The budget fails to address the long term issues confronting longer living older Australians.
... to help ourselves
My Federal Budget 2014 blog is not a deep analysis of the different measures Mr. Hockey has taken to reduce the surplus. Elsewhere I have stated that we do not have a budget emergency, but yes, some prudent savings are necessary for our long-term economic health. And no, I see little point in noticing that a levy is a tax, is a tax, is a tax – which we were promised wouldn’t happen – we all know this anyway.
Briefly, I think this is a mean budget as it beats up on older people, younger people, students, those on welfare; generally the less able. But the most disappointing aspect of this budget is that, whilst the Treasurer claims it is aimed at creating a sustainable welfare system, it is actually failing to address the long-term issues confronting longer-living older Australians at all. The age of entitlement is over, we are told. But at every twist and turn, this and previous federal governments have abrogated their responsibility to create and support sustainable retirement income savings systems.
For instance, it is useless to bleat about the number of older Australians on the Age Pension, while there is very little opportunity to grow a retirement nest egg when the superannuation funds gouge so much in fees. In fact we have the third highest private pension fees in the OECD.
Ditto financial literacy. The financial services industry is continually creating new products which are sophisticated, complex and often very risky. Only a Rhodes Scholar would know enough to reasonably evaluate their suitability within an individual portfolio’s asset mix. Yet ordinary men and women are being told it is their own responsibility to save for an increasingly lengthy retirement, with minimum financial information support from our government or financial services regulators such as Australian Prudential Regulation Authority (APRA) or Australian Securities and Investments Commission (ASIC).
Of course older Australians could use the services of financial planners, but once again, this is fraught as so many planners have been caught doing unethical things with their client’s life savings, as evidenced by the collapse of Storm Financial and the recent rogue planner working for Commonwealth Financial Services.
So it’s back to square one with a need for far less complex financial investment options for retirement, urgent support in financial literacy for those about to leave full-time work, and a restructuring of access to superannuation which prevents us from spending our hard-earned savings far too quickly and then being forced onto a meagre pension which seems to be shrinking before our eyes.
Most importantly, rather than roll back the FOFA reforms, we need ever stricter supervision of the financial planners who purport to know how to advise us to invest our life savings. And rather than freezing the Superannuation Guarantee Contribution (SGC) for four years, we should be raising it from 9.5 per cent to 15 per cent as quickly as we are able. This measure alone would ensure the Age Pension does become sustainable sooner rather than later.
It is time the Treasurer set the conditions which would allow us to save more to finance ourselves in our later lives.
Governments have many levers – sadly this budget shows only the spending side of the equation being addressed, to the detriment of all those in, or entering, retirement.
What do you think? Is this budget a missed opportunity? Or are you happy with most of the measures?
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