Welcome to Western Sydney Business Access

The Greater Western Sydney Regional Roundtable (GWSRR) is an initiative of Adunct Professor Jim Taggart OAM and Western Sydney Business Access (WSBA) that brings together people of influence in the region to discuss and share insights that impact upon the region for the purposes of public education.

GWSRRs are held bi-monthly. The latest GWSRR was held at the Parramatta Parkroyal Hotel in May on the subject of the 2013 Federal Budget – Impact and Implications. All photos by Milestones Photography. Following is an edited transcript of the May GWSRR. Attendees: Chairman Adjunct Professor Jim Taggart OAM, Michael Walls, Phillip Brophy, Neil Pereira, Karin Bishop, Josh Vrsaljko, Alan James, Associate Professor Geoff Morris and Steven Brown.

Dr Jim Taggart OAM: Well good morning everyone and thanks so much for attending today. I know that you all have very busy diaries so let’s get straight into it. We might start with introduction please. Steve, we might start with you, if we may.

Steven Brown: Steven Brown. I’m Chairman of Etienne Lawyers, a law firm. I have a Bachelor of Economics and I’ve also got a Master of Applied Finance. I’ve lectured at Macquarie University, UTS, and the Institute of Company Directors. Our area of expertise is corporate and commercial law. And therefore the budget has great impact on what our clients do or don’t do, as the case may be.

Phillip Brophy: Phillip Brophy, Director of Matthews Folbigg Lawyers here in Parramatta. Matthews Folbigg is very much involved and engrained in Western Sydney, having been established here over 50 years ago. So we like to think we’ve got our finger on the pulse. I’ve also got an Economics Degree, so this might sort of dust off a few things that I’d long forgotten.

Alan James: Alan James. I’m from LJ Hooker Commercial. My main area of interest is commercial property within Western Sydney area, focussing on Parramatta and Norwest and Blacktown. I guess I am a relative newcomer to the economic scene in Australia, only being here for two and a half years, so yeah, interested to see how it how this happens.

Neil Pereira: Morning, everyone. Neil Pereira. I’m a Tax Partner at Deloitte. We are the only big four in Western Sydney and have been for over 10 years which I think demonstrates our commitment to and support for the region. A lot of the proposals coming out of the budget will impact our clients, and we’re very interested to see what the general view is as well on how that’s impacting other people and other businesses.

Karin Bishop: Karin Bishop. I’m the Deputy CEO at WSROC, which is Western Sydney Regional Organisation of Councils. We represent 10 of the local councils through¬out the area, stretching from Auburn out to the Blue Mountains, and from Hawkesbury down to Liverpool. We’ve got a fairly big area. I think we’ve got 1.6 million people in our area, and the economy is worth about $85B. The economy obviously and the budget is going to have a big impact. We’re really interested to see how it works with the election coming up and all eyes being on Western Sydney.

Associate Professor Geoff Morris:  Geoff Morris, University of Notre Dame. I’m the Dean of Business. I haven’t had a very traditional academic back¬ground; I’ve only been in acadaemia for about five years. Prior to that I came from the world of business; I was the Deputy Managing Director of Sydney Water. Ran my own consultant company for many years, and took on some very large projects for people like TAB, the Common¬wealth Bank, and I also ran the World Youth Day.

Josh Vrsaljko:  I’m Josh Vrsaljko, from ZAC Homes/ZAC Investments. Been in business probably 24 years; I’m also a licensed financial planner. We own a Yellow Brick Road franchise over at Caringbah. So we do finance as well. We’ve got a lovely home at Home World 5 at Kellyville, the village there, and we do a lot of investment properties and a lot of property inside super. It’s interesting to see with the super¬annuation going up and up, given the history of funds, more money to play with and more fees and charges. So it’s very, very interesting.

Michael Walls:  Michael Walls. I’m the editor of Western Sydney Business Access. We started the newspaper about five years ago and it’s been in its current form for about two years. Prior to this I was involved in journalism; I spent six years in News Limited with the Sunday Telegraph, The Australian, and before that with Fairfax. I did my cadetship down here at Parramatta many years ago. I hold a Master’s degree in Media Education and spent a number of years managing media and publications at the University of New South Wales and Australian Graduate School of Management. So my background is in journalism and commercialisation of media products. It’s great to have everyone here today, and thank you for coming and supporting our initiative.

