28th Jun 2017

Grattan Institute commentary an attack on older Australians

Grattan Institute commentary an attack on older Australians
Kaye Fallick

Everything is the fault of older Australians. They are greedy, rich and ruining life for millennials. Yep, here we go again.

It seems somewhat ironic that in the week that a joint Fairfax-ABC report on retirement villages revealed systematic financial and institutional abuse of older Australians, that another commentator finds it necessary to stoke a fake intergenerational war based on misinformation.

So what’s this all about?

On Monday, The Guardian published an article by John Daley and Danielle Wood from the Grattan Institute.  Titled Malcom Turnbull be warned the young are coming, the article predicts an Australian political youthquake following the high turnout by younger people who voted Labour in the June 2017 British election. Such a turnout, we are told, is because UK millennials are faring so poorly on many economic indicators, including housing (un)affordability, university debts and lower incomes. Additionally, it stated that ‘young people will inherit sizable government debts and a pension and social care system many regard as unstainable (sic) given the ageing population’.

The article goes on to quote from the Grattan Institute’s own 2014 report, The Wealth of Generations, stating that, over the past decade ‘older households captured most of the growth in Australia’s wealth’. Later that day, when interviewed by host Patricia Karvelas on Radio National’s drive program, Mr Daley said that older households paid less income tax and that the Age Pension has ‘gone up significantly faster than wages’.

Enough! Stop! We really do need to challenge these misleading statements before they add further fuel to a fake intergenerational war.

And, more importantly, separate the issues over which individuals do exercise a degree of control, from those political changes that the current government refuses to make.

Let’s start with the Age Pension. As noted, Mr. Daley did not define the period during which he believes that the Age Pension has risen significantly faster than wages. YourLifeChoices has been covering all aspects of retirement income for 18 years, and we are not aware of this happening.

The last major boost to Age Pensions was in 2008 just after the Rudd Government came to power. More recently, the indexation of Age Pensions on 20 March 2017, saw the single Age Pension increased to $808.30 – a total of $13.50 extra per fortnight, from the 20 March 2016 indexed rate. This rise equates to 1.7 per cent, a considerable amount lower than the 3.3 per cent rise received by those on the minimum wage. Indeed, if an increase of 3.3 per cent had been awarded to those on the Age Pension over the past 12 months, the payment would be $821 per fortnight.


Also, the Age Pension (after CPI is applied) is benchmarked to the MTAWE, so how is it possible to have increased more than wages? The single rate of pension equals 27.7 per cent of the MTAWE and the couple combined rate is equal to 41.76 per cent. 

As calculated by Matt Grudnoff, Senior Economist at The Australia Institute (TAI), if this is tracked as a comparison from when the clean energy supplement was introduced, there is negligible difference in increase between the Age Pension and the Wage Price Index (WPI):




Another measure of the relatively low wealth held by the majority of older households is the amount of superannuation at retirement age. The median superannuation savings for workers approaching retirement in 2014 was less than $100,000. (ISA) So if household wealth for older Australians is ballooning, this is probably tied, for most, to their one major asset – the family home. Its value is calculated at today’s inflated house prices, and could just as easily come crashing down tomorrow.

Lastly, we know from the YourLifeChoices Retirement Affordability Index research that those on an Age Pension who are renters (at least 15 per cent of retirees) are doing it tough. They are spending about a third of their income on rising rental costs and cutting back on health services and social activities to live within their limited means. Those on a pension living in their own homes are barely covering costs, but are able to afford the occasional meal out. Put simply, retirees on a full or part Age Pension in Australia are hardly living the life of Reilly.

But let’s not rely on YourLifeChoices research alone. A new study by researchers at the University of Birmingham tells us that fears of ‘intergenerational tension between young and old are unfounded’ and that ‘baby boomers vs young generation’ is NOT the problem with financial inequity. Key findings in the study note that:

  • families are determined to support their own members financially
  • some families are much better placed than others to provide help – reinforcing the gap between rich and poor

It also found that an alternative means of reducing financial inequality over the longer term could be to reform wealth taxation.

