January 21, 2014 | Graham

If they’re not looking at the aged they’re not serious

Kevin Andrews has announced an inquiry into the social welfare system, but has immediately ruled out considering the aged pension. This will be a waste of time and an unmitigated disaster.

Total welfare spending in the last budget was predicted to be $138 billion, of which only $9.55B goes to the unemployed, while $25.5B goes to people with disabilities. The lion’s share is the $54.8B, or 39.7% of the social security budget, which goes to the pension.

If you are going to make a significant dint in social security outlays you are not going to get there attacking the Newstart recipients. Indeed, the best way to get Newstart payments down would be to get employment up, which is not in his portfolio.

How do you take money away from people with disabilities when you’ve already promised to increase assistance to disabilities through the NDIS (or whatever it is now being called)? How many promises are you going to keep in the letter and break in the spirit?

No, the only area where there is likely to be much to be saved is in the aged pension.

And this can be done reasonably simply and equitably over the next few years.

The fact is that we have a pension system which was designed for an early C20 demographic who died not long after they retired.

Not only are we living longer lives, but we are healthier and fitter much longer. There is no justification for making a pension available to someone who isn’t disabled much before 75 years of age these days.

The other issue we should look at is the tax advantages that older Australians get, including the benefit to partly pay themselves from a tax advantaged superannuation stream once they are older than 55. 

Writing as a 55 year old, that is not a time when you ought to be accessing any part of your retirement savings, let alone being encouraged to do so by a generous tax treatment of your resulting income stream.

The idea that we will all be able to sit around, doing our round Australia trips and occasional overseas tours, leveraging against the kids inheritance and taking a taxpayer funded pension, augmented by our seniors’ card for the last 20 to 30 years of our life while generations X, Y and Z, and AA, AB and AC pay the bills is a pipe dream.

The kids won’t stand for it, and neither will our financiers.

But it’s unlikely that any of the current crop of politicians, on either side, has the skill, fortitude or foresight to deal with it.

Which is bad luck for my kids, and bad luck for me, because in 20 years time, when I might need some assistance, the baby boomers in front of me may well be pulling up the ladders, leaving the rest of us to drown, and I’ll be at a stage in my life when keeping afloat will be hard.

Posted by Graham at 11:09 pm | Comments (16) |
Filed under: Uncategorized


  1. 2 things:
    1. people over the age of 50 are finding it difficult if not impossible to find a job. What chance at 65 or 70?
    2. The reason so many look forward to retirement is, simply through the good ol’ Christian work ethic, they’ve spent most or all of their lives working at something they really hate.
    If we could put more emphasis on fitting people to their interests, retirement would cease to be an issue.

    Comment by Peter Grimley — January 22, 2014 @ 8:44 am

  2. The idea that people are living longer and healthier is taken too seriously. Baby boomers are already dropping like flies. Those living longer have already done it – they are around the 90 mark, lived through wars, depression and simple, healthy diets. The talk about living longer is like the computer models of climate change – worthless.

    As for no pension until 75, Graham, you will notice a big difference in how you feel in 5 years time; and an even bigger difference will be apparent at 65, then 70. You have to live it to know what ageing is really like. The expected life for males is still only 79.

    Income tax needs to be replaced with consumption taxes on everything, and everyone pays.

    Comment by Herb — January 22, 2014 @ 9:12 am

  3. Taxes on employment are killing employment. If you want less of something, tax it more. Doesn’t matter where or when in the life-cycle of people ready, willing and able to be employed, if the paperwork and cost of providing a useful job are too onerous, the potential job just doesn’t happen. We must cure the disease, not muck around with bandaids to relieve the symptoms. One of America’s greatest architects, Frank Lloyd Wright, had his most productive period from in his 60s when he lost his wife, family and home in a horrific episode, to when he died in his 90s. Our discriminatory tax system in attempting to share the wealth is destroying the motivation to create wealth. A simple low, consistent, non-discriminatory spending tax could easily fund government and allow the economic cake to grow with plenty for all.

    John McRobert

    Comment by John McRobert — January 22, 2014 @ 1:20 pm

  4. Yes we are in for many demographic shocks in the near future.
    Peter Grimley is of course correct in his first point.

    But the question remains as to how employment is going to go up when there are no jobs. How many men lost their jobs in Victoria alone over the past 12 months?
    Most probably there will be fewer jobs in the forseeable future too as Ford and Holden close down. Much of our manufacturing and processing industries will go off shore to low wage countries too.
    The casualization or McDonaldization of the work force is and will be a big factor too. More and more people will be unable to find full time work.
    How can such people possibly save for their retirement years, and as Peter Grimley pointed out the older you get the harder it is to find a job.

