A super end to the week

Japanese abacus
A Davy Coogan https://www.flickr.com/photos/adavey/

In early 2007 our since-retired accountant sat back in his chair and asked the crucial question about starting a self-managed superannuation fund: “Can you tell me why you want to do this?” Then he explained in detail just how onerous it is to run your own super fund. He explained how you need to keep records for 10 years, how big a burden it is in terms of compliance, and, crucially, even when you get an accountant to do the books, the buck stops with you. We decided to go ahead and roll over our superannuation balances from large funds because, if you’ll recall, in 2007 the world markets were imploding and some large listed companies were facing annihilation. We had not been happy with the returns from our managed super funds for some time. She Who Has Not Been An Acronym For A While had slipped her money into cash in 2006 (smart, eh) but the paltry returns (less than 2%) were prompting us to manage our own affairs.

A Big Mistake
I say that from the viewpoint of someone who just wants to lead a quiet life. Our SMSF has brought us a positive return in every year bar one and, despite our expensive travel habits, the balance has not atrophied as much as we had thought. But on a personal front, keeping the books and making sure one does not breach the terms of the all-seeing Trust Deed has been a burden for one of the world’s many anxious people.
I have a theory about anxiety – it troubles conscientious, honest people far more than it bothers the people who hide their money in Luxembourg and pay sanguine lawyers and accountants to keep the Australian Taxation Office (ATO) at bay.

Speaking of the ATO, did you know that among the many functions of our under-resourced tax collection agency is supervising self-managed superannuation funds?
The ATO charged us a supervisory levy of $388 this year. I spend about 11 hours a month updating our internal accounts, filing paperwork and reconciling bank accounts. Any simple errors made along the way can double the amount of time spent. If there was any justice in the world, the ATO should be paying me $388 for supervising my own fund.
Actually, given the ATO’s workload and clearly inadequate staffing levels, it’s a wonder they get around to me. Did you know the ATO has 17.18 million “clients” including 12.3 million individual taxpayers, 2.7 million small businesses, 750,000 trusts and 534,000 SMSFs? All of this work was carried out in 2013-2014 by 23,631 people (before the ATO was required to cut staff numbers by 3,000). They are an efficient lot, though – the ATO’s annual report says the cost of collecting $100 is 69c.

Come back, it’s quite simple really
For those of you who run screaming from the room whenever anyone mentions superannuation, I can understand your anguish. I was a business journalist throughout the era when successive governments pretty much ballsed it up. In 1980-something I set up my first super scheme, before Paul Keating introduced the Superannuation Guarantee Levy (1992), without which many of us would get to 65 with no super whatsoever.
The way super rules were in the early 1980s, I could make after-tax contributions and claim them on my personal tax return. This was before salary sacrifice became a thing. Stay with me here – it’s not that hard to understand.
Historical data from the Commonwealth Treasury tell us that prior to the 1980s, no tax was paid on contributions to superannuation funds. Super fund earnings were tax exempt and tax was only imposed on 5% of lump sum benefits. Pensions or annuities were taxed at the recipient’s marginal rates. Sounds like a fair and simple system.

Tax havens and other sharp practices
Ah, but then the Greed is Good era began and all sorts of chicanery was invented to minimise tax. So in1983, the government moved to thwart the concessional treatment of lump sum superannuation and termination payments.
They introduced a complex system for eligible termination payments (ETPs). The full value of ETPs was included as income, with the post 1983 component taxed at a maximum rate of 30%. For those aged 55 and over, the rate was reduced to 15% up to a threshold.
This system was tweaked in 1988 so the government of the day could bring forward tax revenue. This involved reducing tax on the post 1983 component of ETPs and imposing a 15% tax on super fund contributions and earnings.
Reforms to superannuation in 2007 aimed to make superannuation easier to understand (hah!), and improve incentives to work and save. Superannuation benefits paid from a taxed fund to people aged 60 and over became tax free (hoorah!) The treatment of ETPs was also changed to differentiate between payments received from employers and those received from superannuation funds.

Tax-free Super (Yippee)
These rule changes are said to be behind the exponential growth of DIY Super, which 10 years ago represented less than 10% of all funds.
The ATO reported in June 2014 there were 534,000 SMSFs in Australia with total assets of $557 billion. About 28% of these funds have $1 million or more in assets, but the median fund balance is $518,000.
The ATO is collecting $207 million a year in supervisory levies. It seems iniquitous that they charge $388 whether your account balance is $2.95 million or $295,000. Scope for a sliding scale, perhaps?
I mentioned salary sacrifice before. For a two-income family, this can be a painless way of saving for your old age, which will come along soon enough. In the last eight years of my full-time working life, I was taking home a small wage and shovelling the rest of my pre-tax income into my super fund.
Along the way, there were sterling years when industry-based super funds earned 25%+ and charged very little for managing our money, so as a strategy it paid off. I still have an industry super fund which, now that I am a certain age, is just another bank account from which I can withdraw lump sums whenever needed (as long as it lasts).