It’s clearly time to introduce some facts into the discussion about wealth, opportunity and who is suffering. There is no intergenerational divide, as Mr Daley claims, but a very real divide – some might say a chasm – along the lines of haves and have nots, of life course advantage and disadvantage. We know that the rate of home ownership for younger Australians is decreasing.

But it’s also worth remembering that our Age Pension is the third meanest out of the 34 OECD nations with the proportion of GDP spent on the pension in 2014-15 at 2.9 per cent. It is only projected to rise to 3.6 per cent by 2055, according to the most recent Intergenerational Report (IGR 2015). This makes us the third meanest nation in the world, sitting behind Korea and Mexico.

Let’s be very clear that our older citizens are not a burden on our economy. And younger generations are not being sent broke by money spent on the Age Pension. In fact, many older Australians have compromised their own retirements by transferring money and assets to younger family members, to help them get a better start. This includes cash, house deposits and assistance with university debts, not to mention the untold hours of free grandparent supplied babysitting. Whilst older Australian may have enjoyed free university education, many are now paying fees on behalf of their children.

So let’s not take up the cudgels in this fake intergenerational war incited by economists in search of a headline. Let’s acknowledge that legislation which favours those who are better off – negative gearing, capital gains tax reductions, overly generous superannuation concessions – is simply unfair. And that it is up to our government to have the political will to fix this, and fix it sooner rather than later. Beating up pensioners is not going to help younger Australians any time soon.

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29th Jun 2017
It's all about government and it's paid mouth-pieces playing the ancient game of divide and conquer. We've been seeing this insanity since the heady days of 'women's equality' in its virulent form was foisted upon us ALL.

" Additionally, it stated that ‘young people will inherit sizable government debts and a pension and social care system many regard as unstainable (sic) given the ageing population’."

Well - the young whips will just have to get cracking, and start forcing their government to generate polices that will sustain and then build work for Australians first..... Lock the Gates - Both Ways!

Pension risen faster than wages - bulldust... I was on around half what I get today on pension twenty years ago, and I put $20 aside a fortnight for electricity... now the average six fortnight bill demands 5-6 times that - it is the costs of living that have gone through the roof, and trying to push the blame on the Pension for its struggle to keep up is pure lie.
29th Jun 2017
Yes TREBOR. Mostly lies, but what else ever comes from this government.
Not mentioned was WHO is going to get all of this supposed loot when the current generation passes on. I winder why.
29th Jun 2017
Read that:- "Many with a self-interest and an agenda to push regard pensions and social security systems as unsustainable".

Most others with any sense don't because they can see that it is partly driving our faltering economy... and I thought I was doing it hard with a faulty heart valve... there's always someone worse off.. in this case the economy... leaking like a sieve and pumping money into aged care and NDIS is actually helping to keep it afloat.

Where is the next stop gap coming from?
29th Jun 2017
Mick, I wondered why the World Health Organisation was going to get all of this loot. Sometimes shouting misses the point completely.
29th Jun 2017
WHO shouted? That's emphasis.... if the forum had the opportunity to use italics or bold, people could do it that way instead of the old missionary way of shouting...
30th Jun 2017
Are you talking about the "ALL" in so-called shouting capitals in the first paragraph of TREBOR's first post? If so, don't you mean "HALF"?
29th Jun 2017
The Gratten Institute should highlighting the now disfunctional taxation system. There are many rorts from special rulings, trusts, SMSF, Car Leasing to name a few. Mates rates.
The GST is in the same boat. Why is revenue not rising when price inflation is rising ? People eating more fresh food???? I doubt there is more home cooking.
Start complaining about the loss of fulltime jobs and the casualisation of the work force. Our moral fibre has been lost in this. When will we see these people on the parliamentary benches.
29th Jun 2017
Correct. A 'special' tax system for the wealthy and new taxes for everybody else. Where is the ongoing discussion about that?????
29th Jun 2017
Absolutely, Grattan institute is missing in action when it comes to analysing tax shelters.
Good article, Kaye. Perhaps send it to John Daley with the title "LIAR, LIAR".
Tom Tank
29th Jun 2017
It is false to compare Australia with the UK. The UK is in a political mess with draconian austerity measures in place which will actually make matters as these measures are taking money out of the economy which naturally starts to slow down.
The young in the UK are also upset about Brexit which is largely down to the vote by older people in England, to be precise about which part of the UK this happened in, voting to leave.
The problem with that was that the younger people in the UK, to a large extent, didn't bother voting at all. An issue with their non-compulsory voting system and the young feeling apathetic.
All in all we are a different country, not without our problems of course, and comparisons in this case truly are odious.
29th Jun 2017
Apparently many of the young people thought their comments on Facebook or other social media would count as their vote and there was no need to go along to the Polling booth to vote in person.

