I'm indebted to an email I received for the information that it's possible for retirees to earn more than $60,000 tax-free, as long as their finances are structured correctly. A bit of money shuffling is required, but the payoff makes it worthwhile. Although I'm not quite old enough to take advantage of this means of minimising my tax, it certainly gives me something to aspire to in the future.
As well as that - and this is what's beaut about the whole thing - governments of both political persuasion are not merely standing back and allowing this to happen; they're positively encouraging it. Older Australians are being told their contribution to making this country what it is today is valued, and in recognition of this, they're getting a bit of a tax break. What could be fairer than that? And supposedly none of this has anything to do with wooing the grey vote. At least that's what a politician told me, and no one respected would lie about something important like that, would they?
The exemptions have accumulated over time and under governments of both sides, but the effect of these arrangements is political. They're solidly directed at a particular constituency, and it's one that regularly turns up at the ballot box, unlike younger Australians. This gives grey power its weight and ensures nobody's going to touch the slowly accruing benefits being showered on ageing voters.
Non-voting didn't suddenly soar at the last election, but it's been steadily increasing over the past two decades. Understandably, governments don't want to suddenly get out the big stick and threaten the punters that they'll be heavily fined if they don't bother to vote. But political apparatchiks aren't dumb. They know if these people are forced to go to the ballot box it's likely they'll react unpredictably. Informal voting will soar, the donkey vote will create unpredictable results, and (perhaps most significantly from the point of view of sitting politicians) the anti-government vote is likely to rise. Those who don't want to go to the booths, but are being forced to attend by the threat of a fine, are likely to direct their anger at the person or party they think is responsible for their Saturday morning being interrupted. This is why the informal vote has been creeping upwards, and no party really wants to risk the backlash that would result from hauling these people into the booths.
Despite its rhetoric, it seems unlikely the Coalition government is going to make any effort to change this, and the reason is obvious. If you look at the figures, Labor tends to be the beneficiary of bigger turnouts, as in 2007 and 1993. And it's clear older people are far more likely to vote than younger ones, and as a generalisation, this group of electors is traditionally considered more conservative. They were rewarded when the good times were here (economically speaking) under John Howard, and Labor did nothing to curb this largesse once it had been distributed. In fact it added to and entrenched the entitlements.
But the problem is not simply that the deserving aged get discounted tax rates. This is just one of a number of breaks costing the budget billions.
It's almost two decades since the halving of capital gains for assets that are held longer than a year. As long as assets are held for more than a year, the capital gains tax is assessed at a 50 per cent discount.
The reasoning behind this measure was sound. It encouraged investors to look at the longer term rather than trying to make a quick buck from churning assets, and it's been successful in accomplishing this objective. But no one should be surprised the rich are becoming richer. Of course wealthy people will benefit disproportionately from a tax break that's designed to reward those who've got money to begin with.
It's the same with other exemptions such as the ability to negatively gear property. This is designed to increase the amount of rental stock on the market, and judged by this measure, it's succeeded. Unfortunately it's also resulted in housing prices at unsustainable levels (particularly in the major cities), the creation of occasional (and recurring) bubbles, and most importantly, a tax break that's costing the budget a massive amount. Like the hallowed break for capital gains realised on the sale of the family home - the mere suggestion this might be touched by the Henry tax review had Wayne Swan and Kevin Rudd tripping over themselves in an attempt to assure everyone this would not be altered, with the inevitable result that people continued to invest in houses and ensure younger hopefuls remain priced out of the market.
And this is the issue. Every time a justifiable decision is taken to protect a group of individuals, someone else ends up paying the price. The tax system is intended to do two things: raise money for the government and redistribute it to ensure it is directed towards achieving worthwhile ends. It's failing to achieve either of these objectives today.
Kevin Andrews last week bemoaned the increasing cost of social services. He's right, but cutting benefits at the sharp end isn't the only answer. The huge and burgeoning number of tax expenditures is placing a massive burden on the budget. It's positively groaning as it labours under the weight of exemptions and waivers to favoured constituencies. Slashing services isn't the only answer when it comes to bolstering the government's coffers.
The first priority should be to fix the tax system.
Nicholas Stuart is a Canberra writer.