Considering the rights of aged pensioners
All too often, the rights of aged pensioners are overlooked in what is sometimes a callous and cynical political game.
For the residential care system - high and low intensity care, there is already an urgent need for reform. This paper, however, will survey the plight of those aged Australians not yet in residential care, but struggling to “make do” in the broader community.
Whether dependant upon the Aged Pension, or otherwise supplementing this with continued paid work even beyond the official retirement age, these Australians deserve security, comfort, dignity, social engagement and purpose. Many services and allowances should be made available for elderly Australians after application of a generous and fair means test.
We will consider some of these - one at a time - leading towards the conclusion of this paper.
Choice in work and retirement
To begin, Australia should not respond to the ageing of our population by raising the minimum retirement age beyond 65. Indeed, it would be preferable to set this threshold to 60 years for both men and women. After 40 years - or more - in the workforce, it is reasonable that elderly Australians be free to pursue their passions. This is especially important in cases where that work has involved drudgery.
That said, many elderly Australians, given the choice - and the incentive - would continue work. For some, work does provide social engagement and connectedness; as well as opportunities for self-expression, purpose and personal development.
Providing tax and welfare incentives for continued work can provide an element of choice. The existing Pension Bonus Scheme is an important move in this direction, but ought to be more generous at the time of its inception. However, Combined Pensioners and Superannuant’s Association Policy Co-ordinator, Charmaine Crowe, has identified a number of problems with the program.
At first payments are minimal: $1,373.80 for the first year. Thereafter payments increase more steeply: $5,495.10 for the second year; $12,364 for the third year; and $21,980.40 for the fourth year. After five years payments reach is $34,344.30. (These calculations apply only in the case of singles. Rates for couples can also be found here.)
Such provisions may provide reason for pensioners to continue work long beyond the official retirement age. But there is an argument to be made that the process is discriminatory. Perhaps the payments should be more evenly spread, providing a more immediate incentive.
In correspondence, Ms Crowe also raised concerns about the severity of the income test for working aged pensioners.
To begin with, the current fortnightly income test for aged pensioners “kicks in” at “$134 a fortnight” after which 40c in every dollar is taken from the pension. As Crowe argued, “they take two steps forward and one step back”.
Most elderly people have difficulties in finding work. And with a means test so severe as to provide a crushing deterrent - even the prospect of casual work is substantially less appealing.
Compared to the preferential treatment of superannuation, treatment of earned income via the Pension Bonus Scheme - is not generous enough over the first couple of years. And for those attempting to supplement their pensions with earned income, the regime is punitive.
Superannuation also, more generally, reproduces class stratification in retirement - yet does not provide security for retirees in the event a financial crisis such as the one we are facing now. There is an unreasonable element of risk. A fully public pension fund scheme could address these issues.
Quality of life for every pensioner
There are many other essential issues regarding the rights of aged pensioners - and the support they deserve - so that each may enjoy true quality of life.
As noted earlier, support should be provided for all pensioners - in particular aged pensioners with generous but fair income and assets tests.
To begin with, quality heating units and air-conditioning should be provided for aged pensioners, and installed free-of-charge. These units need to be safe and energy efficient. During winter, in particular, elderly Australians are at risk of contracting pneumonia and similarly, air conditioning can be of critical importance - especially in light of the extreme weather seen in Melbourne and Adelaide at the time of writing. Failure to provide essential heating and cooling has the potential (quite literally) to be a matter of life and death.
Mobility is also a core contributor to quality of life, including the vital area of social engagement. Free public transport for these men and women must be provided while taxi vouchers ought to be provided where public transport is not a reasonable option.
Imposts upon those least able to afford …
With the increased costs of living, aged pensions should also be raised to ensure that none of these citizens live in poverty.
In some states, construction of private infrastructure will see an explosion of costs into the future. In Victoria, private tollways already provide a significant imposition.; while there is an increasing cost for water - supposedly to “send market signals” - in the context of drought and scarcity. Such measures, though, could hurt those most vulnerable.
The proposed desalination plant in Victoria is one such example. Peter Ker, writing in The Age reported that Victoria’s water retailers were set to double the price of water by 2013: with a decision being made in 2009. Yarra Valley Water, for instance, will charge its customers - on average - “about $585 per year”.
Such factors as this make plain the need for reform not only of aged pensions, but of all pensions.
Reform of pensions
There are a number of streams of thought on the reform of the aged pension. The Greens have for some time been arguing for “an increase of $30 a week” for the unemployed and for carers - and also for aged pensioners.
Drawing on last year’s figures, such a move would bring single aged pensions up from $562.10 a fortnight to $592. However, there needs to be a specific and persistent formula to make sure pensions keep up with the cost of living.
The Council On The Ageing (NSW), for instance, is calling for single aged pension payments of 35 per cent of male average total weekly earnings (MATWE). Specifically, the citizen’s representative group has developed a new “Cost of Living in Retirement” benchmark, which would translate to $750.60 a fortnight for singles, and $1125.90 a fortnight for couples. Alternatively, the Combined Pensioners and Superannuants Assocation, has made the case for a more tightly targeted regime of assistance “to be paid to around 1.5 milllion pensioners with little or no additional income”.