Silas Palmer

Sennheisser headphones maybe?
“Whenever needed” can include expensive, age-related items like hearing aids, crowns, ride-on mowers and mobility scooters (which may or may not be deductible).
Or indulgences like producing an independent songwriter album, augmented by some amazing musicians including Silas Palmer and hopefully ready for sale and download in early 2015.
In coming weeks I will be writing about crowd funding, the creative urges of older Australians, the struggle of independent sound engineers, the death of the CD, the not-quite successful birth of the paid music download, the endemic practice of downloading and copying anything that is not tied down, occasionally mentioning a finely crafted recording of truly excellent songs.
Since you have all been so patient working your way through the perils of superannuation, I’ll leave you with the (free) version of Loudon Wainwright III’s protest song “Something for Nothing.”
Ain’t irony great!

620 road closures

Bibliothèque nationale de France

I so rarely go to Brisbane and this week I’m there four times, just when the whole city goes into lock-down for the outrageously expensive and disruptive G20 conference. It started last Sunday with our annual garden concert at Fairfield – our former neighbours have been hosting this event for 10 years (not counting 2011 when their back lawn was awash). We started setting up our small PA system, all the while being “buzzed” by helicopters, supposedly on manoeuvres, rehearsing their role for the coming week’s shenanigans.
Finally at 3pm we go up to start the concert and just as we did, a lone helicopter hovered overhead. What was he thinking?
“Ten four, HQ, we got ourselves a folkie gathering.”
“Roger that – have they go a permit?’
“It looks like a private house – and…they all seem, like, elderly.”
“OK BravoEcho, move on.”

We’ve had our share of G20 vehicles up here in the hinterland – black limos, white vans, all with G20 number plates. We imagine they are making half-day tourism forays into the hinterland − checking out the Glasshouse Mountains, browsing the cheese shop, tasting a few local wines, buying an investment property or two. The conspiracy theorists point to our well located comms (radio communication towers) on hilltops and move their internet security settings to high.
Ah well, it’s good to know the G20 folk feel OK about freely driving about in our town while authorities make it as difficult as possible for us to visit Brisbane at this time. Crikey, they don’t even have to pay to park.
We had tickets to the ballet in West End yesterday and were wondering (a) how to get there and (b) how to get home again until friends who live in Bardon offered us a bed for the night.
Then we got an email from Queensland Ballet, warning us to “Please plan your trip and allow extra time ahead of your journey.” We ended up taking the Go Between Bridge (one of two Brisbane bridges – the other is the Goodwill Bridge – named after ‘famous’ bands). That was too easy – we were half an hour early, but had to park three blocks away.

And then, this Monday morning, at what my musician friend Silas Palmer calls “stupid o’clock”, we will be driving to Brisbane so he can catch the 5am red-eye flight to Melbourne. We’re driving to Samford on Saturday night where Silas is playing at a G20 Women in Docs gig (it’s free). Then we’ll take him back with us and spend a day in the studio while he adds piano and fiddle to my new songs. Hopefully by then the 620 (sorry G20), road closures will have ended and Monday’s 2.30am drive will be easier than today’s three-hour drive to Maleny via Woodford. The freeway was a car park today and last night, on account of people doing what Mayor Graham Quirk urged them not to do (leaving town for a three-day weekend at the coast).

Tabling the G20 agenda
While the Federal government is spending some serious coin to stage this event, the businesses that are affected by detours, road closures and barricades receive no compensation.
Sydney Morning Herald political reporter Heath Aston was apparently shown some Federal Government G20 contracts that outlined some of the expenses incurred over the two-day meeting. There was a lot of talk about the meeting table, which was commissioned for the G20 finance ministers’ meeting in 2006 (at a cost of $70,000). The Abbott government has approved a further $36,000 to extend the table and another $68,000 for chairs.
More than $10 million is being shelled out to house the 20 delegates and their entourages at some of Brisbane’s leading hotels. Another $250,000 has been earmarked for taxis and rental cars and $150,000 for “tablet devices”. Oh, and did I mention $34 million for security?