Dr Jim Taggart OAM: Great thank you everyone. I too am an economist by trade. So one of the things with economics is, you make assumptions. So I think it’s quite interesting that we’d have so many economists in the room. Let’s start. You’ll see the questions that we have here. Steve, I’m going to throw it to you. What, what do you see as being the major themes coming through, through this fiscal budget?

Steven Brown: Overall, I think that the budget really isn’t a budget at all, in the sense that if you look at traditional theory, a budget is to do with fiscal policy, to deal with either reducing spending or to, to stimulate the economy. And it’s not doing anything; it’s not affecting taxes, save for the increase in the Medicare levy. And the only element really is the increase in spending. But they’re increasing in spending with figures that are, you know, to say the least, rubbery. Consequently, I don't know whether it really does much at all; it’s more smoke and mirrors than, than anything else. And if it’s a true budget, it really should be looking at a one-year term. And a lot of the figures go for four years, ten years. And whether the income’s ever going to be there to support any of the projections is quite debatable. So I, I think the budget is nothing more than, “Let’s not do anything, because we have an election coming up in September.” So that’s how I see it.

Dr Jim Taggart OAM: Okay, thanks. Now it’s open for, for discussion. So Steve started the ball running; how do you respond? What are your views? What are you telling your, your clients?

Neil Pereira: Well, for us it’s an interesting one. There’s some key tax measures included in there, and for a lot of our clients that are inbound or outbound, some of the changes proposed can have a big impact. Specifically around the thin capitalisation measures which reduce the amount of debt funding corporates can effectively take on. There’s been a prevailing view that Australia is quite generous, perhaps overly generous, compared to the rest of the world with the ability to debt fund up to 75% of net assets. This is going to be reduced down to 60%. So that coupled with a broader project going on with the OECD at the moment around profit shifting, this has a lot of attention with governments at the moment. The Assistant Treasurer’s very interested in it. And for us, these changes affect a lot of our clients.

Dr Jim Taggart OAM: Well in fact, the Treasurer has put part blame to profit shifting for falling company revenue, which has had an impact on the revenue side of the budget. Not sure how valid that is from an economic point of view. But he has put that up as being a considerable impact on fiscal revenue.

Josh Vrsaljko: You look at housing, which the budget stores a lot of spending, and housing does get affected as well. The good thing about that lately is the interest rate coming down, which is not a bad thing. And the banks were very quick to move on it. But it’s very hard to see what Liberal or Labour are doing due to the fact that it’s, you mentioned, a lot of talk, and a lot of disclaimer of what other people aren’t doing, and it’s very hard to follow what actually the new government’s going to do. They talk a lot about what they’re not, what the other government’s not doing and stuff. I think it’s very unclear, of really, what Government’s going to be doing.

Michael Walls: Can I ask Josh, how does politics affect your, your business?

Josh Vrsaljko: It affects it, like last year, they got rid of the first home buyer’s grant. And it took them three months to get a new home buyer’s grant. You would think that if they’re going to get rid of something and release something, you wouldn’t have that gap for three months. Because the building industry employs a lot of people, where they spend a lot of money in shops and retail so has snowball effect. And then it’s very, very hard for the developers to get money from banks to develop land to build houses to release. They talk about all this land that’s being released, but it’s so that the services aren’t getting there quick enough. So there’s 50,000 houses need to be built per year; there’s probably 25,000 getting built. So it’s a huge, huge shortage. If there were more houses getting built, there’d be more money getting made, more money getting spent.

Dr Jim Taggart OAM: The lag effect in doing things.

Josh Vrsaljko: They just released land, to say, “Oh, we’ve released all this land.” The services aren’t there for five years, or the roads aren’t there.  How do you respond? Phillip, what are you saying to your clients?

