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Pension reform and the ‘budget crisis’: a less than mature debate

Treasurer Joe Hockey last night stepped up his rhetoric on the the need for heavy government spending cuts, singling out the A$40 billion age pension cost as “much more than we spend on defence, or hospitals…

Treasurer Joe Hockey has his sights set on the age pension. Daniel Munoz/AAP

Treasurer Joe Hockey last night stepped up his rhetoric on the the need for heavy government spending cuts, singling out the A$40 billion age pension cost as “much more than we spend on defence, or hospitals, or schools each year”.

Some reports have suggested the pension eligibility age is to be lifted to 70 for everyone born after 1 January 1959, taking effect by 2029, in next month’s budget. Whatever the detail of the measure, it looks as if the rise in the pension eligibility age is a done deal.

So what happened to the “mature debate” that the treasurer called for just a few weeks ago? Because a mature debate on the question of retirement incomes - of which the age pension is one dimension - is certainly needed.

The population is ageing rapidly and it is quite right that the implications for public policy and public financing are thoroughly interrogated and options explored.

Several options are on the table

It may be that the government considers the recent Productivity Commission and Grattan Institute recommendations are sufficient. Both institutions support a pension eligibility age of 70, and the Grattan Institute a superannuation preservation age of 70. In addition, John Daley, CEO of the Grattan Institute, in March published a strong defence of the increased pension age policy particularly focusing on the benefits to the budget and the labour market.

Daley argues that increasing both the pension and superannuation preservation ages is the best option for achieving a budget balance. Other tax reform possibilities are largely ruled out, although in the Grattan Institute paper on balancing budgets, a GST increase to 12.5% is advocated in addition to wider retirement income reforms including reduced superannuation tax concessions and widening the pension assets test to include the family home.

But the focus on expenditure measures for solving the “budget crisis” by the Grattan Institute in its March policy brief Increasing the Age Pension age – busting the myths stands in contrast to other perspectives on fiscal sustainability, such as that of the Treasury Secretary Martin Parkinson, who canvassed more broadly both the revenue and expenditure options to boost productivity and innovation in a recent speech - and for that matter, the Grattan Institute’s own broad suite of ideas in its Balancing Budgets report.*

Nice in theory…

Whether the increased pension eligibility age will be effective in achieving a balanced budget will depend on whether older people will be able to obtain and maintain employment until 70.

In the Grattan Institute’s recent policy brief, Daley points to ABS data showing that most people over 65 who are not working have chosen not to - because they have reached retirement age and are eligible for a pension or superannuation.

But this glosses over the substantial other factors that have contributed to retirement decisions. For retired people who have held a job in the last 20 years (using the same ABS data, table 6), 13% were no longer working because they had lost a job, a temporary job had finished, or they could not find a job. A further 23% had retired because of own sickness, illness or disability with 4.5% retired to care for someone ill, disabled or elderly. These factors account for around 40% of retirement or leaving the workforce decisions.

They relate to two major challenges for the older workforce. The first is obtaining and maintaining employment in later life. The data suggests that regaining a job is difficult for many if a job is lost, precipitating a decision to retire. Age discrimination barriers are more significant than either the Productivity Commission or the Grattan Institute acknowledge in their reports.

The second challenge relates to capacity for work. The argument most often posited is that life expectancy is now much longer than it was when the age pension was introduced over 100 years ago, with an eligibility age of 65 for men and 60 for women. So the logic goes that it makes sense to lift the eligibility age. Daley calls this a “pretty obvious reform”.

Harsh realities

But life expectancy (mortality) is not the only consideration. Health status (morbidity) is also important. We can look to two professions, nursing and teaching, as examples where we would think working to 70 would be quite possible but clearly this will be a serious challenge based on the current experience.

People working in occupations requiring physical inputs (see ABS table on occupations with highest injury/illness) will struggle to keep working until 70, but we cannot discount the stresses and strains in other occupations such as teaching where work has become very demanding.

Work-life balance issues become more sharply defined with age. We might be living longer but this doesn’t mean we are the same at 65 or 70 as we were at 35 or 40. Work intensification stemming from increased productivity requirements may pose a real barrier for many older workers regardless of overall health status.

With large numbers of workers not being able to access a pension until 70, the outcomes will be more reliance on other pensions and benefits. The default for some will be the disability support pension as suggested by both the Grattan Institute and Productivity Commission. This adds adds a layer of an eligibility requirement of “impairment” for income support on to the pension income and assets test. A long-term project of governments is to reduce reliance on this payment and again a new round of review of eligibility is under way.

