Australian News

Aussies spending superannuation on plastic surgery and new cars are ‘obviously breaking the rules’

For thousands of Australians, the Federal Government’s Super Early Release Scheme – introduced in the wake of the coronavirus-fuelled economic crisis – has been dubbed a “lifeline”.

Under the scheme, as many as 2.1 million people applied to access their superannuation early, with those deemed eligible able to grab $10,000 from their super last financial year and a further $10,000 in 2020-21.

Last month, Australian Prudential Regulation Authority figures showed $14.8 billion had already been withdrawn.

At June 7, 2.12 million applications to access super early had been lodged with the tax office.

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Assistant Minister for Superannuation, Jane Hume, said that the decision to take the money out now – or build a nest egg over time – was a “big deal”.

“For many people, the benefit of taking that money out now outweighs the benefit of leaving it in the future,” Ms Hume said.

“The government isn’t in the business of telling people how to spend their money.”

Critics have argued accessing your superannuation should be a “last resort” only, after it was revealed by Industry Super Australia (ISA) about 480,000 Aussies had cleared out their funds completely, and that accessing cash now would have dire long-term consequences for retirement nest eggs.

On average, about 15 per cent of Australian workers have accessed their super early.

Three states were above the national average – Queensland at 20 per cent, Northern Territory 19 per cent and Western Australia 16 per cent. Only 8 per cent of ACT workers accessed their super early.

Those critics have taken it one step further following a report on 60 Minutes on Sunday night that showed some Australians who have withdrawn $10,000 from their superannuation splashing the cash on “non-essential luxuries” like plastic surgery and new cars.

Cassandra Garcia, a 41-year-old mother and businesswoman, put the cash toward a “series of surgeries” that included a boob job and liposuction on her torso, legs and chin, purchases that she deemed “essential” to her own self-confidence.

Asked if she’d taken the money out in the spirit that the government intended, Ms Garcia said she’d “definitely put the money back into the economy, I haven’t just left it in my bank account”.

“The reality is, I’m OK with my decision. At the end of the day, this is all of our money, it is not money that we’re loaning from the bank,” she said.

According to some, though, this behaviour is “obviously breaking the rules”.

“If you’re spending your super draw down on a boob job, you’re obviously breaking the rules,” ABC business reporter David Taylor wrote in a tweet.

“And ill-informed,” fellow ABC business reporter Rachel Pupazzoni replied.

Others commented it was “laughable” that people like Ms Garcia had been approved to withdraw their super.

“Classic short-term thinking from the government and from those who’ve taken the money but aren’t experiencing financial hardship,” another viewer commented.

“Have fun now and who cares about future. Hope they don’t whinge about not having enough money when they’re trying to survive on pension.”

“No thought for the future. Appalling that some consider a car and cosmetic surgery essential,” wrote another, in response to Ashleigh Masterson, a 26-year-old who lost her job at the beginning of the COVID-19 pandemic, using part of her withdrawn super funds to purchase a new car.

But while many were critical of people’s “frivolous” spending, others defended their financial decisions, claiming “the money belongs to the individuals”.

“If they choose to spend it freely, let’s not forget it will provide a boost to the economy,” one viewer commented on Facebook.

“There is no right or wrong in this situation but I for one am someone who desperately NEEDED it and am so grateful for its help!!!” wrote another.

“A minority will always use things in a way that it’s not intended, the majority need it. It’s people’s money at the end of the day.”

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Avoiding an economic ‘cliff’ will require more spending

Just how much “fiscal space” a country has is a judgment call, but it’s safe to say Australia has a fair bit more up its sleeve. The same report said our projected government debt for 2021 as a share of the gross domestic product was about half the average for advanced economies.

But how far should governments go in propping up businesses and jobs that have been destroyed by measures to contain COVID-19? And when should we start to worry about the risks of taking on even more public debt?

So far, Australia’s economy has fared better than most in this crisis. The government rightly responded to the pandemic with one of the biggest stimulus packages in the world, relative to our size, which prevented much economic and social misery.

However, economists are still pretty gloomy when looking at what we’re facing in a few months’ time.

The sheer size of Australia’s stimulus effort, and the fact the spending is concentrated in the six months to September, means that removing it will have a big impact. ANZ Bank has even forecast the economy will shrink in the three months to December because of stimulus being withdrawn.

Business leaders are nervously awaiting this final quarter of the year, with National Australia Bank chief executive Ross McEwan last week supporting targeted packages to support the hardest-hit industries.

Illustration: Simon Letch

Illustration: Simon LetchCredit:

And Prime Minister Scott Morrison has indeed signalled there will be some targeted support for the sectors that have been forced to effectively close, such as aviation and international tourism.