Phillip Brophy: Well, our clients are very much like a lot of professional service clients here. They’re driven by business confidence. And the thing that I would be concerned about is this black hole that’s suddenly appeared. The Treasury presumably have known about it but the fact that we can have this sort of looming deficit, and the figures are so huge and rubbery, that you’d have to wonder whether the forecasts are reliable or whether in next year’s budget, there’ll be an even bigger deficit. So I think, for me personally, there’s a lack of confidence in the integrity of the information that we’re getting.

Dr Jim Taggart: Phil, thank you. Geoff, you wanted to add something?

Associate Professor Geoff Morris: I was going to say that, that one of the techniques that I use in – I teach macroeconomics – is a thing called a pop quiz. And so it’s a no notice question that I put out to the students. So the budget was on Tuesday night. On Tuesday night, I put out a pop quiz; I wanted a response by Thursday morning. And the question was, “Pick one of the macro¬economic issues that have come out of the budget. What did the Government say about it, and do you believe?” Now, my students are essentially 20, 21, 22 year olds; there’s a few mature age, but it’s basically that group. Predominantly they lean more towards the Labour than to the Liberal approach. They picked the deficit, unemployment and Gonski. None of them believed. They said, “Here’s what the Government has said. We don’t believe it’ll happen.” And I certainly agree with them. I said to them after that, in terms of the deficit, that if this Government is re-elected, if they deliver a deficit - a surplus in 2015/16 like they’ve proposed - I’ll run naked down George Street.

Phillip Brophy: Okay. Well, we’ll be there to watch.

Associate Professor Geoff Morris: You will have nobody to look at. I made the same bet last year about this year’s deficit. The expectations that the Government is putting on itself I think is just astronomical. And their ability to deliver against their most optimistic fore-casts, I agree there’s just not credibility there. If you go back to good old Keynesian theory: “When times are bad, spend more money to get the economy moving.” And I think most Governments have done that. The bit they forget is the second part of the equation: “And in good times, pay the debt back.”

Phillip Brophy: But I also think – and this is not really a budget thing, but it’s just my observation over a number of years – I think the, the gap between the poor or the lower middle class and the wealth is getting bigger. I think that the middle class are slowly evaporating, so you’re getting an increasing number of poor, genuinely poor people and genuinely wealthy people. And I think we’re in the middle of that. The middle class has just fractured.

Karin Bishop: I think a lot of it has to do with the pre-GFC debt that everybody - the middle class particularly - got into, with house prices rising, everybody rushing into the housing market. People are now finding that they’re saddled with this debt, and it’s becoming harder and harder to pay back. They’re suddenly looking at house prices stalling or dropping, and they’re worrying about that. And plus, there’s been this sort of amazing psycho¬logical shift, where people are just sort of with¬drawing into themselves. People have lost confidence. As you were saying, the budget’s done nothing to restore it. But people aren’t confident to go out and spend, people aren’t confident to go out and invest the level of political uncertainty, especially over the last three years with the hung Parliament, I think, has contributed to that. So it may well shift after the election, if we get some certainty in the political direction. But yeah, I think for all those reasons, I totally agree with you, the shift is, between the rich and the poor, is becoming more marked, and people are sort of going one way or the other.

Dr Jim Taggart OAM: Alan, from a commercial point of view, you deal in the commercial part, small business and large business. What’s your response?

Alan James: The movement of small business is stale. You know, companies are not prepared to take that risk, that next step, and they’re very much staying. In the industrial side, the manufacturing they are saying: “We’ll just take that off¬shore, because we can do it cheaper, and we’ll just leave the office base part of the business, that part of the business over here.”

Dr Jim Taggart OAM: It’s got quite interesting. Most of us have heard of Amway. Amway have done, done that. They’ve closed down in Carrington Road in Castle Hill, moved the administration part into Norwest, and have off¬shored their other parts to New Zealand. Okay. Just to get our heads around this, then, are you saying that the budget didn’t provide any confidence in terms of going forward? Any other aspects with regards to the budget or general comments?