The later pension eligibility age will mean many older workers in their sixties will be forced on to unemployment payments – the low Newstart allowance at a mere $A250 per week. This will widen older age penury and heighten the risk of homelessness.

The government and the institutions advocating for a later retirement age have largely not engaged with these difficult and complex factors that are relevant to public financing for an ageing population. As such, the logic for raising the pension eligibility age as a solution to the “budget crisis” is deeply flawed and is setting up future governments for other social and economic “crises” down the track. It is a shame that the “mature debate” is over before it even began.

*The wording in this paragraph was amended post publication.

Join the conversation

87 Comments sorted by

  1. Rod Govers

    Retired IT administrator

    Simply put, why the need for the government to attack the elderly, those needing bulk-billing etc. when there's so much fat at the other end of town?

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    1. Terry Mills

      lawyer retired

      In reply to Rod Govers

      This whole business of holding a mature debate or a conversation with the nation is just so much spin. I think this government is proving to be hopeless at policy formulation and communication.

      We are told that we must charge bulk billed patients $6 or whatever to prevent over-use of medical services but we clearly know that those who seek to over-use these services are not going to let $6 prevent them from going to the doctor. Those who will suffer are those who have limited incomes and to whom…

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    2. Chris Saunders

      retired

      In reply to Terry Mills

      Terry, I share your concerns. It’s problematic for Australia that their treasurer would lock himself out of two prongs of economic management: taxation and growth. He claims growth at the rate needed to repair the budget would be inflationary. So this apparently absolves him from making any effort to grow the Australian economy beyond its present growth. He also insists on income tax cuts because he has some problem with progressive taxation which he fails to elucidate. He gives some IPA made-up scare statistical projections about old people on pensions in 2050 as reason to cut costs in welfare areas and the universal health scheme. So all the risk for Australia’s grand future is resting on one horse: cuts to welfare. I’d feel a lot more secure about Australia’s future and its vulnerable ones if the treasurer spread his bets a little wider.
      http://www.liberal.org.au/latest-news/2014/04/23/case-change-address-hon-joe-hockey-mp-treasurer

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    3. Mike Stasse

      Retired Energy Consultant

      In reply to Chris Saunders

      What these idiots fail to understand is that 100% of all the money shelled out as benefits re enters the economy and keeps it going.

      People on welfare will simply make up the difference between what the get and what they need with their credit cards, and when they hit the wall, simply go bankrupt. I know of two pensioners who have done exactly that........

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    1. Veronica Sheen

      Research Associate, School of Social Sciences at Monash University

      In reply to Fred Coorong

      Thanks - well that is a big part of the problem.
      It is of course the greatest irony that those in the most difficult jobs are also the lowest paid. Precisely the workers in these jobs will be the ones forced to stay in them longest but may face the most challenges in doing so.

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    2. Alice Kelly
      Alice Kelly is a Friend of The Conversation.

      sole parent

      In reply to Fred Coorong

      Because newstart has been tied to a different index than the aged pension for about 20 years now, in real terms it will mean a considerably lesser cost to the government, and increasing numbers of people living in extreme poverty.
      Sure I think they're trying not to have the conversation we should have about all forms of pension and benefit.
      It's a big conversation, and one which we could have.
      Indexing should be changed for sole parents, carers, and newstart, means testing has to be applied to the aged pension and family benefits, and taken from those who really don't need it. Superannuation tax concessions should not be allowed to continue for wealthy Australians.
      They have not really talked about to larger problem at all. Paying wealthy people pensions and benefits, and giving them greater tax concessions than poorer people.

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    3. Paul Prociv

      ex medical academic; botanical engineer at University of Queensland

      In reply to Fred Coorong

      Not to mention all the perks for retired parliamentarians . . .
      Will they have to stay on until the age of 70? Or get a big cash consolation prize much earlier?

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    4. Rick Sullivan

      Vast and Various

      In reply to Fred Coorong

      But.....you mean Joe and the other porkies won't have to wait until 70 to get THEIR pension? Do you mean THEY won't have to undergo a means test? I'm shocked!

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  2. Dennis Alexander

    logged in via LinkedIn

    Mr Hockey is reported elsewhere as saying "We should also not see someone's life ending when they turn 65 or 70," he said. "They should work as long as they can." Read literally, this is a blunt equation: life = work. By implication, work = paid employment. There are many ramifications to this pair of equations and some of them, at least, are not pleasant. I'll leave it for others to take up some of those ramifications.