The questions are how much extra support there will be, who will get it, and when does the downside of all that debt outweigh its benefit?

There are clearly limits on how much we can and should borrow, but the view of most market economists is we’re not there yet, especially in an era of ultra-low interest rates. More to the point, attempting to rein in debt through “austerity” would make a bad economic situation even worse.

Independent economist Saul Eslake says one of the key lessons of the aftermath of the global financial crisis overseas was the damage caused by withdrawing stimulus too early. “Germany, Britain and to at least some extent the United States tightened fiscal policy too early in 2010 and dealt their recoveries an unnecessary setback, and we don’t want to do that,” he says.


ANZ Bank head of Australia economics David Plank, who is forecasting a budget deficit of $200 billion for the coming financial year, also says the debt being racked up is worthwhile. “I don’t think a deficit of $200 billion in 2021 is inappropriate. I think what would be inappropriate would be sharply withdrawing government spending,” he says.

Deloitte Access Economics partner Chris Richardson says that with official interest rates at rock bottom and unemployment high, it is a time for government spending to step into the breach. “A given dollar of government spending can do more good today than at any other time that Australians have ever known,” Richardson says.

Importantly, none of this is to say we should be writing a blank stimulus cheque, nor that every business can be saved. Further public spending to get the economy off a “cliff” is a far cry from what proponents of modern monetary theory advocate – expanding the money supply to finance government spending.


It is also a sad reality that many businesses are likely to fail during this recession. It won’t be in the economy’s interests to have a series of so-called “zombie” companies – those that only survive because debt is extremely cheap, but are unable to invest.

Indeed, Eslake points out that part of improving Australia’s low productivity growth will involve allowing capital and labour to move to more productive uses. “We don’t want to adopt a suite of policies that inhibit the movement of labour and capital from low productivity uses to higher productivity uses,” he says.

Australia’s economy still faces a highly uncertain outlook as it tries to avoid the”cliff”, and there will no doubt be many hard decisions facing economic managers in the months ahead. But whether to provide more targeted stimulus to the economy should not be one of them.

Ross Gittins is on leave.

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Local News - Victoria

Victorian Liberals demand audit of state’s COVID spending

The line of credit to address the crisis would bring state debt to $78 billion within three years if fully utilised.

The government believes it is unlikely the full $24.5 billion will be borrowed, but spending to fight the health crisis and its economic fallout has already topped $8.3 billion.

Mr O’Brien said there had been little democratic oversight of the Andrews government since the crisis intensified in early March, with Parliament sent home for much of the period.

Major cabinet decisions have been made by a group of eight ministers advised by a handful of senior public servants, and the government used its parliamentary numbers to vote down an attempt to establish a multi-party committee to scrutinise the handling of the crisis.

The Liberal demand comes as the independent Parliamentary Budget Office (PBO) tallied up the state’s spending on its response to COVID-19 to about $8.3 billion, or about $650 million a week since it first began pouring money into the emergency in early March.

The largest proportion of the spending – $3.7 billion – has been on “economic affairs”, the PBO found, as the government sought to shore up the state’s economy.


Health accounted for nearly $2 billion, or about 24 per cent of the total, much of it for vastly expanded intensive care capacity to prepare for the anticipated numbers of COVID-19 patients, which did not materialise as the lockdown strategy kept the spread of the illness in check.

Another $1.5 billion has been spent on taxation measures to help keep businesses afloat through the crisis.

In his letter to Auditor-General Andrew Greaves, Mr O’Brien acknowledges large amounts of money were needed in the crisis but said he was “deeply concerned [about] this concentration of financial and executive power at a time when there is reduced scrutiny of the executive”.

“This centralisation of power has been expanded enormously with a ‘new kitchen cabinet’ of eight senior ‘super portfolio’ ministers, including the Premier, together with the assistance of a small number of senior public servants, directly responsible for the government’s COVID-19 response,” Mr O’Brien wrote.

“The… unprecedented COVID-19-related legislation gives the Attorney-General enormous scope to alter the operation of the Victorian justice system and the Treasurer almost unfettered capacity to spend $24.5 billion in new borrowings.”


Mr O’Brien said investigation by Dr Greaves was needed into the biggest one-off debt-raising exercise in the state’s history.

“It should not be used to backfill budget blowouts on existing infrastructure projects, nor should it be used to fund recurrent expenditure such as public sector wages,” the Liberal leader wrote.

A government spokesman said all of its financial activities would be fully reported and open to scrutiny.