Steven Brown: More from Western Sydney possibly, with the education, the cap on spending for self-education expenses, whether that’s been capped. Then how do people increase their post¬graduate studies, because they can’t afford it. So you’ve got increased unemployment, you’ve got a cap on spending for self-education expenses, so it therefore should theoretically impact on post¬graduate students, because they’re not going to get the tax deduction for it. Businesses won’t want to pay that sort of money, because they don’t want to take the risk. Banks aren’t lending, because there’s no money to lend. No one believes what the figures are.

Phillip Brophy: Well, they should tell us.

Michael Walls: Neil can I just ask you a question. You have some very major clients? We’ve talked about confidence, lack of confidence. How, how do you cope with that … I mean you have to instil a sense of confidence in them despite the reality.

Neil Pereira: Well, we conduct a CEO/CFO survey amongst the ASX100. A lot of the data we get back from that has been very consistent for the last number of quarters, where confidence is reasonably flat. It seems to go marginally up, and then comes back down again from time to time. So we’re not really seeing a lot of –pick up in confidence in the short-term. I don’t think things that are coming out of the budget, especially around profit-shifting amongst the big corporates coupled with cutting R&D, is going to have a positive impact on the sense of confidence and releasing capital, doing M&A activity, and things like that. I think it’s actually going to put the brakes on a lot of activity, because, the M&A goes hand in hand with structuring, and a lot of the reforms that are being proposed around anti-avoidance rules, thin capitalisation, transfer pricing, where you’ve got significant in -bound activity will affect this and at the moment we just don’t know where its all going to end up. So for example, you can do something today, and the Government makes an announcement around tax changes that retrospective effect but you don’t see any of the rules for some time.  This contributes to a dampening effect on activity.

Dr Jim Taggart OAM: All right. Let me be devil’s advocate. I think the budget’s fantastic. Cash rates, economic growth compared to OECD countries, top quartile; unemployment, relatively low; company profits in terms of revenue, well we’re nearly the highest in history. Why the lack of confidence?

Phillip Brophy: Because we could do better. We’ve been told by the spin doctors about our survival through the GFC; we could do better.

Associate Professor Geoff Morris: It’s the best of a bad lot argument. Is that where we want to be? And I think the issue about confidence is about stability of direction. And I think the thing that when I look at budgets, what are the things that business and individuals are encouraged to do as a result of the budget? And without being too trite about it, stop having babies, because that’s no longer a profitable enterprise. But if you have a look at what are the things that were announced to encourage people to do. The Government has played very heavily onto the two centre¬pieces of the Government, the two centrepieces of the budget, Gonski and NBB. Nothing’s going to happen for three to five years in either of those. Unfortunately, I don’t think budget should be only about aspirations. Because when you dive into Part 6 or Chapter 7 of the budget that comes out there and you start to see all of the factual indicators that are there of what you are encouraged or dis¬couraged to do, taxes come up. The monetary policy, cash rates, it’s not the Government. That’s the Reserve Bank. And the Reserve Bank and the Government are actually operating, in my view, on different economic policies. The Federal Government is trying to reduce economic activity, simply because they’re increasing taxes. You’ve had this conflict for years.

Phillip Brophy: Well, I take Jim’s point, that those numbers are good. But that doesn’t mean that the man in the street or the business¬man shares that sort of pure thought, if you like. If you’re sitting in Westmead Hospital waiting to be seen, you know, because your kid’s sick or something, and you wait there for four hours and you think, “Oh well, the Medicare levy’s just gone up by a quarter of a per cent.” I’m still sitting here for four hours. So I think people get a bit cynical. They think, “Oh well, yeah they’re big numbers and they sound good, but for me in the street, it doesn’t really cut the mustard.”

Associate Professor Geoff Morris: But all those numbers that Jim talked about, they’re correct. They’re averages of averages of averages. And I think one of the things that need to happen is the average needs to be broken down into the specifics. Because I don’t think we’ve got a two-speed economy; I think we’ve got a multi-speed economy all over the place.

