Horror cuts to come

The last three weeks leading up to the May Budget feel like Groundhog Day as even more leaked horror cuts hit the headlines. In addition, rumours abound as to the contents of the final report of the Commission of Audit, due for release in the next few days. Yesterday we heard ‘confirmation’ that the Minister for Health, Peter Dutton had signed off on a minimum $6 out-of-pocket fee for visits to the GP. On Saturday The Australian newspaper ‘confirmed’ that the family home would not be included in an Age Pension assets test, as had been rumoured, but that the Government “would, instead, focus on lifting the retirement age to 70”. The same report ruled out any plans to cut the existing pension but said that “consideration is being given to changing the rate of indexation for age pension payments”. So is this a cut which is not a cut? For those who are confused, this seems to indicate that the base rate of the Age Pension (singles, $766 per fortnight, couples $577.40 each per fortnight) would remain the same, but the current system of benchmarking indexed pensions to 27.7 per cent of the male total average weekly earnings (MTAWE) twice per year may be revised, with perhaps a lower measure being applied when reviewing pension increases.

Confused? We don’t blame you.

Read more at The Australian website.

Read more at the Sydney Morning Herald website


Opinion: The real costs of retirement

By now, if you are aged 50 or over, you are probably feeling a drain on the nation’s resources, a burden on the budget, someone who should simply get out of the way so the next generation can come through unhindered by your debt, your waste, your environmental carnage, your tendency to have medical concerns and your total failure to retire on two or three million dollars per year.

What WERE YOU THINKING???

Working for 30 or 40 years, paying taxes, raising your family, funding infrastructure such as kindergartens and universities, roads and airports for younger generations along the way.

YOU SELFISH OLD FOOL!

Couldn’t you see that you and your friends would benefit from medical science, grow older and stick around longer? And that what was once a social security safety net – the old Age Pension – would become an ‘entitlement’ which could be plucked away – or reduced by a thousand cuts?

So the pre-budget softening process is in full swing and if we are told that the age of entitlement is over one more time, we really will have to say the Treasurer is nagging.

So it’s time to allow some facts to get in the way of the great con job currently underway.

Firstly, as noted by the Australia Institute yesterday, there is more than one way to skin a cat. Rather than cutting back on the safety net for the poorest in our society, why not extend this safety net to all – but cut back on current ‘entitlements’ in the form of superannuation concessions which appear to favour the rich?

Secondly, it is worth highlighting the fact that our superannuation fees – that is the money that goes to the Big Four banks and AMP, to a large extent – are the third highest in the developed world – that’s right, apart from Spain and Mexico, we are paying more per head than almost any other rich nation for the privilege of sharing our retirement savings with a large financial institution.

In fact the annual fees on our retirement savings are $18.6 billion – $1075 per head; equal to the annual amount paid out by Medicare on our health bills. If that isn’t crazy, please tell me what is? So let’s say that the Government, instead of pushing 65-year-olds to work for an additional five years – whether in sickness, health, or disability – turned its attention to the real cost of retirement – the fees our financial services institutions are earning. And given there is about 1.7 trillion in investment in superannuation, let’s say we applied a small social security fee – say 1 per cent – to these funds. That would net $17 billion within a year – and soon add up to a sizeable amount that could be invested in a future fund which easily covers universal age pensions until the generation which has had a Superannuation Guarantee Contribution since day one of their working lives hits retirement.

In short, it’s time the policy makers stopped looking only at the poor, the defenseless and the disabled as the easy targets for budget cuts. Any government which is serious about balancing the books needs to look at both sides of the ledger – and corporate profits on retirement savings should be first on the list.

What do you think? Should the Age Pension be changed? If so would you raise the age of those who receive it? Change the indexation? Or include the family home in the assets test?

And are the big banks getting away scot free when it comes to paying their share?

Written by Kaye Fallick



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