    As my old friend Hanrahan said, we will all be rooned.
    My deceased partner Pa Kettle and Hanrahan were good friends.

    Comment by Ma Kettle — January 22, 2014 @ 2:58 pm

  5. Much of the asset exemptions padding for pensioners introduced by Howard to shore up his constituency. do you seriously believe Abbott will touch this?

    Comment by barney — January 22, 2014 @ 8:10 pm

  6. No, I don’t Barney, but if he doesn’t he’s not serious, as I say. Peter, I think you will find that older employment is going to pick up. There is going to be a shortage of people to do all the work, plus if people stay in the workforce longer they are going to want to hire people who look like them. In which case, openings for older Australians will multiply.

    I don’t doubt I will feel differently in five years time Herb, but I walk some mornings with a group of friends, the oldest of whom is 70. He keeps up a good pace (somewhere north of 6 km an hour) and is actively involved in his business and the world. There are a lot like him.

    When the pension was introduced average life expectancy was around the 70 years mark. Now that life expectancy is 80 I can’t see why 75 is appropriate.

    The principle ought to be that if you can look after yourself you should.

    Comment by Graham — January 23, 2014 @ 1:24 pm

  7. Sorry Graham but I think you’re wrong.
    Not only is there little chance of older people -not solidly ensconced in a permanent position, and what’s that these days- being able to find employment, but there’s very little chance of ‘running out of people’; even if we stopped immigration and refugee intake altogether.
    The whole purpose of technology is to get more productivity per individual, which we have excelled at. Compare the labour saving devices today to just 20 years ago, and try to imagine the labour required in 20 years time.
    The reason unemployment is so high all over the world is that a large labour force is simply no longer required. I have a brother-in-law who farms 5,000 acres, alone. One man providing food and clothing for thousands. We are fast approaching a very similar situation to England, circa 1778.
    Where will we send the surplus?
    It’s only rampant consumerism -and even more rampant bureaucratic expansion- that keeps the majority employed now. Employing people to dig holes and then fill them in again is dumb; as is making and buying things to throw away.
    In the next few decades we are going to have to address a paradigm shift in thinking, starting with how much we need to work and why, and what we really need to buy, and why.

    Comment by Peter Grimley — January 23, 2014 @ 6:02 pm

  8. Sorry Peter, but you don’t understand the nature of work. There will always be things to do, and while there are, there will be work. Higher productivity just shifts the goal posts in terms of what we spend our working time doing. The secretaries that used to type in typing pools are no more, but female employment is higher than ever, because they are doing something else, far more enjoyable.

    I agree that “employing people to dig holes and fill them in again is dumb”, but who is doing that?

    Comment by Graham — January 23, 2014 @ 9:27 pm

  9. Graham, the only way you could be right is if the next 20 years faithfully mirrors the last 20.
    A dangerous assumption indeed.
    As to who is digging holes and filling them in again, remember Victor Lebow?
    “Our enormously productive economy . . . demands that we make consumption our way of
    life, that we convert the buying and use of goods into rituals, that we seek our spiritual satisfaction, our
    ego satisfaction, in consumption . . . we need things consumed, burned up, replaced and discarded at
    an ever-accelerating rate.”
    And we have. The majority of people employed today work for STATUS. Not only their own, but everyone’s. Durable clothing thrown out for being ‘unfashionable’ -or just not made durable. Cars with a 15 year life expectancy ‘rolled over’ after only 1 or 2 years. Houses made too large and with built in obsolescence; there are houses in Europe literally hundreds of years old. They could do it but can’t? The main stay of our economy is the building industry.
    1999 Paul Hawken wrote:
    “It’s dismaying enough that compared with
    their theoretical potential, even the most energy-efficient countries
    are only a few percent energy-efficient. It’s even worse that only
    one percent of the total North American materials flow ends up in
    and is still being used within, products six months after their sale.”
    In a world fast running out of resources, this egregious waste can simply no longer be supported.
    Rather than talking to the few 70 year old’s still working, perhaps you should talk to multitude not working, and ask them if they’re interested in rejoining the Rat Race…
    For the sake of someone else’s Status.

    Comment by Peter Grimley — January 24, 2014 @ 6:30 am

  10. Peter,

    I think you are spot on.