Dr Jim Taggart OAM: It’s one of the interesting things. And for, for most people, it’s very daunting fiscal policy, discretionary fiscal … we’re talking about all these big economic terms. That doesn’t resonate when you’ve got a child who is sick, or traffic congestion, or you’re running late. Geoff, I agree with you. There’s this macro, big head¬lines and all this type of stuff, and then you’ve got the budget of the home person, particularly in Western Sydney wanting to get ahead, create wealth, and do all that, and it’s not happening. I mean, for me, you know, people getting an income of $100,000 combined or greater a year are really doing it tough. It seems to me one thing that’s come up over the last four or five years, and it’s not a comment on the political party but something that’s crept in, is that if we need some money, we just put a levy – it’s not a tax, it’s a levy. And I think people are really getting quite taken back by that. Only half a per cent, half a per cent. Let me ask you this: was it a budget that was for the 14th of September?

Michael Walls: I don’t think it was a politically smart budget. But I don’t think they’re politically smart people at times. But having said that whatever you do, whatever’s done in politics, there are always two sides to it, and you’re never going to please everyone. I think that’s one of the biggest challenges of being a politician. They can’t please everyone at any time. I think the whole process of being a politician is tough. I’m not an economist, so I can’t talk in these terms.

Alan James: Why, why is there that fear of a deficit? We’re talking 10% of GDP. We’re not really talking about that much. In an economic, pure economic thinking sense, is that a good thing? Do you need the deficit from time to time to advance your position?

Karin Bishop: WSROC’s very big on the borrow-to-build. That is very much our, our point of view. And I’m not convinced that the man in the street necessarily sees deficit as a bad thing, because they’re all living with deficits; they borrow for their homes, they borrow for their businesses, they borrow for their cars, they live on their credit cards. So this idea that it’s bad for the Government to have a deficit, I think you’re right because it’s our money – and there’s a sense, unless you see what you’re getting for it, people lose confidence – and I think again, it comes back to the confidence of the Government, that people have in the current Government. But just back to your point about what kind of a budget it was and how it played into the election; I think it was very much about shoring up legacy. This was the budget of a Government who knows they’re not going to be in power on September 15.  And what they were doing is basically looking to make sure that they will shore up a legacy, so that in ten, 20 years’ time, when these things are up and running and Australia is at the cutting edge of education, carbon reform, NBN.

Phillip Brophy: Maybe it’s a bit, bit like Gough Whitlam, Medicare, and all those reforms. They were his legacy.

Steven Brown: But see, I don’t think, I don’t think carbon tax would be there. Because the Coalition has said they’re going to get rid of that. If the Coalition doesn’t maintain its promises, it will fail very quickly. So it’s already been out there that they will dismantle that; they’ll dis-mantle it. Provided they’ve got the votes within the Parliament, it’ll be dis¬mantled. It’s only a question of passing some legislation; bang, it’s gone.

Dr Jim Taggart OAM: Your comments have been robust and excellent. Let’s look at retirement planning. We use the word superannuation. And most of us here are probably in that accumulation phase, anyway, in that part of the equation of our lives. But I want to broaden that to look at retirement planning and the impact of the budget. Josh, what about you? I mean, you’re right in the fore¬front of helping people build wealth.

Josh Vrsaljko: I think, obviously the Government realises they haven’t got enough money there to pay people when they get old, so they just think they’ll just slug someone who can pay, which is a business owner. I’m a big believer it should come from the person who’s working. We employ about 120 people, and because I employ people, I should have to pay for someone else’s retirement because the Government hasn’t done a good enough job. There are not enough rules and regulations on the Fund Managers, what they do and can and can’t do with it. I reckon they gamble it, pretty much, wherever they gamble it; overseas, in Australia, and what not. They’ve got all this technology in front of them, all these experts, and they still can’t get it right. I know they can’t get it right every time, but they still must be able to see things happening. So really, the average man is not going to get any more money, because he’s not making money. He’s probably got less now than he did five years ago. They’re not going to retire with any more; it’s just another burden. Why would I want to put more people on?

Dr Jim Taggart OAM: I find that an atrocity in an economic free enterprise system, where you can pull in more people and you get handcuffed.