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    1. Chris Saunders

      retired

      In reply to Mike Hansen

      Mike, that cartoon is excellent. It says a lot about what is happening here in Australia. It's annoying we have such copy cat politicians in control. Australia is not the US, never has been.
      We have our own unique vision. Well, most of us have. Innovation is an invaluable Australian characteristic. Why aren't they making use of it?

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    2. robin linke

      stamp dealer

      In reply to Chris Saunders

      Chris, Give us a few specific examples of how you think our unique vision and innovation could build new Australian industries and exports. Some of my suggestions would be nuclear, hydro, GM crop research.

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    3. Chris Saunders

      retired

      In reply to robin linke

      Some of your ideas might be goers robin, but with the present government's funding cuts to the CSIRO and other innovation bodies and their complete abandonment of sustainability concepts we may never know.

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    4. robin linke

      stamp dealer

      In reply to Chris Saunders

      Funding cuts Chris are caused by Rudd/Gillard/Rudd the worst Govt in Australia's history. You seem to be incapable of putting any ideas of your own. Our top priority is a sustainable economy, had you supported that concept over the last 6 years we would not be in the current mess.

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    5. Chris Saunders

      retired

      In reply to robin linke

      The current 'mess' has purely been created by the LNP. It's a fiction robin, which they are very desirous of making into a reality.

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    6. Ken Alderton

      PhD student, former CEO

      In reply to robin linke

      Can you explain to me how a rapid reduction of debt and return to surplus produces or even enhances the prospects of a "sustainable economy"

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    1. Susan Nolan

      retired

      In reply to Veronica Sheen

      The Grattan Institute says some other peculiar things, too . . . as you have pointed out in your article.

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    2. Susan Nolan

      retired

      In reply to David Hudson

      Who would take up the slack in volunteering?

      I guess the people left with time on their hands would be all those unemployed young people.

      Those underemployed young people who are part of the ever-increasing casualised workforce might find it a bit difficult to volunteer - since they have to be ready to work at the drop of a hat or else lose their casual job.

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    3. Andrew Fisher

      Worker

      In reply to David Hudson

      In a society where everything is measured in terms of money and where "what's in it for me" and "return on investment" and "cost benefit analysis" are catch phrases of the day, there isn't much room for volunteering anyway. Give it a few decades and nobody will be willing to help their neighbour without being paid for it.

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    4. Lyndal Breen

      logged in via Facebook

      In reply to David Hudson

      Being involved in volunteering with Landcare I have also noticed that the most reliable volunteers tend to be between 60 and 70 years of age. One of the problems that arise with older volunteers is that they get called on to babysit school-aged children during holidays and on weekends, and some are also minding great-grandchildren.
      While some people remain very fit into their 70s and 80s, many have developed health and general mobility problems (dicky knees, arthritis etc), and are no longer confident doing physical work as they get older (even gentle, at your own pace activity).

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  3. Shauna Murray

    Associate Professor; ARC Future Fellow, Plant Functional Biology and Climate Change Cluster at University of Technology, Sydney

    I have not heard any debate on this issue as such, "mature" or otherwise.

    I think there are many factors to discuss.
    What about, for example, gender differences?
    Many older women after retirement often take on carer's roles for elderly parents, grandchildren, etc. The lack of discussion of these issues, is, I believe, one result of our currently 5% representation of women in cabinet.

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    1. Veronica Sheen

      Research Associate, School of Social Sciences at Monash University

      In reply to Shauna Murray

      Thanks - The gender issue is a very important one and yes urgently needs to be considered in a 'mature' debate. . All the caring issues are indeed relevant - but equally the long term effects of job loss and discrimination in midlife which I discussed in an article in March.

      https://theconversation.com/eviction-from-the-middle-class-how-tenuous-jobs-penalise-women-23004

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    2. Jane Middlemist

      citizen

      In reply to Shauna Murray

      Yes grandparents are a very large part of the childcare system in this country, enabling parents to work, parents who otherwise could not afford childcare fees. Places in childcare centres often have waiting lists so not always easy to find.
      The great advantage of grandparent-carers is that they love the children and, above all, their services are free.