They were quite upset when they discovered that Facebook comments didn't count :-)
29th Jun 2017
Kaye: You might have mentioned that the Grattan Institute is a government propaganda mouthpiece, one of many.
I find it alarming that this government is not content with having ruined the retirements of many retirees and is now wanting to start an intergenerational war. This is not healthy for Australia....but what does this government care as it attacks the nation's citizens whilst lavishing tax cuts on the wealthy and tax avoidance for multinationals and the rich via blatant offshore tax shelters.
What the puppets at the Grattan proaganda machine fail to mention is that GENY WILL WILL INHERIT THEIR PARENTS' WEALTH. It has always been so. What the Grattan propaganda machine is doing is fuelling the ingrained belief with genYs that they are hard done by as they spend like drunk sailors on shore leave and demand to be handed more.
I hope that when Labor wins the next election it will not fund Grattan. This group are another blight on our society and seek to initial intergenerational war rather than hones discussion of the facts.
29th Jun 2017
This report seems to be driven by a sense of(misplaced) envy. You oldies have it easy with your homes worth so much, and living- I use the word loosely- off the pension. It ignores the time factor. How many years of hard work has it taken to get us into a position of owning a modest home and paying 7.5% of income tax to support the pension? Of course the younger generation want everything now. Advertising promotes little else. Reality is something else.
29th Jun 2017
GenY is something else Crowcrag. This generation is the 'hand out' generation and have little interest or concept in living frugally and saving their money. They seem to live in a Walter Mitty world of make believe where they feel entitled and hard done by.
Sorry to have bitten but I have only met a very very few from this generation who did what my wife and I did for over 30 years. Most do not have the backbone, the stamina or the ability to deny themselves anything other than consumerism gone feral.
GenyYs should shut their belligerent traps and wait for the next big handout in their miserable lives: when their parents pass on.
29th Jun 2017
Indeed - I don't recall getting trips once a year to places like Madagascar, Scandinavia, and other ports of call on some sort of rotating basis. My children as teens had made more overseas trips than I did.
29th Jun 2017
Oh - went to a travel agency to book a pensioner bus/train trip - had to wait while two teenaged girls in school uniform were working out which overseas destination they'd go to for their graduation present from their parents.