Josh Vrsaljko: Obviously with, with Yellow Brick Road, we have a financial planning arm as well. When you really look at it, people have got less money to reinvest,

Dr Jim Taggart OAM: Okay. Thanks, Josh. Any other comments?

Josh Vrsaljko: I think there should be more rules and regulations on, on fund managers and financial planners. I don’t reckon there’s enough on financial planners.

Steven Brown: I think the real issue again, it comes back to confidence. The rules keep getting tinkered with.  So it’s all this constant change. And, and it comes back to uncertainty. We’ve got the uncertainty with the GFC; we’ve got the uncertainty with carbon taxes. And I think what’s even more fundamental, is there such a thing as climate change?

Neil Pereira: I think it’s interesting the point about what can be done with the superannuation funds. I’m just thinking on a broader level. There’s a lot of capital there, that if, if directed to the right places – maybe not in an individual by individual basis, but there’s certainly a lot of funds there that they could be directed to infrastructure or, some kind of major capital spending or even investment without the government having to get directly involved with supporting the banking or the E&R sectors. Obviously there has to be a return associated with that, but put that money to, some good use strategically.

Associate Professor Geoff Morris: There’s another dimension, because we’ll be talking about the rules of what you can do with superannuation. Let’s go back to, why do you have superannuation in the first place? Because the concept of retirement has fundamentally changed, I think. In the good old days, you knew at 60 or 65 there was a chronological trigger, and that’s it, you’re out the door. You were not allowed to work beyond that point. In some places it’s still there, there is a chrono¬logical limit. But I look at two people of the same age – their skill set and their attitude and their physical health is, is vastly different. It’s something I react to about anything that has a chrono¬logical trigger on it; it’s just too easy, set up by the, the legislators, because it’s very clear, it’s black and white: You are either 18 or you’re not 18, there’s, there’s variation. And so looking at superannuation and how we do the superannuation, I don’t think can be un¬coupled from the, “Why are we doing it in the first place?” I have absolutely no intention of retiring at 65. But I don’t know what retirement means yet.

Steve Brown: You’ve only got to look at the fact that it used to be the situation when a person could not be a company Director over the age of 72 without them being re¬voted in every year, because they were perceived as senile. Judges have to retire now at 72. Now, they previously were appointed for life; and now at 72, you must go.

Neil Pereira: The point around superannuation….mortality has changed, and health is a lot better generally speaking. But I think the converse to that is people are almost being forced to retire earlier. If you can’t actually get in somewhere, what happens then? I think that’s a side of things that probably needs to be addressed.

Dr Jim Taggart OAM:  All right. Now, let me be brunt and brutal. There’s a mentality in Australia that the Government should provide for me.

Josh Vrsaljko: I think they’re entitled to something, because they’ve paid taxes all their life. And because they’ve done well in investment, it shouldn’t be reduced, the pension. I believe they should get something. And I, I think there’s nothing wrong with that. Because they’ve paid tax for 40 or 50 years – some people do better in investments, some people do worse. But it all relates back to, someone else is controlling your retirement.

Dr Jim Taggart OAM: Well, let me set the cat amongst the pigeons. I believe one of the fundamental flaws with superannuation, there is no voluntary compulsory contributions. One of the big anomalies is sole traders are not compulsorily having to put into super-annuation; it’s only structured by companies and, and other types of entities.

Steven Brown: If you have sole traders that have to put in say 3%, what’s it going to be based upon? Is it going to be based upon what they made the year before? And then, if their income goes down, how do they then fund that 3%, because they haven’t got the cash to do it? Or are they going to pay it on the 3% after they actually receive it? Or is it being paid on an accruals basis, which means they’ve got to then borrow the money to put in because they haven’t been paid their debts?

Josh Vrsaljko: Most sole traders are sole traders that want to minimise tax.

Karin Bishop: And do you calculate the 3% on what their trade is making, or on what they’re declaring as take-home pay?