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  4. Rory Cunningham

    Test Analyst

    I wonder what the effect of increasing the working age will have on young people who are trying to enter the workforce. Trying to compete with people with decades of experience will be incredibly hard

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    1. Veronica Sheen

      Research Associate, School of Social Sciences at Monash University

      In reply to Rory Cunningham

      Thanks for that - it is an interesting point - I think the issues for younger and older workers are quite different though and not really a matter of substitution. For older workers, the decades of experience is not automatically the ticket to a job with age discrimination as it is. For younger people, it can be lack of experience and education, geographical location or often some kind of disadvantageous background.
      To note - the Grattan Institute discounts substitution see page 7 of its report.
      http://grattan.edu.au/static/files/assets/a4e30491/227_daley_oped_australian_ausperspectives.pdf

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    2. Jay Wulf

      Digerati at nomeonastiq.com

      In reply to Rory Cunningham

      In many fields, mature workers face significant barriers to entry.
      In part it is because a younger manager feels threatened by an older, experienced, wiser and better employee. One would think that is not the case, and objective values are used to hire people, but we all know that humans have non-linear performance characteristics and decision making processes that are not always based on rational factors. In part it is because older workers are perceived as opinionated, inflexible and less healthy.

      Add to this, as many commentators observed that it is unreasonable for a bricklayer or a truck driver to work well into his 70s and you have catastrophic failure of this delusional right wing extremist fairytale they are trying to sell to us. Notably that it is appropriate for elderly to work well into their 70s. Not as an exception, but as a rule.

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  5. Craig Read

    logged in via Twitter

    I fully intend to still be writing software when I'm 80. I've always loved doing it, and do it in my spare time.

    But I've been rejected for roles in language_a because I had "too much" experience in language_b (despite having spent several years learning and coding in language_a). I've had this response to applications several times, and seen people in their 30s rejected because they wanted somebody "younger" or "more dynamic".

    I really don't know how they expect people to be working at 70 when they're facing ageism in their 30s and 40s. I suppose they think everybody gets security of tenure for 3+ years, earning 6 figure salaries where it's almost impossible for you to be sacked regardless of how bad a job you do.

    Maybe I should just go into politics. The wages, pension and hours would certainly be better.

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    1. Veronica Sheen

      Research Associate, School of Social Sciences at Monash University

      In reply to Craig Read

      Thanks for your comment - I have heard this story many times too about IT - it is quite a capricious area of employment and again points to the problems in many occupations of keeping on until you are 70. Having been involved in older worker issues for some years now, I believe age discrimination kicks in after around 40.

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  6. James Hill

    Industrial Designer

    Could we, in the style of an ETS, aim to keep pension spending fixed at some historical level such as, say 2014, and work instead to eliminate all the costs foisted upon aged and other persons, so that those pensions remain adequate for their purpose?
    Jus one small but typical example of the problems and how they might e solved is the large impost upon pension's budgets just to keep their gardens in order.
    This cost could be entirely elevated , especially the lawn mowing by appropriate gardens…

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  7. Peter Evans

    Retired

    But Mr Hockey said tonight that most of the announced changes don't come in until after the next election. Assuming that is 2016, what about the budget emergency? Or we being asked to look at things some away while other changes are made? Or is there no emergency now?

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  8. Suzy Gneist
    Suzy Gneist is a Friend of The Conversation.

    Multi-tasker at Graphic Design & Montville Coffee

    How much more savings could be skimmed off the over generous pensions and superannuation incomes of politicians? I suppose they cannot do with less and it's not up to them to live more responsibly within our national tax revenue limits...
    How about means testing their allocations?

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  9. Geoff Taylor

    Consultant

    Unlike Britain and the US among others who have partially participant funded national retirement security schemes, we abandoned the National Pension fund set up by Menzies (I think) early on. Now the sparrows are coming home to roost.

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    1. Ken Alderton

      PhD student, former CEO

      In reply to Geoff Taylor

      Yes. In my early working days I paid an extra 5% tax as as separate item detailed on the annual tax return. It was specifically to finance my old age pension.
      Mr Hockey, can I have my money back with the accumulated interest!

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    2. Susan Nolan

      retired

      In reply to Geoff Taylor

      That's not quite accurate, Geoff. The first 3% of the Superannuation Guarantee was in lieu of a wage increase. So, at least 3% of the Superannuation Guarantee is part of "participant funded" retirement scheme.

      Of course, employees can make their own additional contributions as well.

      The Superannuation Guarantee scheme was put in place to afford working people a retirement income through superannuation so that there would be less pressure on the age pension.

