implications of removing refundable franking credits.

The chair of the committee, Tim Wilson MP, said, "The committee has considered the case for removing refundable franking credits for individuals and SMSFs and is of the view the policy is inequitable and deeply flawed.

Mr Wilson said, "In particular, abolishing refundable franking credits will unfairly hit people of modest incomes who have already retired, and who are unlikely to be able to return to the workforce to make up the income they will lose.

"It will force many people, who have saved throughout their lives to be independent in retirement onto the Age Pension. This undermines any objective that it may raise revenue and reduce dependence on taxpayers resulting from an ageing population," Mr Wilson said.

In its submission to the inquiry, the Alliance for a Fairer Retirement System claims that, in 2014-15, over half of those receiving cash refunds for their franking credits had incomes below the $18,201 tax-free threshold of the time, and 96 per cent had taxable incomes of less than $87,000.

Mr Wilson said, "Some have argued that the intention to scrap refundable franking credits is designed to tax the wealthy. This is an unfair characterisation of the 900, 000 Australians who will be affected and could lose up to a third of their income.

"Australia has a tax free threshold of $18,200 for workers, yet the abolition of refundable franking credits would apply an effective 30 percent tax from the first dollar earned. This is fundamentally regressive," Mr Wilson said.

"In consideration of the evidence received during this inquiry, the committee strongly recommends against the removal of refundable franking credits," Mr Wilson said.

The committee also recommended that any policy that could reduce Australian retirees’ income by up to a third should only be considered as part of an equitable package for wholesale tax reform.

The report is available here.

A total of 1777 submissions have been published and are available on the committee’s webpage at: www.aph.gov.au/economics.

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PROPOSED changes to superannuation fee disclosure still don’t solve the problem, Industry Super Australia’s latest submission to ASIC has warned. 

Industry Super Australia has provided input on ASIC’s proposed changes to Regulatory Guide 97 (RG97), which aims to improve transparency around how superannuation funds and managed investment schemes reveal their fees and costs to consumers. 

The submission makes it clear that the proposal put forward by ASIC does not go far enough to address the inherent complexity of fee disclosure, meaning consumers still won’t get the clarity they need to make informed decisions based on fees and cost comparisons. 

Industry Super Australia chief executive Bernie Dean said that while attempts to improve the system were long overdue, the ASIC proposal could in fact lead to consumers being more confused – not less. 

“The current proposal by ASIC only serves to reinforce the inconsistent and confusing fee disclosure structure – whereby platforms owned by banks and investment managers would only be required to disclose the cost of gaining access to a product, not the cost charged by those issuing the product,” Mr Dean said.

“This means consumers may believe these products are less expensive, while unaware they will then have to pay additional fees and charges on top of what has already been disclosed.

“Consumers should be able to make fair and reasonable comparisons and have confidence that they are comparing apples with apples,” he said. 

“Under the current ASIC proposal, all consumers will benefit from is empty rhetoric and more confusion.”

Industry Super Australia’s submission sets out a number of recommendations to ASIC to improve RG97, including its key proposal that the most effective disclosure regime is one that places a ‘net returns measure’ – incorporating the effect of fees and costs – at its core.

The full submission can be accessed at www.industrysuper.com/media/isas-submission-to-asics-consultation-process/

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THE Executive Director of the Australian Retailers’ Association, Russell Zimmerman, said that whilst February trade figures released today by the Australian Bureau of Statistics (ABS) indicated solid year-on-year growth of 3.17 percent, with most states and territories experiencing increases compared to this time last year, the persistent decline in the Northern Territory has continued.

“The latest retail trade figures, viewed overall, are pleasing, but they are likely to have been affected by a number of one-off and seasonal factors,” Mr Zimmerman said.

Mr Zimmerman said that figures showing strong growth in food and supermarket sales are likely to have been heavily influenced by the price impact of drought and flooding on food items.

“When you have droughts and floods – and in different parts of the country, we’ve recently had both – this makes some food items more expensive as supply contracts, and this has in all likelihood contributed to the rise in food trade,” Mr Zimmerman said.

“Conversely, the rise in clothing and footwear sales means we are probably seeing the beginning of spending on new season items ahead of winter starting to flow into trade data,” Mr Zimmerman said.

Mr Zimmerman added that this may have also contributed to the year-on-year improvement seen in department store spending.

Mr Zimmerman also noted that whilst spending on hardware and building goods has increased overall but was slightly down from the previous month, it suggested homeowners were continuing to undertake upgrades and renovations within their dwellings.

“While there are some fluctuations in today’s figures in discretionary spending categories – where turnover may have declined month-on-month but remains higher compared to this time last year – the bottom line in these numbers is that consumers continue to spend with confidence, which is great for businesses in the retail sector,” Mr Zimmerman said.