“We’ve been clear that this is about making sure we are able to protect Victorians and help communities and businesses get through to the other side of this crisis,” he said.

“All expenditure will be fully accounted for as part of our obligations under the Financial Management Act.”

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Retirement nest-egg withdrawals used to boost spending on non-essentials

The report reveals 11 per cent of the additional spending by those accessing super was on gambling.

As part of its response to the pandemic, the Morrison government is allowing people to withdraw up to $10,000 from their super accounts tax-free now and up to $10,000 next financial year.

When the scheme was announced in March Treasurer Josh Frydenberg said: “this is the people’s money and this is the time they need it most.”

The analysis shows recipients have accessed an average of around $8000 and spent an extra $2855 in the first fortnight after receiving the withdrawal compared with the same group’s average spending in a normal fortnight before receiving the money.

Around two thirds (64 per cent) of the additional purchases were on discretionary items such as leisure, entertainment, cafes and personal care. Spending on essentials such as groceries accounted for 22 per cent and 14 per cent was used to repay personal debts including credit cards.

AlphaBeta director, economist Andrew Charlton, said the data showed the super withdrawals policy had been poorly conceived and poorly administered.

“People who access their superannuation have made one of the most expensive spending decisions of their lives,” he said.

“While this policy was aimed as a lifeline, what we can see is a strong likelihood of people accessing their super, who really could have kept it working away until their retirement.”


Around 1.4 million applications have so far been approved worth more than $1.3 billion, the most recent Tax Office figures show. Over 460,000 of those making withdrawals were under the age of 30.

Angus Dockrill, a financial planner and co-founder of financial advisory firm IMFG, warned that accessing superannuation prior to retirement could be very costly.

“It should be very much a last resort,” he said. “If you’re a young person withdrawing $10,000, which was probably $12,000 back in January, you are forgoing about $40,000 or $50,000 of your retirement nest egg.”

To qualify for early release of super you must be unemployed, have been made redundant or had working hours reduced by at least 20 per cent since January 1 (sole traders qualify if their business was suspended or turnover has fallen by 20 per cent or more).


Simon Bligh, the chief executive of illion, said the next round of withdrawals should be more tightly managed.

“Tools are readily available to do this digitally,” he said.

Brendan Coates, the Grattan Institute’s Household Finances program director, said it would be disappointing if 40 per cent of those able to access the withdrawal scheme had not seen any drop in their income.

“It suggests the need for the ATO to better police the scheme and make applicants aware that penalties will apply if they have used the scheme inappropriately,” he said.

The findings of the spending analysis contrasts with the results of a Bureau of Statistics household survey released last week which asked those who had applied for early access to their superannuation about the “ways they used or planned to use the money”. More than half the respondents said they had used or planned to use it to pay household bills, mortgage, rent and other debts while 36 per cent said they had added, or planned to add it, to savings.

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Local News - Victoria

Victoria records 17 new cases; federal probe into COVID-19 cluster at meat works; retailers track job losses as spending slips

Virgin Money UK, a former National Australia Bank spin-off, is the latest bank to see profits hit hard by the coronavirus pandemic, with provisions for bad debts slashing returns in the latest half.

The dual-listed bank, which is more than 60 per cent owned by Australian investors and was previously known as Clydesdale Bank, on Wednesday reported a 58 per cent slump in underlying profit, to £120 million ($232 million).

Virgin Money UK chief financial officer Ian Smith.

Virgin Money UK chief financial officer Ian Smith.Credit:Eamon Gallagher

The plunge was driven by a £232 million ($448 million) provision for soured loans, as the lender awaits the full economic impact of the coronavirus lockdown amid unprecedented government support.

The bank, under its own name Clydesdale, was spun off from National Australia Bank in 2016 and remains heavily owned by Australian shareholders, mainly institutional investors.

Read the full article here.

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COVID-19 lockdown spending habits will outlive pandemic

“There are a lot of consumer trends that this crisis has really accelerated,” Dr Charlton said.

“In some ways Australia has been a bit of a laggard in online shopping, but this crisis has forced many people to get a login, open an account and work out how things work. And I don’t think they’ll ever go back.”

Spending on subscription television was 11 per cent higher than normal last week, while the purchase of streamed music, video games and apps was 53 per cent above normal in the week of April 6-13.

“People are getting used to doing things differently and some of the changes will be persistent,” Dr Charlton said.


Consumers have been spending much more on their homes during the lockdown.

The real-time spending tracker reveals purchases of furniture and office equipment were 57 per cent higher than normal last week, while home improvement spending was up 38 per cent.

Pets also appear to be benefiting – pet care spending was 14 per cent higher than normal last week and has been consistently strong during the past month.

