Unsurprisingly, the release of the government’s discussion paper on the pension system has prompted calls for immediate action. Perhaps the opposition were all waiting for Godot Costello somewhere because The Greens appear to have been first out of the starting block, with Senator Rachel Siewert calling for an instant $30 increase and damning “yet another review”.
The discussion paper emphasises the fact that 77% of Australians over 65 rely to greater or lesser degree on income support. It also highlights the fact that on current projections, the percentage of the population over 65 will rise from 13% now to 25% by 2047. Few aged pensioners currently supplement their income with paid work, but that can be expected to increase, and there may also be debates about the age cut-in as the labour supply situation alters and health outcomes improve. Because the income support system costs 6.8% of GDP, its sustainability is very relevant, and increases are also very expensive because of the very large number of recipients. The paper also considers those on Disability Support and Carer pensions, where the issues are different for many - with fewer having substantial assets and more receiving some income from paid work.
While the Labor Party has indicated - both in policy and in post-election statements - that increases to pension levels are planned, and it’s an objective I support, I don’t think a particularly responsible attitude towards policy reviews is to effectively ignore them and call for immediate action without actually identifying either where the money comes from or responsing to the policy issues raised is awfully helpful to anyone. For a start, it won’t happen, so it’s effectively political posturing. Secondly, the government faces some degree of political risk any time it does start a relatively open ended policy process. It’s designed to deliver better outcomes, but I’m sure that it’s not universally popular within the Labor Party precisely because it seems - on the evidence so far - to lead more to political flak than to genuine consultation. Enjoy it while it lasts, would be my advice.
Thanks for the link Mark. One of the interesting stats I read in here is that 18.6% of aged pensioners are living in the private rental market. Now that’s gotta be tough as you age and with rents getting higher. I can’t imagine being 80 and having to find a new flat to live in Sydney in the current rental market.
What I find hard to understand is how so many people got to this situation? If people need a pension to live society should definitely pay them enough to live off. However most of these now pensioners grew up through a time of much lower house prices (compered to income) free education etc….how could u not amass enough $ for your old age? i know there were recessions etc, but just form a purely house prices you would think that they could have afforded over 30-40 years of work to buy a house and save $.
Virtualkat the data I gave was for single pensioners (it’s lower % for couples). And if you drilled down I bit, I reckon you would find a much higher proportion of women. In my experience this reflects family breakdown, lower earning potential even in a time of boom and that sort of thing. I don’t think anyone planned ahead to end up on the private rental market after retirement and probably would have done anything they could not to be in that situation.
Angharad puts his/her finger on it: the private rental market is mostly to blame here, and it’s not just hurting pensioners. Housing has become a ridiculous Ponzi scheme.
A lot of the pensioners worked in low-skill blue collar jobs, harder to save.
Government could surely increase rental assistance while awaiting the full Review?
My 87yo Mum lives comfortably on her pension in her own house.
Yet if you go looking at studies of hardship most age pensioners aren’t poor, and most of the poor aren’t age pensioners.
Frankly, if someone gave me a few billion dollars to address financial hardship in Australia I reckon I could get much better bang for the buck by spending it on other things than raising the base rate of the age pension. After all, that rate is now 25% higher than the rate of YA and Newstart that students and the unemployed are expected to live on. And the gap is increasing.
As for affording aging, as usual most of what journos write about this is crap. Of the 6.8% of GDP on social welfare, just over half is age pension (the rest is mostly family payments and disability pensions; things like sole parent pensions and unemployment payments are relatively small beer). According to Treasury’s (pessimistic, IMO) projections, we’ll be spending about 6% of GDP on the age pension in 2050.
Sounds horrible, doesn’t it? Except that it is less than the US is spending now, and is less than half of what some European countries are spending now. And these same projections imply that future taxpayers will have twice the incomes of today’s. Funding the Australian age pension is a non-problem.
Which of course cuts both ways. We can, if we wish, afford a much more generous age pension. It’s just that I reckon there are currently greater needs elsewhere.
But can we do something for those aged pensioners who aren’t doing well, such as those in private rental? Why not target an increase?
I look at my parents, who own their own home and have a mix of pension and investment and to quote them, “we’re rolling in money”.
But others aren’t so lucky.
dd - I agree - affording the elderly is not a problem and if prejudice against employing older people declines it will be less of a problem. In addition the next waves of elderly coming along will increasingly be compulsary super cohorts.
The trick is how to support the elderly to live healthily and with a modicom of dignity without any schemes just turning into a subsidy for their kids post carking it. After all it isn’t Brian and Jane’s fault that at 84 yo their paid off home is worth $300,000, but they are depending on the pension of around $270 a week, to pay rates, repairs, power bills , phone, and eat, because they didn’t have super and used their cash to educate their kids Fiona and David.
Fiona and David in their knowledge worker jobs will collect $150,000 tax free each when the parents go.
I can’t see why we can’t have a simple HECS system for retirement. At least for home owners it would make life easier for everyone.
Francis Xavier: just trying to figure out what HECS stands for…. Higher Enjoyment Carking Scheme?
Has Enyone Copped a Subsidy.
Hooray Everyone Can Save!
How Even Conmen Starve.
I feel a ‘pensioner pension pensees’ competition coming on….. and that’s a worry.
“penurious” has to get a guernsey somewhere.
yes: “penurious, affluenza, amortised, malnourished, disposable, charitable foundations, liquidation (of assets, not old folks); equities, equitable, succession planning; governance, nuanced.”