Well drop mah drawers, cut me off at the knees, and call me tripod... I don't suppose they had to sell their school car to pay for it, either...
29th Jun 2017
Don't forget how hard done by they are TREBOR.
29th Jun 2017
The Grattan Institute!! Another bunch of economic theorists. The world has gone backwards since the introduction of economists and even quicker under Globalisation.
From my observations over the last 50+ years a government budget has gone from one for the next year, then we have budget items for three years, now we talk of 5 years or even 10 years. 10 years!! Goodness gracious me! there could be three elections and three different governments in this time. No wonder we are in chaos.
I no longer get a small part Age Pension since 1 January this year because I was just over the new assets cutoff level. A level that is several hundred thousand dollars below the figure that is often offered up as a figure that would be needed to have a comfortable retirement. I am fortunate to have a CPI indexed pension that provides for our basic needs, but when one gets a $1.90 increase a fortnight in pension and at the same time gets a medication one's on taken off the PBS, health insurance increasing by 9%, electricity by 12% and the list goes on I can't see where there is growth in my wealth.
I was at a Quality Conference 25 years ago and in a plenary session the moderator asked "What is the vision for Australia?" Some bright spark in the audience shouted out "Winning the next election!" How true. How true.
We are going down the track (AGAIN) of following what's happened in the US. Having two parties nobody really wants but has to put up with one.
I'm a PENSIONER and I VOTE Mr Turnbull and Mr Shorten.
P.S. Couldn't agree more DaveL.
Bring on the revolution!!
29th Jun 2017
Show me one economist who has not screwed up the planet. I don't know we publish anything from these people.
29th Jun 2017
Mick, Keynes. Unfortunately his theories were supplanted by Milton Freidman and his Chicago School of Economics, who have worked very hard at making the rich richer, and the poor disenfranchised.
29th Jun 2017
My point exactly. I read a lot of the financial advertising from economists and laugh at the ludicrous stuff they pump out as science. Quite embarrasing.
Liverpool Anne
29th Jun 2017
It is interesting to note that no mention has ever been made that our elderly parents and grand parents never had much child endowment, no large payouts for child daytime care, first home payments, very little support back then for single parents, etc. etc. Whereas today they get all than and more. Might mention that it seems the youngsters (y gen or whatever,)get far more than we did. We sucked it up and got on with life, character building. They should try it
29th Jun 2017
Well said Liverpool Anne.
29th Jun 2017
The Divide to Conquer movement will go on until some of the next generation start to feel the pinch. Children of the baby boomers range in age from fairly young to about 50 years.
It won't be many more years until the older ones start to appreciate their parents have been telling them the truth about saving for years for the deposit on their home and going without to make payments on the mortgage.
It will be interesting once the children of the baby boomers start complaining about how hard done by they are and it is all the fault of the government.
I hope I am still around to see it happening.
29th Jun 2017
'Save'? Now there is a 4 letter word. Don't expect that from genY. They're 'different'.
29th Jun 2017
Very well written and researched piece for a change. I feel the reference at the beginning was made to Comrade Jeremy Corbyn the terrorist lover and his appearance at Glastonbury handing out lollipops to all the poor hard done to little turds that we are displacing! Yes, Corbyn appeals to these no brain kiddies because he is promising them the world on a plate.
I have no doubt that they will do the same here soon, lord help us. I surely don't feel guilty, having two of these useless 30 years olds next to me who simply do not work, and furthermore, no one, least of all the Government, seem interested! Carry on the Officers
29th Jun 2017
Is that like scumbag Christopher Pyne handing out shopping bags at the shopping centre to get people to vote for him?
29th Jun 2017
That is interesting Mick. Were the shopping bags empty or full of groceries?
29th Jun 2017
Unlikely Pyne would actually give people anything other than a bum steer.
29th Jun 2017
*falls about laughing*
29th Jun 2017
The standard response to any report. It is a bunch of lies, they are envious of our wealth of what we own and the usual shoot the messenger stuff. It would be great if people read the reports and tried to understand it for what it is and just maybe there will be a possible solution. But no.
Australians put money into houses not industry, not production and certainly not the future of their children. The tax subsidies going to multiple house ownership and speculation are frankly ridiculousl but still the governments do nothing. Theis mob blather on about jobs and growth and innovation but do nothing. Our generation has a role to play in these events. Not just hanging onto outmoded ways of thinking.
29th Jun 2017
You are cherry picking.
No discussion of the REAL issues: money being sent to offshore tax shelters where the rich and multinationals pay not tax and tax cuts for the rich.
This story is a diversion so that people do not stay on the pages which matter.
30th Jun 2017
You're talking about 2 issues here, which are both relevant as to why young people are disenfranchised:
"The tax subsidies going to multiple house ownership and speculation are frankly ridiculousl but still the governments do nothing." and
" money being sent to offshore tax shelters where the rich and multinationals pay not tax and tax cuts for the rich."