Excuse me – I have a question. What happens to the table (which will apparently cost $150,000 to be moved around between lead-up meetings to its final destination at the Brisbane Exhibition and Convention Centre) once the G20 is over?
Considering it is highly unlikely the G20 will return to Brisbane in our lifetime, why not put the table and chairs up for auction? I would think some cashed up city council would love to brag about that. Or a high class restaurant could grab it for their VIP room. Or perhaps one of the country’s idle rich would like a showpiece dining table. They’d have to extend the dining room of course, but what else is money for?
Then again, the table (and other recyclable detritus from the G20), could be donated to a clever timber worker with instructions to build a small, affordable, sustainable house – a display home for poor people, if you like, located on a suburban allotment donated by a kind-hearted developer (they do exist). This house (I’m thinking three rooms, a kitchen, a bathroom and somewhere to chain the pushbike), should be rented at $50 a week to the person on the bottom of the public housing list. This, I think, would make several points about a few things.

I’ll admit we live in a sort of utopian bubble up here, gathering at our local watering hole on Fridays to harrumph about this and that. Mr Clean had a few pointed questions for the G20 organisers. Had they not ever heard of Skype? Were they deliberately trying to incite dissent by occupying a city for two days and denying its people freedom of movement? They could have taken over Hamilton Island for the weekend and repelled all boarders. All good points, Mr Clean.
One of my old business contacts observed that the main risk with the G20 is that they will listen too much to economists, who spend most of their time looking out the rear window, and over-stimulate world economies with money-printing and fiscal incentives.
He says most world economies have been recovering quite well over the past three to four years without their help.
He is expecting a stoush and will be disappointed if there isn’t one, adding that, whatever form it takes, he hopes that some degree of common sense prevails.

From the mouths of babes
That left me pondering what you’d say to a four-year-old, in that ‘why’ phase of life, if he asked why Brisbane was hosting the G20.
Kid: “Daddy, what’s a Geetwenty?”
Dad: “It’s a meeting of 20 finance ministers and central bankers who play a significant role in ensuring that international and domestic economic policies work together to protect the global economy against future shocks.”
Kid: “Yes but why?”
Dad: “They meet so they can restore business and investor confidence and address the causes of the global financial crisis and ensure financial stability.”
Kid: “A dress like what Mummy wears?”
Dad: “They also have to make important decisions about inflation.”
Kid: “What’s inflation?”
Dad: “Well, if Mummy buys a dozen free-range, organic eggs from the co-op and they cost $7 and next week they cost $9, that’s inflation.”
Kid: “Why don’t we get chooks, then?”

The Climate Change Stakes

Taking solar to another level. Caloundra Uniting Church

Two dead horses and the outcry from animal rights groups that followed unfortunately pushed a telling United Nations report on climate change off the front page. In any other week, the report would have had a better run, without having to compete with horse form and breeding analysis, gossip and trivia, sweepstakes (there’s another page gone), fashions on the field and heart-tugging articles about little Aussie battlers trying to knock off cashed up European stables.
I acknowledge that the connections of Melbourne Cup contenders Admire Rakti and Araldo would have grieved when their horses died after the running of the 153rd Melbourne Cup. But these things happen in racing, and other sports for that matter. Professional racing people bury their horses; they claim the insurance and move on to the next race. The strappers and track riders who knew the horses best will be disconsolate for a while, but the world goes on.

According to the United Nations Intergovernmental Panel on Climate Change (IPCC), it will be a world of melting polar ice, rising sea levels, higher temperatures and extreme weather. The IPCC says worldwide we need to act urgently to stop burning coal, and to replace fossil fuels with renewable energy. We also need to stop producing greenhouse gases and to discourage investment in dirty industries.
The IPCC’s key findings are completely at odds with Team Australia, which has dismissed the carbon tax and is still trying to scrap or at least wind back the 2020 renewable energy target. Prime Minister Tony Abbott has been widely quoted as saying coal is “good for humanity” and has decried the efforts by some institutional investors to divest (sell) shares in carbon-intensive sectors.
However, the world’s top scientists have given their clearest warning yet of the severe and irreversible impacts of climate change. The 116-page IPCC synthesis report, a summary of its last three, is a dry read (no pun intended). But its message is blunt: greenhouse gas levels are at the highest they have been in 800,000 years. The most recent increases are largely blamed on the burning of fossil fuels.
“Continued emission of greenhouse gases will cause further warming and long-lasting changes in all components of the climate system, increasing the likelihood of severe, pervasive and irreversible impacts for people and ecosystems,” the report said.