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    3. Ken Alderton

      PhD student, former CEO

      In reply to Susan Nolan

      You need to remember that the people who are now retiring have had a maximum of 22 years compulsory superannuation contributions which were slashed by the effects of several national financial disasters. People entering the workforce now have more that 40 years contributions to look foward to. A very large slice of the current retirees were not eligible for any employer superannuation schemes before 1992 and private superannuation schemes were very rare.

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    4. Mike Stasse

      Retired Energy Consultant

      In reply to Ken Alderton

      Hah! And you expect the economy to keep going "like this" for the next forty years? EXACTLY why do you think the government (and many others throughout the world) is slashing social security and services?

      Pension funds all over the US are already bankrupt with pensioners receiving pennies in the dollar from their efforts. The system is utterly stuffed. It's just not obvious yet, but it will be by the time Abbott loses the next election..... maybe you should watch this..:
      http://damnthematrix.wordpress.com/2014/04/26/capitalism-is-the-crisis/

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    5. Susan Nolan

      retired

      In reply to Geoff Taylor

      I've tried to look this up, Geoff. What I've found is that both Great Britain and the USA have a non-contributory age pension, as we do here in Australia. Further, in Great Britain, there is a supplementary pension for workers which is employer funded - like our Superannuation Guarantee - to which employees may (but are not obliged to) contribute - like us. And, in addition, both in Great Britain and the USA, individuals make take out their own superannuation/pension plans themselves. Same as here. Only the names have been changed.

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    6. Susan Nolan

      retired

      In reply to Ken Alderton

      That's true, Ken. I know that from personal experience, being a self-funded retiree myself and having lived and worked through those times.

      With respect to those commencing work now with about 45 years contributing to superannuation before them (50+ years if Joe Hockey has his way). Whether that amount is going to be sufficient for them to retire on (and thus avoid being on the age pension) is a matter of debate - but most commentators seem to think that the contribution percentage needs to…

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    7. Ken Alderton

      PhD student, former CEO

      In reply to Susan Nolan

      What I would like to know is how much benefit the budget or the general community reap by preventing people accessing their superannuation until age 70.
      It certainly benefits the private superannuation sector.
      But Mr Hockey wouldn't just be lifting the age to benefit a particular sector of the finance industry. Would he?

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    1. Rod Govers

      Retired IT administrator

      In reply to Peter Nicol

      A neighbour's son works 50 hours a week every week but it took him 6 months to find a real estate agent who would allow him to rent a flat because his employer's employment letter classes him as a 'casual'.

      Casualisation (and this includes IT professionals etc on contracts*) of the workforce is one worst things that has happened to a large percentage of the workforce in modern times.

      *My partner just finished an 18 month IT contract - no public holiday pay, no sick leave and no annual holiday leave.

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  10. Peter Boyd Lane

    geologist

    Not one correspondent in support of Hockey's mantra! Surely there's one shock-jock out there who has something to say in support of the rich and privileged and for balance we deserve to hear from him/her.

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  11. Comment removed by moderator.

  12. Ian Hodgson

    retired geologist

    At 73, I have been retired for 15 years. I would have happily worked on beyond age 58 at which I retired. However, I took a voluntary redundancy when the government agency I worked for took a hefty funding cut and was forced to reduce its staff number by some 50 plus positions.

    Thus, it is not always the employee's choice as to when they retire.

    We need some serious and extensive discussion of the implications of retirement, not just a quick fix for a budget only a couple of weeks away.

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  13. Will Ross

    Student

    And what about university graduates trying to secure a career? I imagine forcing older generations to work later into their life would certainly free up the job market...

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  14. john tons

    retired redundant

    Excellent article - we need to do away with the age pension altogether and acknowledge that there is no fixed age at which people need to retire. We need to find the means of replicating what still happens in most agricultural communities. People never 'retire' as such instead their workload is changed as their physical capacity changes. Allied to that needs to be a recognition that some people, for whatever reason, need to be financially supported by the community and they need to be supported not so that they are on an income just enough to keep them alive but on an income that enables them to fully participate in the life of the community.

