Pension without politics

At Budget time every year, and at every election, Australia’s Age Pensioners take an unwarranted political and social pounding.

They are accused of being an intolerable burden on younger taxpayers who are concerned that most pensioners may be welfare cheats.

The cynical aspect of it all are that their accusers are mostly tax evaders who constantly cry out for more corporate welfare such as tax cuts, subsidies and low interest rates.

Nevertheless, the fact is that the Age Pension today amounts to a payout of 45 billion dollars a year, a figure that will double by 2030 as more Australians grow older and take a lot longer to die.

The question for us all is how we finance it without sending oldies to the gas chambers as some fascists would like to do.

We can start by taking an objective look at the current situation and work out how to turn it into a positive.

The Age Pension is indisputably inadequate, very close to the poverty line, and has been for a long time.

In September of this year, in attempting to have our nation face this issue, I was part of a team that prepared a report on THE ADEQUACY OF THE AGE PENSION. We presented our findings to the Press Club in Canberra where it went nationwide on ABC and Sky.

It was the result of a partnership of the Longevity Innovation Hub (that I chair), the Benevolent Society (Australia’s oldest charity) and Per Capita (an eminent think tank).

Part of our research involved holding focus groups across the nation where ten pensioners would meet for two hours to discuss what they actually spent daily, weekly, monthly, annually and what necessities they could not afford. It revealed a totally different result to that which is achieved by Treasury when they base their pension calculation on a number of economic indices. Older people have costs that others do not have.

Our quite definite conclusion was that the Age Pension must rise, but its size must cease to be the political decision that it has been since it was created in 1908.

The prime recommendation of our report was that legislation be passed to create an Age Pension Tribunal that would be totally independent of political pressures and whose determination of the amount of the Pension could not be challenged by Parliament (in the same manner as the Parliamentary Salaries Tribunal).

Parliament would retain the power to determine who is eligible for the Age Pension. It would also have the power to sack the Tribunal at the end of its term, while the enabling legislation can require the Tribunal to hold formal meetings with the Treasury, Reserve Bank, Treasurer and Shadow Treasurer prior to making its determination every year.

Crucially, the Tribunal would be required to carefully relate its determination on the impact that it will have on superannuation,  other savings and mature age employment and comment on this in their report. Above all, it must strive to create a situation where pensioners are not penalised for having saved diligently during their working years, as disgracefully occurs now.

All of this will mean that the Pension will cease to be a political football that demeans and humiliates Pensioners and drives a rift between the generations.

It will mean also that the Government of the day can’t be attacked by the Opposition for being mean or generous to Pensioners. The Tribunal takes the blame.

More importantly, the sum that it determines can provide a benchmark against which other pension payments and welfare transfers are calculated.

Some misinformed critics will say that the cost of the Age Pension is so great that no government could possibly agree to losing control of it. But, the fact is that the Pension has been an indispensable part of national life for a century and will be for the next thousand years. It must be accepted as an unavoidable cost just like the repayment of loans and interest. We must stop agonising about it year by year and allow the Tribunal to announce the figure six months before Budget Day.

A vital reason why the Pension must come out of politics is that there is no such thing as an average pensioner. Some are frugal, some not, while some are good money managers and others are not. Some enjoy good health, but many don’t. Far too many don’t own their own homes and many don’t live near essential services. Economic indices can’t cover any of those issues, nor will political ideologies.

The Age Pension is quite clearly long overdue for change and the challenge is not an insurmountable problem. It can be financed easily if all evaders pay their taxes and negative gearing is abolished as being ludicrous middle class welfare.

Australia is one of the most prosperous nations on earth with a hard working, intelligent work force who do not deserve to be demeaned in their twilight years. They most certainly should not have such a low pension that they have to choose between food and medicine which so many do today.