Meanwhile, Prime Minister Tony Abbott, who says he is no punter, despite having a totally wild bet against the science of climate change and the burning of fossil fuels, tipped Signoff (4th) to win the Melbourne Cup.
The connections of Signoff might have picked up a healthy cheque ($250,000), but bookies don’t pay out on fourth. And voters seldom return a politician who has shown poor judgement on serious global issues.
Imagine if there was indeed a race, the winner of which would be allowed to implement their method of repelling the advances of global warming.

The Climate Change Stakes.
“The horses are parading for the Climate Change Stakes. Looking fit and determined in the birdcage is Mitigation, the 6-4 on favourite, heavily backed by every greenie on the planet. Climate Denier, a 33-1 pop with a reputation for coming home when least expected, is expected to struggle with its big weight and the track conditions (wet again). Pay the Polluters has found some support from the Society for Illogical Thinking. Carbon Tax Mk II, having his first run for the Green stable, will find it hard from the outside barrier, but if he gets an inside run coming into the home turn, look out. Solar Leader, a German import, will need a sunny day, as will Sunshine Valley Stables entry, South Australia’s Beam Me Up. The Northern Territory entry, Diesel Rules, is a late scratching. Apparently his transporter ran out of fuel. CeeCeeEss was disqualified for having a stupid name.”

It is now nine months since the chairman of the Climate Change Committee, UK conservative Lord Deben, described the Australian government’s then plan to scrap the carbon tax (which it has since done) as irresponsible.
“Australia’s actions are appalling,” Lord Deben (a former MP in the Thatcher government), said in a statement. “While the 66 countries that account for 88% of global emissions have passed laws to address global warming, Australia is repealing them.”
The IPCC’s synthesis report made four key recommendations, all based on broad scientific consensus.
If the planet is to be kept from warming by more than two degrees:
• Renewable energy (i.e. solar, wind power, wave power et al), nuclear energy and carbon capture and storage (CCS), should comprise 80% of the world’s energy by 2050 (it is currently about 30%);
• Investors need to switch their allegiances from polluting industries to clean energy sectors;
• The world must stop using fossil fuels by 2100 (unless fossil fuel power generation uses CCS),
• Greenhouse gases must be cut by 40% to 70% by 2050, and to less than zero by 2100.
Meanwhile, Team Australia got its Direct Action Bill through. An alternative to the carbon tax, it pays polluters to clean their act up. Under political pressure, the Abbott government is now talking about a renewable energy target of 5% by 2020, rather than scrapping the original RET of 20%, so there is a glimmer of hope.

My research assistant Little Brother found a gem of a story in The Guardian which harked back to Budget cuts in May. While Mr Abbott has recently said Australia’s energy future lies in coal, five months ago his government cut $495.3 million in forward research funding to develop carbon capture and storage technology. CCS captures carbon emissions that would otherwise have been expelled into the atmosphere and stores them underground. LB says there is only one large CCS plant in operation (in Saskatchewan, Canada). The science has many detractors.
The Labor government also slashed funding for CCS, so while it has been flagged as an alternative by the IPCC, it seems out of favour here, with just $191.7 million left to develop trial plants over the next seven years.
Despite all the obstacles in its way, the solar energy sector keeps signing up new industries (the Brisbane Markets is using the massive amounts of roof space it has at Rocklea to install a 1.06MW system). Construction will start next year and when completed it will be one of the largest in Australia.

Last time I wrote about renewable energy a reader studying the solar sector wrote to tell me that financially disadvantaged sections of the community continue to pay more for electricity as a result of past solar policies. And so far, commercial solar power stations can’t compete with coal-fired stations. But while that debate is played out, more households and commercial businesses are installing solar systems so they can control their own destiny. Smarter technology (thermal storage) and a mass market, will make solar a less expensive option. Besides, it’s irrelevant whether solar “stacks up” in the conventional sense of being the cheapest alternative. As the IPCC says, we have to act and we have to act NOW.

Anyone who had a harp

Custom harp
Custom six-tone harmonica Photo Jorge Royan http://www.royan.com.ar/

We’re back in the studio after our three-month road trip, trying to pick up the threads of what was as an intensive three-week recording session back in June. The last thing I did in the studio before we left was to re-record harmonica tracks with a new, $55 Hohner E harp. I use harmonicas a lot when we perform live, playing the instrument with a rack around my neck. The cheap harps I normally use did not stand up to scrutiny in the confines of a studio.