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    1. Lyndal Breen

      logged in via Facebook

      In reply to john tons

      I'd be quite happy to be paid for all the community work I do - at market rates. At the moment I provide free childcare, run a voluntary organisation, participate actively in another one, represent my local area in community consultation processes, give psychological support to a number of troubled people ... Society does not recognise what I do at all, and the Government support I get (Newstart) is an insult.
      Despite retraining to achieve a Post-Graduate degree, I have not been able to crack the job market (at 62)

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  15. Andrew Fisher

    Worker

    So I will have to work an extra 3 years before I can get the pension which I will definitely need in order to survive, just because I was born 6 weeks to late. Joe on the other hand, who was born years after me and who already has enough money to retire, is already eligible for a pension much more generous than anything I'll get. I believe this is what the word "scumbag" was invented for.

    Why doesn't the government get of its collective backside and actually collect the taxes owed by its rich mates? Why not make the rich pay for a share of the economic burden instead of continually squeezing the life blood out of ordinary working Australians? BTW, in case anyone feels like answering my questions, they were rhetorical. I know exactly why our rulers won't do what I asked. They are a too busy lining their own pockets.

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  16. Margaret Rose STRINGER

    logged in via email @iinet.net.au

    With Mr Rabbit's gift to wealthy working mothers looming behind him, Hockey is in no position to even think about this ludicrous 70-y-o for retirement idea. They're not going to get any more taxes, if that's one of their bright ideas; and they are DEFINITELY going to get a whole shitload more on the dole ... The economists who recommend this need their heads read. It should go without saying that Abbott, Hockey and whatshisname do, too.

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  17. David Maddern

    logged in via Facebook

    Let's not forget that this Government gave $B10 to the Reserve Bank, and I for one have not heard cogent arguments to justify that.
    "Labor were going to do it" "No we weren't".
    It looks plain, like in a gold rush you become a food seller, Centrelink is the growth area, and the area to get into, and if Government wants you to work to 75 or whatever they won't let you go from there.
    Our one tilt at democracy in three years has had worrying consequences. Long live the Senate.

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  18. robin linke

    stamp dealer

    I have run a small business for 40 years. It would not have survived if I had not analysed problems and opportunities in advance.
    The current problems re the aging population have been evident for 40 years. The number of children born per woman started to decline in the 1970's. and the improvement in health care and increased longevity was also self evident in the 1970's onward.

    It was self evident from the 1970's that the working population had to SAVE for retirement. It is still not compulsory…

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    1. robin linke

      stamp dealer

      In reply to Chris Saunders

      It was not satire Chris but serious ideas, analysis and argument to determine whether readers (with a tertiary education) had any ideas of their own. In that sense your reply was not a complete waste of time.

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    2. Chris Saunders

      retired

      In reply to robin linke

      Not satire Robin? I assumed anyone living through those times would have observed them quite differently. For instance the trade off of pay rises and conditions for super payments. It's actually part of the workers pay package. Women having children or not was the result of a number of economic and social pressures, technological advances and government policies.
      Of course the increase in longevity has been noticed before this, that's why the introduction of mandatory superannuation by Keating…

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    3. robin linke

      stamp dealer

      In reply to Chris Saunders

      My point re super is that it was not compulsory for the employee. If it had been shared with the employer then savings for retirement would have increased by billions. The more pressure you put on the employer the less jobs are available.
      The main reason for women deciding not to have children is 'life style choices' . Feminism is a major cost in the long term to the nation. DINKS couples outbid families with children for houses they want for financial investment when the greatest investment a…

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    4. Chris Saunders

      retired

      In reply to robin linke

      Sorry Robin, I don't think you know what you are talking about. You have made a lot of untrue statements, but your primary concern of the state of the economy when Labor and the Greens left it with a triple A rating from three rating authorities, the lowest debt of all OECD countries and an economy growing at a rate of 3.5% despite the GFC and one that treasurers in both Europe and the US would give their left arm for was never in a state to warrant the bad mouthing it got from the LNP nor the feigned panic response it is getting from them now when it has only taken them six months to double the deficit.

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  19. Veronica Sheen

    Research Associate, School of Social Sciences at Monash University

    Point of clarification re the article -
    The 7th para states:
    But the focus on expenditure measures for solving the “budget crisis” by the Grattan Institute on this occasion stands in contrast to other perspectives on fiscal sustainability such as that of the Treasury Secretary Martin Parkinson, who canvassed more broadly both the revenue and expenditure options to boost productivity and innovation in a recent speech.