Across the country, Australian Capital Territory (5.35%), Victoria (4.21%) and Queensland (4.15%), Tasmania (2.92%), New South Wales (2.45%), Western Australia (2.02%) South Australia (1.89%), recorded growth, while the Northern Territory (-2.14%) posted negative figures in February.

“Victoria, Queensland and the Australian Capital Territory experienced strong year-on-year growth in the February figures, and the rebound we saw last month in Western Australia has continued and gathered pace.

“However, the contraction in retail spending we’ve seen in the Northern Territory for six months now has continued once again, which remains highly concerning,” Mr Zimmerman said.

Monthly Retail Growth ( January 2019- February 2019 seasonally adjusted) 

Department stores (3.56%), Clothing, footwear and personal accessory retailing (1.98%), Food retailing (0.09%), Other retailing (-0.05%), Household goods retailing (-1.28%) and Cafés, restaurants and takeaway food services (-0.05%).

Australian Capital Territory (1.69%), Queensland (1.45%),Northern Territory (1.42%),New South Wales (0.83%), Victoria (0.82%), South Australia (0.78%), Western Australia (-0.07%) and Tasmania (-0.95%).

Total sales (0.92%).

Year-on-Year Retail Growth (February 2019 – February 2019 seasonally adjusted)

Food retailing (4.88%), Other retailing (3.71%), Clothing, footwear and personal accessory retailing (3.47%), Cafés, restaurants and takeaway food services (2.38%), Household goods retailing (-0.10%) and Department stores (-1.32%).

Australian Capital Territory (5.35%), Victoria (4.21%), Queensland (4.15%), Tasmania (2.92%), New South Wales (2.45%), Western Australia (2.02%) South Australia (1.89%), and Northern Territory (-2.14%).

Total sales (3.17%).

About the Australian Retailers Association

Founded in 1903, the Australian Retailers Association (ARA) is Australia’s largest retail association, representing the country’s $320 billion-dollar sector, which employs more than 1.3 million people. As Australia’s leading retail peak industry body, the ARA is a strong pro-active advocate for Australian retail and works to ensure retail success by informing, protecting, advocating, educating and saving money for its 7,800 independent and national retail members throughout Australia. For more information, visit www.retail.org.au or call 1300 368 041.

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CANBERRA’s iconic Parliament House served as a fitting backdrop as the federal parliamentary committee examining Canberra’s national institutions released its report today.

Chair of the Committee, Ben Morton MP, said the Committee found that national institutions play an invaluable role in preserving and promoting Australia’s history, culture, arts, science and democracy.

“Canberra’s national institutions are a treasure and are worthy of our continued support and patronage”, Mr Morton said.

“But they need to do more to recognise their shared value to the nation as a cohesive group, rather than as individual entities. A shared narrative should directly connect national institutions with Australia’s story, and should underpin all the work they do.”

Outlining some of the report’s 20 recommendations, Mr Morton said that the Committee was keen to see various measures taken to enhance national institutions’ engagement with the public. These include encouraging new migrants to visit national institutions, reviewing and improving access to educational programs for the more than 165,000 school students who visit Canberra each year, and promoting the science education offered by some institutions. 

“The Committee particularly welcomed Australians’ genuine interest in being informed about their democracy through visiting and accessing Canberra’s national institutions”, Mr Morton said. “We have therefore recommended reviewing, enhancing and better aligning the work of institutions in this area, as well as offering more parliamentary and electoral education programs to the general public.”

Mr Morton highlighted the Committee’s recommendation to relocate and expand the Australian Institute of Aboriginal and Torres Strait Islander Studies (AIATSIS), effectively creating a new national institution focused on the history, culture and heritage of Australia’s first peoples. ”A major national institution focused on positive and comprehensive recognition of Australia’s rich Aboriginal and Torres Strait Islander culture  is long overdue”, Mr Morton said. 

“An expanded AIATSIS, located within the Parliamentary Zone, would include public exhibition facilities to tell this important Australian story in a bigger way, to more people. It would also be home to a national resting place for repatriated ancestral remains that cannot immediately return to Country.”

The Committee also recommended that the Government develop a business case for the establishment of a natural history museum in Canberra.

Among other recommendations in the report, the Committee identified measures to strengthen national institutions’ governance, including through better collaboration, and to help ease pressures on their budgets and resources. These include recommendations that the Australian Government work with Canberra’s national institutions to:

• establish a formal consultative structure for Canberra’s national institutions, to work on aligning their planning, policy, marketing, and sharing resources;
• develop shared collection storage and public exhibition spaces for Canberra’s national institutions;
• develop a whole of government strategy to ensure that analogue audio-visual items held by national institutions are digitised, before it is too late; and
• consider measures to offset the impact of financial and staffing pressures on small agencies, including Canberra’s national institutions.

“This was a large and complex inquiry, and an important one”, Mr Morton said. “I hope the Committee’s report will contribute to making Canberra’s national institutions even more effective in their work to preserve, and tell, Australia’s national story.”

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