The humble mouth harp was given credence 84 years ago when a fellow called Larry Adler saw an advertisement in the Baltimore Sun for a mouth organ band. Adler went to the audition and a grand career was born. He worked with the likes of Fred Astaire, Dizzie Gillespie and George Gershwin. Vaughan Williams composed music for him. A jazz musician from the same era, Max Geldray, was a pivotal part of The Goon Show. He provided musical interludes and the closing music for at least 160 episodes of that madcap radio programme.

I was thinking about Max, who died in 2004 and Larry (in 2001), as they were without a doubt the people who helped me overcome shyness and make use of my natural musical ear to embark on a journey which, 55 years on, is still bringing me joy, even if my neighbour’s dog howls when I play harmonica.

I’m a lazy player, quickly inventing instrumentals to add colour to my songs and I clearly don’t practice as much as some of the people in the videos at the end of this essay. But I’m happy to report that my harmonica tracks survived the cut. I did my three tracks in a couple of takes. We got it done quickly because I know the stuff backwards, but also with my new hearing aids, I can hear snails sliding across the studio’s tin roof.

My laziness extends to the maintenance of my harps. When a great blues harp player, Matt Moline, came to the studio to add harmonica to one track on our first CD, he had a very large number of instruments encased in a soft travel pack.
We got on to the subject of cleaning them and I confessed I had never done that. Matt got that look on his face that you see when nurses are gowning up to go into the infectious diseases ward.

The author

It was all Santa’s fault
I sometimes wonder just how many children, apart from me, found a harmonica in their Christmas stocking when they were six or seven. It used to be a good way to assess if your child had any latent musicality. (I suspect a large number of said harmonicas were “lost” sometime on Boxing Day.)
The radio was our only entertainment in those days, so there was lots of time to learn things that require hours of practice, like knitting, embroidery, 1,000-piece jigsaws or learning to play the spoons. I was always coming second in talent quests, usually to a comely lass with a guitar and a sweet smile.

Once shunned as a toy instrument for the poor, the humble 10-hole diatonic harmonica has progressed to become a mainstay of contemporary rock, folk and blues music.
There are great players who have gone on to play harp in the choir invisible (Sonny Terry, Little Walter, Big Mama Thornton), and a good few who are still with us, including Australian players Chris Wilson, Doc Span and Jim Conway. Charlie Musselwhite is lauded by some, as are Charlie McCoy, Christelle Berthon and Stevie Wonder. Stevie learned to play when he was five and invented a completely distinctive style.

And (OMG I didn’t know this), Billy Joel played harmonica on “Piano Man”, inspired by Bob Dylan using a rack to play guitar and harmonica at the same time. The less said about “Piano Man” the better. I prefer Weird Al Yankovitch’s “Sling us a web; you’re the Spider-Man”.
You can spend $250+ on a chromatic harmonica (it has a slide which enables you to play sharps and flats). You need two, in different keys, to cover the complete range of anything you might like to play (William Tell Overture, Night and Day, Clare De Lune).
But most players today use diatonic, 10-hole blues harmonicas. They have a small range of notes and lack of sharps and flats, so in theory there is a limit to what you can play. I use a cheap set of seven Hohner harmonicas bought from the Internet for $99. They are what you think they might be! I have some old harmonicas I paid a lot of money for (Lee Oskars) and they are still better than the new ones in the box set.
You can pay upwards of $85 for a quality Lee Oskar, although you’ll find them cheaper on the Internet. Those of you obsessed with music trivia already knew this, but Lee Oskar is a Danish musician and harmonica manufacturer who featured in Eric Burden’s band War and performed in Cheech and Chong’s “Up in Smoke”.

People who don’t know how to do it think that being able to play guitar, sing and play harmonica at the same time is one of the dark arts. All you need to do is put a rack around your neck, insert the instrument (the right way up), keep a steady tempo going on the guitar, and save some breath for singing.
Kath Tait, a Kiwi who lives in London, has a special way of playing the concertina and a harmonica in a rack while singing. The harmonica bits happen in the instrumentals, but I guess you’ll figure that out.

Kiwi expat Brendan Power, now domiciled in the UK, is a harmonica virtuoso who manufactures, repairs and tunes harmonicas. He uses a loop pedal and other gadgets to put on a one-man show, but is still heard to best effect jamming with other musicians.
If you had no idea how versatile the harmonica can be, check out at least one of these videos. I especially like the fan comment (sic) at the end of M-S Blues: “I dont no who let you off the chain but you shore can play that thang.”