    I am referring in this para only to the Grattan Institute's policy brief on…

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    1. robin linke

      stamp dealer

      In reply to Veronica Sheen

      Re last paragraph. What if people are not able to work longer? What are the consequences?
      What concessions do you think employers need given the decline of worker productivity with age?
      Would you support part time or full time employment of older people with a single hourly rate and no holiday sick leave etc etc. negotiated between employer and employee?
      Why were the problems regarding the ageing population not dealt with comprehensively by the Universities 20 to 30 years ago?

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  20. Peter West

    CEO at Property

    As someone who started work in Australia at 14, earned 4 pounds 5 shillings a week and paid 2 shillings and 6 pence tax, have been continuously employed most of my life, started a few businesses, have been broke at 40+ and worked my way out of it, I find now, because I own a few properties, I cannot get any pension whatever.

    A lot of my tax was at 46% when I worked for someone else.

    Surely I am not the only one in this position. The age pension is already means tested. Many pensioners are…

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    1. Chris Saunders

      retired

      In reply to Peter West

      Peter I don't have the latest figures, but you could Google them I imagine. But first off you are allowed your home. That is not counted in the assets test. Then, if you are single you are allowed maybe something like $200,000 in assets apart from your home. If you are a couple then commensurately more. You will still get the pension. If your assets are over this then you could still get a part pension and the all important health card. It might be worth your while to check it out.
      For your friend, if he did not receive income for those six months then Centrelink would need to know this, if they were to top up his allowance. I don't know whether they do or not automatically. He may have to plead hardship or something. I don't know the ins and outs.

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    2. Susan Nolan

      retired

      In reply to Peter West

      Hi Peter,

      I, too, do not get an aged pension - nor any part thereof.

      I live off my superannuation.

      I, too, pay my own medical expenses. I, too, do not have a rich retirement.

      I started work after finishing school and I have also been in continuous employment all my working life. I did my degree part-time whilst working full-time.

      For the first part of my working life, being female before even the whiff of equal pay came in, I was paid 60% of the male wage and was not eligible…

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    3. Susan Nolan

      retired

      In reply to Chris Saunders

      Hey Chris,

      Thanks for that. Looks like it might be an idea for me to check my eligibility, too.

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  21. Peter Boyd Lane

    geologist

    well said Chris! Hard to accept there are people out there who still believe the opposition, the Murdoch press and the shock-jocks had it right.

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  22. Joy RIngrose

    Retired Maths/Science teacher

    Money spent on pensions circulates in the community. Money spent on US fighter jets goes to out of the country. This government does not appear to understand the most basic of economic principles.

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  23. Ken Alderton

    PhD student, former CEO

    The thing that continues to surprise me about the current government's approach to budgeting is the almost absolute concentration on needy groups, pensioners, disabled people etc by reducing their "cost" to the community and yet apparently quarantining from any share in the burden those more well off groups like middle to high income workers, high salaried new mothers on paid maternity leave, mining corporations with diesel fuel rebates etc. As is noted in this article they seem to be completely…

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  24. Chris Saunders

    retired

    I must say Veronica (after browsing your two references) that if the government is relying on the Productivity Commission’s and the Grattan Institute’s reports for advice they do not appear to have made a very good choice of advisors. The Productivity Commission's advice seems to be prefaced on the inevitability of a decline in labour force participation from 65 to 60%. One would have thought that was the problem to address directly. And the Grattan Institute is all fired up at making people work longer and full of all sorts of strange statements like “Massive increases in women’s workforce participation didn’t put millions of young people out of work. Nor did the substantial increase in older workforce participation in Australia over the last decade.” Like weren’t these people here to see what actually happened?

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    1. Mike Stasse

      Retired Energy Consultant

      In reply to Chris Saunders

      The whole 'productivity' thing is such a load of BS...... there's a very good reason why fewer people are in full time employment than, say, twenty years ago: TECHNOLOGY!

      Forty years ago when I was a youth we were promised we'd never have to work again because robots would do all the hard yakka, and we would have more leisure time on our hands than we would know what to do with...... In our dreams. The system needs us to work forever so we can consume all the crap made by robots (or cheap Chinese labour), while at the same time, more and more technology simply replaces people.... even the mining industry's at it now..:
      http://www.miningaustralia.com.au/news/rio-s-driverless-trucks-move-100-million-tonnes

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    2. Veronica Sheen

      Research Associate, School of Social Sciences at Monash University

      In reply to Chris Saunders

      Thanks - Good points - One main reason that women's work participation grew was because of growth in service sector employment from the 1970s, much of it part time and casual which meshed with family responsibilities. Young people also got a lot of those part time, casual service jobs - which went well with increased education retention to later ages. The problem has been that many can't make the transition into full time permanent jobs. I am sure it will be argued that part time jobs will suit a lot of older people - this will be true for some - but we should consider that there is a lot of underemployment in part time jobs, and many are casual - this doesn't add up to a living wage. Older people will also be competing with younger people for those part time jobs.