More specifically, the CPSA has argued in favour of an extra $80 a week for single pensioners who do not have additional income. These pensioners are those who would otherwise have insufficient income “to purchase essential goods and services”.
Finally - in the past, the author has made a personal call for a rate of 30 per cent of the male average total weekly earnings for single recipients.
Today, this would amount to $674.52 a fortnight. Rates for couples could be set at 90 per cent of the full single rate for each recipient. (for a total of $607.86 a fortnight each). This proposal is a more modest compromise for the time being.
Importantly, such reform could be implemented alongside the CPSA’s proposal for targeted supplements.
Even here, though, such redistributive measures could well necessitate tax reform. In the context of a devastated revenue base, and a ballooning deficit, there is little option. Many part self-funded retirees have lost an enormous portion of their income with the crash of the share market, and the rapid decrease in interest rates.
In addition to targeted supplements, reform in this field needs also to be accompanied by an easing of means tests at the lower end of the scale.
All such demands are achievable given the political will and decency of our politicians.
Importantly, by redistributing wealth within the economy, there would be no resultant drop in aggregate demand. If anything, those on lower incomes spend a greater proportion of their wealth. As a consequence, such measures could even increase demand.
Labor holds primary responsibility as it is in government. But Malcolm Turnbull, also, has sought to make political capital from the plight of aged pensioners. Instead of calling for tax cuts, perhaps instead he should “put his money where his mouth is”.
Other factors in achieving dignity, comfort, purpose and social engagement
Support for carers needs to be increased substantially so as to provide - where appropriate - a viable alternative to admission to nursing homes. Such support should be especially generous: given that it would ultimately save money which otherwise would be devoted to more intensive and costly professional care.
These reforms should be sufficient to ensure that pensioners not in care do not suffer malnutrition. But for those - for whatever reason - who are unable to shop for their own groceries - continuing support is necessary for “meals on wheels” programs. And here, there is need for thorough-going quality control.
To further ameliorate the stress faced by pensioners simply trying to survive and maintain some basic quality of life, more generous subsidies could also be provided for water and energy.
Health care, meanwhile, should be made available to pensioners with genuine need with no effective discrimination on the basis of wealth and class. As such, the Pharmaceutical Benefits scheme should be strengthened such as to improve affordability for aged and disability pensioners.
Housing stress and social engagement
According to Charmaine Crowe, more than 500,000 age and disability support pensioners “rent in the private market”. Many of these are suffering “housing stress”. In some cases, Ms Crowe has “spoken to pensioners paying 70 per cent of their income on rent”.
Furthermore, according to the Department of Health and Ageing, in 2008 “close to 6,000 people aged 65 years or more are homeless.”
With Prime Minister Kevin Rudd promising $6.6 billion on 20,000 units of “social housing”, surely much of this should go to the most vulnerable in our community.
Then there are other - generally under-appreciated issues - that are also central in maintaining quality of life. For some, educational grants could be provided. This could include anything from Higher Education, to “Neighbourhood House” programs.
For some this could provide a means of re-entering the labour market. But the aspect of social engagement, or even simply the motive of human development, is more than enough to justify such measures.
In a similar vein, “community circles” should be fostered to help prevent elderly citizens “withdrawing” from social life.
And a modern program to eliminate poverty must also consider the need for social activity, and inclusion in a digital age - in pace with ever advancing standards and means of communication. Fast internet access is today a central need for most Australians, pensioners included. Calculation of such costs needs to be factored into any attempt at setting a benchmark against poverty.
Finally, for those who are capable or interested, gentle fitness activities should be encouraged - and provided free-of-charge, for example, water aerobics.
A broader crisis - not only the aged pension
Of course, there is a crisis faced by all manner of pensioners - not only aged pension recipients. Areas of concern include: the aged pension, disability support pension, single parents pension, carer’s allowance, Newstart and Austudy.
As Australia is drawn into the global fiscal crisis, and the resultant recession, the most vulnerable should not be made to pay the price through austerity. Formulae need to be developed to provide for the needs of pensioners “across the board”.
If need be, taxes should be raised: to provide decent and just pension rates, tax rebates and supplements for low income earners, and the construction of major infrastructure projects that will drive quality of life and productivity into the future.
During the Great Depression of the 1930s many had to line up at soup kitchens. Desperate battles were fought against evictions, and unemployed workers were exploited for a miserable and threadbare sustenance. But now, in 2009, we need not make the most vulnerable pay for a crisis brought on by greed, systemic failure and the ill-informed ideology of neo-liberalism.
Austerity for vulnerable pensioners must not be an option. Yes, there will be need for sacrifice. But assuming real social solidarity, despite the depth of the crisis, the kind of human misery of the 1930s need not be repeated.
The author would like to thank Charmaine Crowe from the Combined Pensioners and Superannuant's Associaiton (CPSA) for her assistance with research. The CPSA website can be found here: www.cpsa.org.au