The real-time spending information, which draws on a database tracking the consumption patterns of hundreds of thousands of Australians, shows spending on online gambling was 71 per cent higher than normal last week, while alcohol purchases were up by 35 per cent.

But the rush of coronavirus-induced buying at supermarkets last month appears to be over – purchases in supermarkets were back to the pre-pandemic norm last week.

The spending tracker has revealed a massive fall in spending on road tolls, which were 52 per cent below normal last week. Spending on taxis and rideshare services are also sharply lower.

Cafes have been hit hard by pandemic restrictions but have managed to maintain some turnover with takeaway sales – spending was 51 per cent lower than normal last week.

Overall, spending across the economy was 14 per cent lower than normal in the week of April 13-20, a small improvement on the previous week when overall spending was down 18 per cent.

A one-off government payment of $750 made to about 6.5 million pensioners and social security recipients during the first two weeks of April continued to underpin spending on essentials, which was 5 per cent below the pre-pandemic norm.

“Over the last few weeks we can see how stimulus payments have been working effectively, with an increase in spending by lower-income households who received the stimulus,” Dr Charlton said.

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Myer, Miniso and shops pull out the stops to spur Christmas spending

With this in mind, Australian retailers are planning to use every trick in the book to persuade customers to open their wallets.

Chinese discount retailer Miniso runs 34 stores across the country, including in major shopping hubs such as Chadstone and Pitt Street Mall. Local managing director Richard Li told The Age and The Sydney Morning Herald the company was prepared for a huge influx of shoppers on Boxing Day.

Miniso is planning to change its store layouts specifically for Boxing Day to draw in deal-hungry shoppers.

Miniso is planning to change its store layouts specifically for Boxing Day to draw in deal-hungry shoppers.Credit:Ben Rushton

“We’ve done Boxing Days for a few years now so we know how crazy it can be,” he said.

Along with increasing both opening hours and staffing, Mr Li says store layouts will also be changed to look different than normal, providing shoppers with a “new experience” on the day.

Miniso will also be issuing a flat 50 per cent discount to all products in its store for the first time this year, having only done product-by-product discounts in the past.

“We’ve found customers want things to be straightforward, they don’t want to play the numbers game on a busy day like Boxing Day,” he said.

We’ve realised if we want to win the battle, we have to do something different.

Richard Li, Miniso Australia managing director

Major department store Myer has also planned for a spending extravaganza on Boxing Day, with shoppers at its Melbourne and Sydney flagships allowed to line up as early as 3am, with doors opening at 5am and not closing until 11pm.

Those stores will include live performances from jugglers, stilt walkers and unicyclists.

Discounts of between 40 and 50 per cent will also be applied in some key categories, such as homewares, with the department store expecting two million shoppers through its doors on Boxing Day alone.

Whether these expectations will be met remains to be seen. National accounts data released earlier this month revealed the July 1 tax cuts and multiple interest-rate cuts have triggered a sharp spike in national savings, with Australians saving $14 billion in the September quarter alone.

Retailers are planning to use every trick in the book to persuade customers to part with their cash.

Retailers are planning to use every trick in the book to persuade customers to part with their cash.Credit:Ben Rushton

Simultaneously, retail sales volumes suffered their worst monthly result since the 1990s recession in the month of September, shrinking 0.2 per cent over the year.

HSBC chief economist Paul Bloxham said borrowers were clearly using tax and mortgage relief to pay off their mortgages faster, rather than head to the shops.

“Households got a boost to their incomes from lower interest rates and tax cuts and have chosen so far to save it. This is clear evidence that monetary policy is working,” he said.

“They have the income and at some point they might choose to spend it. The question is how soon does that happen?”

Illustration: Matt Golding

Illustration: Matt GoldingCredit:

Official retail sales figures for December will not be released until February, and Mr Bloxham said it was not possible to know until then how the Christmas trading period had gone.

But with consumer spending, including on both goods and services, making up around 55 per cent of annual gross domestic product, consumer spending intentions held the key to economic growth in 2020, Mr Bloxham said.


“The bottom line is if consumers continue to save and if consumption growth continues to be sluggish then it’s hard to think that GDP growth will pick up very much,” he said.

Mr Li remains optimistic, with expectations Miniso’s Boxing Day will be “100 per cent” bigger than last year, with stock already running out on some key product lines.

However, Mr Li’s optimism may just be his own, as the retailer admits other shopkeepers he has spoken to are far less sanguine.

“To be honest, the atmosphere and feeling has not been good this year, and isn’t very positive for next year,” he said. “We’ve realised if we want to win the battle, we have to do something different.”

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