    Comment by Herb — January 25, 2014 @ 8:54 am

  11. Peter, even if I were to accept your version of how a modern economy works, I couldn’t on the back of that, justify the architects of that system expecting to sit back and be carried by younger generations merely because they have reached a particular age. That would seem to be of the same type as what you are complaining about – built-in obsolescence based on arbitrary measures, rather than real obsolescence.

    If you can work, and you don’t have enough saved to support yourself, then you should work. It’s not a question of whether you are “interested in rejoining the Rat Race”, but what your duties and obligations are.

    Comment by Graham — January 26, 2014 @ 12:35 pm

  12. I fully agree, ‘if you can work, you should work’ -with the aforementioned proviso, if you enjoy what you do, it just ain’t work.
    The simple reason so many retirees look forward to retirement (in exactly the same way as they look forward to holidays, or even weekends) is because they hate their jobs. The good ol’ christian work ethic has locked them into a job they got sick of years ago -if they ever liked at all- just to do the ‘right thing’.
    How much of that is necessity, and how much spin? As I said, one man can now feed thousands.
    Every government -of either stripe- when first getting in, promises to ‘cut waste’. They start with trimming the Public Service. Then they get hit with higher unemployment numbers, and hire the PS”s back again.
    Do you believe all these PS’s are overworked?
    Interestingly, the statistics suggest conservative governments tend to hire more PS’s than so called progressive governments, despite calling for ‘smaller government’. Full employment is more important, -even if the so called employed are doing buggrall.
    The simple rationale for technology is to reduce the drudgery of labour. We have made enormous strides in labour saving devices since the seventies, so…
    Why are we working harder and longer?
    Remember the seventies? We (in the physical workforce) saw the 40 hour week drop to the 38 hour week, and looked forward to gaining the 35 hour week in line with the office workers and bureaucrats.
    What happened?
    Now we’re being told not only is there no chance of reduced weekly hours, but we need to work longer years.
    Cui bono.
    BTW, your captcha system sucks. (but maybe just because I’m old?)

    Comment by Peter Grimley — January 26, 2014 @ 3:16 pm

  13. And hey (now you’ve put my foot in the stirrup, I’m going to ride this hobby horse)…
    I liked the THEORY of Keating’s compulsory super. It’s neat and simple to divide the population into 2; those who pay (the young) and those who receive (the old). Since everyone goes through the same cycle -if they’re lucky- it makes sense for everyone to pay for themselves.
    Except in practice it turns out we have been compelled to dedicate a fixed proportion of our income to a bunch of suits, so they can pay silly buggers on the stock market with other people’s money.
    You’re worried about people retiring early? Since ’08, that ain’t a problem.
    In practice, a significant no. of retirees (if not a majority) have been having a party with their super payouts, and then going on the pension anyway.
    Make the super system work the way it was supposed to work, and retirees will be funding themselves, not by younger tax payers.
    and I still hate the captcha.

    Comment by Peter Grimley — January 26, 2014 @ 3:41 pm

  14. Now I bet you’re just dying to ask: “how should the system work, Grim?”
    Well, I’ll tell you.
    For starters, take the age number out of it entirely. It’s just a number, and indicative of nothing (there are 30 year olds who may as well be 70, and vice versa).
    Everyone puts into their own super fund -AND sets their own goals.
    If you’re not into consumerism and status symbols, you might be happy to retire when your super is sufficient to pay the minimum (pension rate). This could happen when you’re 70, -or when you’re 50 (the gov would have to set a reasonable life expectancy level. From the Gov’s perspective, the higher the better. Let’s say 85. If you live longer than this, your super’s run out and you’re on the pension. If you croak early, the gov wins).
    Each individual has the right to determine at what age they will retire, determined by how much money they have put away and how much they require per month until age 85.
    No bulk payouts.
    And of course every one has the right to change their minds, within their own super budget.

    Comment by Peter Grimley — January 26, 2014 @ 4:03 pm

  15. And in case you’re wondering why I have nothing better to do on a Sunday Arv, I make money by selling online, so I tend to check the net 16 hours a day, 7 days a week.
    The amount of time I can spend arguing on forums is inversely proportional to the amount of money I make.
    And how much beer I have drunk…
    Interestingly, the more I drink the easier the captcha gets.

    Comment by Peter Grimley — January 26, 2014 @ 4:08 pm

  16. Graham,”I agree employing people and getting to fill them in again is dumb”

    Isn’t this is what the Public Service does on a daily basis and we just ignore it? That’s why their morale is so low. They create the reason for their own existence with rules/regulation that strangles the private sector.

    Our system is stuffed and no one will admit it.

    Comment by Ross — January 28, 2014 @ 5:55 pm

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