These 2 points are not mutually excluding. Why can't you both agree?
2nd Jul 2017
The solution just might be to tell the truth - that our generation struggled to buy humble homes and worked hard to pay them off at hideous interest rates, and vast numbers of us couldn't even hope to finish school let alone go to university - free or otherwise. We started work at 15 and slogged away in poor conditions at lousy pay with little or no superannuation. We didn't know what an overseas holiday was, and restaurant dinners were once every few years. Buying coffee at $4 a cup? Not likely! Many of us did it very tough - and it's time the SPOILT BRAT GENERATION were more truthfully informed. They have had it VERY EASY by comparison. Home ownership is tough? Yes, but no harder than it's ever been. Those who work hard and save still buy homes. My Gen-X children own multiples and so do most of their friends. Unlike my partner and I, they have enjoyed financial help from parents and they can look forward to an inheritance.

I am heartily sick of the whinging and whining of a generation who have had it far too easy and have no appreciation of the struggle older Australians have endured.

These Grattan Institute idiots need a swift kick in the behind and a lesson in respect and appreciation. I wish they could experience real hardship. THEY ARE SCUM!
2nd Jul 2017
The saddest fact of this report is that starting this kind of intergenerational war is guaranteed to make conditions in this country far worse for ALL generations.

There is only one solution, and that is to pull together to identify and fix the REAL problem - that of gross and increasing inequity and a flawed taxation system. Stop attacking older Australians and start correctly identifying greed and selfishness as the problem and addressing that, and recognize that vast numbers of older Australians are suffering just as much if not more than any of the younger generation.
29th Jun 2017
With respect, I was addressing the report and the response to it. You are talking about another can of worms. It will take some very brave people and ten or twenty years to sort that one out.
29th Jun 2017
Perhaps a small group armed with guns could walk into Parliament and say they want to run the show??? Been done, though...
29th Jun 2017
Tell both those jokers above to have a shave and I might, just might, take them seriously, IF they represent the GI
29th Jun 2017
Nah - I represent The GU - The Great Unwashed...
29th Jun 2017
trebor we have known that for a long time, congratulations at last you haven woken up to that fact
29th Jun 2017
Back to school for you, heemie - You need to re-do Sustaining Subtlety 101.
29th Jun 2017
As long as State and Federal governments insist on sending jobs that could be fulfilled by Australian companies here,overseas under the pretense of getting it done at a better price, we will always have an inter-generational war. There is a need to fix the economy and this must start by producing more Jobs for Australians and Australian companies. For each job that goes overseas there is a huge risk that our ability to manufacture and design new technology will fail. The cost of losing these companies will result in the Governments and state governments of the day picking up the bill to support all those who are unemployed through no fault of there own. It will see more people loose everything not only there jobs but there houses reposed by the banks and eventually their marriages and family breakdowns. Where will the government get these kinds of funds to repair what will be multiple problems encompassing not only financial but social and mental health etc. We need to start to put Australian products first and get rid of the level playing field that only Australia seems to have been sucked in by. Lets start by putting Australians first and all try to pull together. This includes our elected politicians yes I say elected by their constituencies not by the party power echelons. Lets start by moving away from the party politics and give our politicians a free vote on every topic instead of being forced to tow the party line after all they are there to represent their constituents and should be answerable to them as to how they vote. Lets not end up having another world war to fix the problems.
30th Jun 2017
Any government of any level that continues down this path is ensured of future self-destruction and destruction of the society/nation/economy in which we all live.

Taking away the opportunity of the majority to earn a viable income, that will produce a minimum level of lifestyle and opportunity to own a home etc, and to live at a level at which expenditure will take in more than the basic of life, will guarantee that the vast majority of small businesses will go to the wall, and the majority of of the ordinary people will go with them.

The end result will be a nation riven by deep divides, with a massive criminal parallel world (not underworld - a necessary adjustment in lifestyle is not 'under' anything), and a brutal and heartless life for many. The end result of such division of society will be civil war of one kind or another.

Greed is NOT good - it is destroying this nation and its people, and unless those people put a stop to this at the ballot box*, the future is dire for the many.

(So now I find myself in the position of Winston Smith in 1984? The only hope lies with the proles... sure it does .. but Big Brother will watch over them so they'll be fine.).
30th Jun 2017
Absolutely agree with you, Aussie, regarding the destruction of jobs here and outsourcing, indeed the need to have Australia First in every aspect.