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    3. Chris Saunders

      retired

      In reply to Veronica Sheen

      Yes the service sector expansion was an essential part of the process, and of course there was the encouragement for young people to stay on another two years at school and then pursue tertiary education, there was also the fall in the number of traditional (blue collar) jobs for middle aged men 45-55 years of age, there was the recession we had to have, and there was the extraordinarily high interest rates for both home and business. I know my home loan went to 14.9 and my brother’s business loan…

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    4. Chris Saunders

      retired

      In reply to Mike Stasse

      Yes Mike, you are so right. Productivity has got nothing to do with the number of people employed or hours worked. It has to do with the increased output per worker per unit of time. More workers or workers working long may result in increased output (although a second world war study showed that this was not effective for wartime production). Increased productivity can be achieved through greater efficiency, improved procedures and/or technological innovation: this latter requires capital investment in research and development and capital equipment which during the innovation stage is often protected by some tariff fire wall. It really is simple as. So any attempt to cut back on funding the CSIRO etc is insane.

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    5. Mike Stasse

      Retired Energy Consultant

      In reply to Chris Saunders

      Strike out "capital investment" and insert DEBT.... because ALL money is created as interest bearing debt.

      I'm sorry, but anyone who believes this debt economy has a future is clueless.

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    6. Chris Saunders

      retired

      In reply to Mike Stasse

      Depending on where you are standing, capital is either an asset or a debt. It has always been thus.

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  25. Account Deleted

    logged in via LinkedIn

    These discussions always seem to assume that retirees are either filthy rich or penniless. Mostly, they are neither. As compulsory superannuation increasingly spreads through the population, people will be able to choose to retire and support themselves for some years before having to rely on the age pension. Obviously, it should be a requirement that superannuation accounts should not be regarded as 'savings', but should only be able to be used to provide income. I suspect such a constraint would rapidly remove the incentive for high earners to use superannuation as a tax concession.

    There is nothing conceptually or practically difficult about forcing people to use money put aside for their retirement, for that specific purpose; rather than to pay for holidays, pay off mortgages, or help their children buy houses.

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    1. Mike Stasse

      Retired Energy Consultant

      In reply to Account Deleted

      I see things rather differently.... it always amazes me that people who retire more often than not EXPECT that in retirement they will be able to take a couple of overseas holidays a year, or buy a humungous caravan to travel around Australia, or like my neighbours... do BOTH!

      Anyone who believes superannuation will still exist in ten years time is in deep denial of reality. ALL moneys in banks and stock markets will one day just go 'poof'. As we hit Limits to Growth (and the current government's…

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    2. Chris Saunders

      retired

      In reply to Account Deleted

      I think Robert, the argument is about should rich people who have large amounts of superannuation and being entitled to and receiving a government subsidy via tax relief receive such so that it equals the same amount as people receiving a pension who it is acknowledged have small enough assets and income to warrant a meager below the poverty line pension payment. We are talking $44.8 billion to the rich supers and $44.9billion going to pensioners. The amount to the rich superannuates is growing…

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  26. Deborah Chubb

    Artist

    Pensioners are in the twilight of their lives, they have done their hard work and contributed to society. Let them enjoy the rest of their lives however long that may be. I feel ashamed that our culture sees the elderly as a burden, not respected like most other cultures do their aged. And I find it appalling that the "government" would do this and then go spend 12.4 billion dollars on jet fighters for the military.

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  27. Rick Sullivan

    Vast and Various

    Oh, Australia. Where to now, with this bunch of greedy clowns stripping from the working class to pad the nests of the rich? Will be able to undo the damage when they are gone?

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  28. Peter Banks

    retired Civil Engineer

    Having mulled over Hockey's for a couple of days I still cannot see what he was trying to say. The aged pension expenditure is much more than that on defence, or hospitals, or schools in a year. But he doesn't give any arguments so far as I have seen as to why this should not be so.

    Should we be spending more on the military and stopping-the-boats than on maintaining our aged and elderly in reasonable comfort? I think no-one would argue that the pension is any more than the minimum needed to sustain…

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