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.
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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