Monday, 14th April 2014

IN FOR THE LONG HAUL

The belt tightening is underway. It will be made official next month, if the annual pre-budget speculation is anything to go by. Of all the signalled cuts, those to the ABC and to the aged pension have attracted the most attention to date.

Joe Hockey is not the first to suggest that the retirement age needs looking at again. In 2009 the Rudd government implemented a set of changes over the medium term that will mean 2023’s retirees need to be 67 rather than 65, which had been the retirement age since just after Federation. Now all the talk is about pushing retirement even further out, to 70.

There are a few schools of thought on this. The rationalist school, from which all of the talk emanates, looks at the forward estimates and sees a Big Problem. When the retirement age was set in 1909, life expectancy for workers was well under 65. Now, it’s over 80. On this view it makes sense to ask people to work longer and rely on the public finances for shorter periods.

Paul Keating laments that it’s got to this. His plan was to shift the nation’s main source of retirement income from consolidated revenue to superannuation, by raising the superannuation guarantee to 15 per cent of annual earnings by 2002. But John Howard’s government reversed those measures in its first budget, entrenching a 9 per cent superannuation guarantee for an extra decade and costing the overall asset base half a trillion dollars. 

On the other hand, Alan Kohler has declared the whole superannuation industry to be a kind of unregulated swill, and plenty of analysts have pointed out compulsory superannuation actually costs more than publicly-funded pensions for most workers.

Still others are suspicious of the need to target the retirement age at all. One economist this morning favours targeting wealthy retirees’ asset bases. And many suggest that the much-claimed "budget emergency" doesn't really exist.

Government budgets, in the end, are about priorities and underlying philosophies. Expect all philosophies to get an airing in the next six weeks.

Russell Marks
Politicoz Editor

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Pension changes would break Tony Abbott's election pledges, says Labor

"Treasurer Joe Hockey has sent his clearest signal yet that the government is considering raising the pension age in the looming budget in an effort to put commonwealth finances on a more sustainable footing. But the shadow families minister, Jenny Macklin, on Friday pointed to the numerous times before last September’s election that Tony Abbott had promised not to touch the pension."

Also: The generous history of pensions (Alan Kohler, Business Spectator)

AndWhen is an election promise not an election promise? (The Vine)

Demand driven university funding system should stay

"The government should remove enrolment targets for university students from low socioeconomic backgrounds and remove the cap on student fees, a report says. The post-election review of Labor’s policy, which allowed universities to set places based on demand, was carried out by former Howard education minister and Grattan Institute board member David Kemp and his former advisor, Andrew Norton."

Also: Demand driven university funding system should stay (The Conversation)

Chinese troops could train in Australia

"Chinese troops could end up exercising alongside the diggers in Australia's north, perhaps even in conjunction with US Marines. Prime Minister Tony Abbott raised the possibility in the final press conference of his north Asia trade trip in Beijing, declaring these issues had been ‘well and truly discussed’."

Also: Barnaby Joyce will oppose asset sales to foreign government-owned companies (The Guardian)

Tony Abbott slumps in polls despite best week yet

"A record high vote of support for the Greens and a slump in support for the Coalition in regional Australia has left Tony Abbott's seven-month old government trailing Labor by four points after preferences, for the second time since being elected."

Also: Greens benefit from main parties' unpopularity (Michael Gordon, The Age)

Where's my ladies at? Tony Abbott searches for female delegates for photo op

"We've lost all the female members of our delegation" (Tony Abbott on footage shown on ABC TV's Insiders)

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