Associate Professor Geoff Morris: Joe Hockey made a speech in London earlier this year or late last year where he’s talked about removing the entitlement mentality. Now, it’d be interesting to see. My interpretation of what he said is: “It’s my responsibility to look after myself in retirement. If, for whatever reason I can’t, then I’ll get some Government assistance.” So I’m not a great supporter of the idea of, “I’ve got to put in a certain amount.” What I would do is create an encouragement for me to do that. So for example, I would say - put the sole trader issue aside; - but for those people in employment that I can salary sacrifice up to 9% of my salary to go into super¬annuation; and for every 1%, my employer matches it. So now I’m taking some responsibility. I’m not actually diminishing anything from, from the employer. And if I want to go and put 100% in, which I’m personally doing for the next couple of months, 100% into super, then that’s fine. But the employer contribution is there. Your comment about the, “I pay tax all my life, therefore I get something back,” I think there’s an under¬lying assumption that the tax is an investment in my future. And I’m not sure that that’s what tax should all be about.

Alan James: People just don’t take that responsibility, though. And, and too many people, later on in life, will realise, “Actually, I haven’t made that sacrifice, and now I have to make additional payments,” and then struggle in those last years of their ten, 15 years of employment to, to actually get somewhere where they can actually afford their lifestyle.

Michael Walls: I had a meeting, interesting meeting with a business consultant yesterday; we were going through some of the issues around business. And he said to me that retire with a decent lifestyle you need $3million.

Josh Vrsaljko: The average person now retires with $71,000.

Michael Walls: And I just wonder how many people actually retire with that amount.

Josh Vrsaljko: But most people don’t, a lot of people don’t go to a financial planner to get that advice. So they’re just going through life, hoping that their 9%, when they retire at 65, they’re going to have some money, a lot of money.

Dr Jim Taggart OAM: If superannuation is so paramount to retirement planning, what are your views then on continuing to tax those, you’re going to earn in excess of $100,000?

Josh Vrsaljko: Well they’ll increase the tax, I reckon. Because there’s a lot of money there, sitting there. The Government needs money, so wherever they can find money to tax, they’ll tax it.

Dr Jim Taggart OAM: Michael, you said you need $3M to retire. I’ll assume that’s correct, right, for the purpose of the exercise. I have my own views on retirement income. For me, raised four kids, super¬annuation in our earlier years was not critical because, you know, you’ve got limited resources. Now we can afford to put more into super¬annuation at a time when I want longevity - for males, 84, females, 85, 86. So for, for me, we’ve started to make those sacrifices now to put into super, and now we’re going to be penalised.

Josh Vrsaljko: Well $3M is not reasonable. I mean, because it’s really not achievable for the vast majority of the population.

Dr Jim Taggart OAM: People’s account balances are considerably less than $150,000. But superannuation has not been seen as a vehicle. So there’s all this, what I call fog, around retirement planning. As you’ve said, confidence, scepticism, what do I do? Do I need to retire? What are the conditions of release?

Karin Bishop: I think this issue of, can I afford to retire is something that’s becoming increasing with housing costs. Because the old system is predicated on the idea that by the time you retire at 65, you’ve paid off your own home. But increasingly, what we’re seeing are people who keep upsizing their homes or going into debt, buying investment properties, whatever. A lot of people when they retire still have a mortgage to pay, and that’s really going to impact on how superannuation plays out, how much people need to live, and that sort of thing.

Dr Jim Taggart OAM: As most of you know, the contributions tax is approximately 15% on contributions into superannuation. Would you be encouraged to put more into super¬annuation if that was decreased? Out of every dollar, 15% goes off to the Government.

Josh Vrsaljko: Yes and no. I think you don’t know whether tax is going to be on your super in five years’ time.

Alan James: But I guess if you get your money in there, into a fund now, and you knew it was going to be taxed, you’d put it in sooner.

Neil Pereira: They’re a lot more switched on as consumers now. We see, a lot of younger kids coming through from university, graduates and the like. They’re very savvy as consumers, they’re very informed. They’ve got the ability to be informed now, with the Internet the way it is. It’s very interesting to see that.

Dr Jim Taggart OAM: Well, I think we need to leave it there. Thanks so much everyone for joining us today and thanks also to ACCESS for arranging this Round table.

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