Add to that, the need to limit the foreigners (mainly the Chinese millions) buying up Australian property and driving up prices - also a serious issue in many Western countries.

No option but to VOTE OUT ALL SITTING MAJOR PARTY MEMBERS, as they are not listening.
Kane Jiang Retirement Planner
30th Jun 2017
I don't feel such sentiment, not in Perth anyway. Most people I know, including my clients, tend to help each other out intergenerationally. Houses here are not as expensive in Sydney and Melbourne too I guess. Many of my older clients help out their children financially and also by helping out looking after the grandchildren (some over and more than necessary I think). And yes, there are a lot of younger generation who are not used to the concept of savings (they had a good recession-less childhood) and I guess it is pretty hard to do so when credit cards being advertised at 0% left right center in all the media all the time. And only a few years later when they realised that 0% are not always 0% (and hopefully at that time their FIFO jobs still have not disappeared).
I think financial literacy need to be taught at early school. And more courses on entrepreneurism in any types of industry teaching should also be made compulsory. We need to prepare the young for the future. The future with less job security, therefore the need for financial literacy.
ex PS
3rd Jul 2017
It's all Right Wingnut hype, they will do anything to take attention away from the fact that they over promised and under delivered with their election lies. It's the old don't look at how we are mismanaging the country, look over there, at the problem that doesn't really exist.
At least they have at last given up on the it's all the previous governments fault ploy.
3rd Jul 2017
Generally speaking, the Boomers have inherited both the effects of their preceding generation and may well be considered (by the current mob) to also be the cause of their present "hardships". Whether seen as right or wrong is largely a matter of perspective - Boomers undoubtedly inherited some negative issues and have questionably dealt with them - equally questionable is whether gen Y are, in fact, the universal axis around which we mere mortals rotate, perhaps they need a subtle reminder that all things being equal then it's now their problem to both prove themselves and deal with their own
inter-generational inheritance. Poor loves, can hear em now - 'what about me, ...' ?
4th Jul 2017
Maybe we should hope that the ''youngens'' do kick this government out. Maybe us oldies would do better then? This mob sure aren't doing anything for the ''oldies''.

Here's an idea. How about instead of ranting here we all write personally to John Daley and EDUCATE THE IDIOT! He needs to be told what life was really like for our generation. For a start, how many of us got ''free university education'', as opposed to how many couldn't afford to finish school? How easy was it to buy a home with 18%+++ interest rates?

Let's write to Daley and ask him some hard questions. Tell him to pull his head in and deal with FACTS instead of FICTION. Tell him to tell his ''youngens'' to stop the restaurant dinners and $4 coffees and overseas holidays and they will have no more difficulty buying homes than we did. We did it THROUGH SACRIFICE AND SAVING.

Send copies of your letter to the Treasurer and PM and tell them its time to sack Daley and his useless bigoted lying crew and deal with facts and reality. The only thing making life harder for the younger generation is their own expectations.
4th Jul 2017
I know quite a lot of Gen Y and younger and oddly I can't find a single one who isn't either living well and paying off TWO homes, or holidaying overseas every year and eating out at least four nights a week (or both!!). They all have nice clothes, new cars, expensive cameras and electronic and communications tools, and spend up big on entertainment and liquor. And they will all eventually inherit a substantial sum from parents and/or grandparents. But yes, they do all whinge and whine incessantly. Put simply, they are spoilt brats with outrageous expectations, and they are totally ignorant of the struggle their parents and grandparents had to acquire homes. But although they complain constantly, I don't know any who indulge in this ''intergenerational war'', fake or otherwise. They generally want to see improvement in their own circumstances, but also in the circumstances of others of all ages. I can't find a single one who thinks their situation could be improved in any way by depriving older Australians. On the contrary, most want their parents and grandparents looked after well - and most are smart enough to understand that they will retire one day and the changes that impact on seniors today will hurt them tomorrow.

I think Daley is an idiot who needs a good swift kick in the behind and to be sacked. He's doing no good for any generation, must less the nation, and he's seriously ill-informed, irrational, illogical and uneducated about life and history. He's a danger to society.

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