Derrida at #6 - a couple of years ago the Victorian government, having noticed much the same thing about where the areas of disadvantage were, decided to direct some assistance away from pensioners and towards other areas of need (the most visible example being to increase the % concession on car registrations, but require pensioners to pay the concessional rate instead of getting it free as had previously been the case). Predictably the pensioners screamed blue murder and those who benefited from the change didn’t notice.
ambig - Home Equity Cashin Scam
virtualkat - pre superannuation perhaps it was more widely accepted that the aged pension was most people’s retirement plan. Also people are living a lot longer past retirement age these days - there’s probably a need to look at moving the official retirement age upwards.
Francis - people do have access to reverse mortgages if they want to.
Once they’ve used up capital in their house, then they should be able to access government pensions. I’d also support the reintroduction of inheritance taxes (I think they also encourage philanthropy), though most people I’ve talked to about it seem very strongly opposed to them.
chris - reverse mortgages are in most cases a trap for old players. We’ll soon see a clutch of whinging 50 year olds complaining on 4 Corners about how they were diddled out of their Miele kitchens, holiday houses at Lorne and windfall inheritance due to rapacious banks after mum and dad pissed up the reverse mortgage at the casino or on Hillsong and Benny Hinn donations.
However a few banks have products were they will buy a share of the property say 50% and take the principal and a cut of the gain when you cark it. Far better than reverse mortgages where interest and principal accumulates. They will only do them on suburbs witha proven record of rising values. No good for Hoppers were house prices have fallen over the last few years.
A HECS type scheme run by the Feds would be simple and fair and pay for itself.
chris and yeah - pre compulsary super only a few lucky public servants had super that was enough to live on. It is legitimate to claim the pension was the plan.
Angharad at #3 is right; it’s mostly women in this fix and it’s not just because of family breakdown (though that is part of it) — it’s also partly because (statistically) women live longer than men, so quite a lot of these people are widows, as I heard being discussed this morning on ABC radio.
But it’s also, and perhaps more so, because even many of women still in their 50s, much less women over 70, are old enough to have grown up in the expectation that they would be financially supported by their husbands and provided for if said husbands died before them, and that they would not do paid work after they married (which in those days it was fairly unthinkable not to do). Don’t underestimate either the belief that prevailed till well into the 1960s that it was somehow shameful for a man not to be able to provide for his family and for his wife to ‘have to work’, or the inferior jobs and pay that were all that was available to most women, or the prejudice against ‘career women’, that all dominated mainstream Australian thinking in the same period.
Otherwise most Australian women over 40 have throughout their working lives done bits and pieces of part-time work in between having children, work that was wretchedly paid and largely categorised as casual, in a work culture hostile to parenthood, with minimal provision for worker luxuries — as they would have seen it — like superannuation. Either way, these are women who have had zilch opportunity to provide for their own old age either through super (not available) or through personal savings (no money of their own because hubby earned and controlled it all).
Superannuation in Australia as we understand it now is something for which we can largely thank Paul Keating, and if the policy had been followed through as he envisioned it, things would be significantly better now for the elderly than they actually are, as I think he pointed out himself somewhere the other day.
Francis - a HECS like scheme may not significantly cheaper nor necessarily pay for itself. The government certainly doesn’t want to be in the position of selling people’s houses under them when the amount they have borrowed (including interest) exceeds the value of the house because they have lived a lot longer than expected - so there is a risk there. And if its going to pay for itself, the interest that people pay will have to be set a bit higher to compensate.
I don’t have much sympathy for people complaining their parents spent their inheritance. They should be the ones helping their parents in their retirement if they need it anyway.
PC, did hubby spend it all before dying? Or did he leave it all to the kids? Either way, he sure was a bastard.
Anyway, you can’t seriously be suggesting that the current elderly would have been signficantly better off if super had gone from 9% to 15% over the course of 1996 to 2002 (let’s say). Think about the numbers we’re talking about. And Keating didn’t point out what you think he pointed out.
BBB
chris - your are right -no government would be silly enough to be in the position of trying to claw back money in 10 or 15 years or so from educated middle class 50 year olds after the old folks have shuffled off.
heheh hahah
You’re dreamin’ - most would “voluntary euthanase” the oldies quicker than you can say probate before they would put their hand in their own pocket.
“Superannuation in Australia as we understand it now is something for which we can largely thank Paul Keating, and if the policy had been followed through as he envisioned it, things would be significantly better now for the elderly than they actually are, as I think he pointed out himself somewhere the other day.”
The Paul K hope was possibly that it would take the pressure off the pension outlay. A big dream, I think. For not one moment, has he acknowleded how ‘down the drain’ many funds have gone, for the casualised OR part time.
His plan was always designed for the preferment of the older style regular workforce. He was bad on the detail.
Many poorer people spend far too much time telling the super company that they do not need another report when there is only a dollar in the account.
BBB — Wow, that didn’t take long. I was counting down till someone got stuck into me for praising Keating and there you are like clockwork. Nice to know the predict-o-meter still works.
By ‘it all’ I take it you mean the lavish savings that, as we all know, most Australians have over and above the family home, even after being depleted by a possibly protracted final illness and death, and that will keep widows in clover for another 20 years? Pffft.
Re Keating I am indeed perfectly serious. I can’t speak for the current elderly, not yet being a member of that class myself, but as a woman who had the great good fortune to have excellent super from 1985-1997 thanks to the university that employed me, I compare my own situation now with that of other women my own age and am staggered at how badly off both of my sisters and most of their friends are in respect of super, savings and property. I assume that if they had had the kind of super Keating had in mind, ie the kind I had just for a mere twelve years — the same interval of time as that between 1996 and 2008 — they would now be significantly better off than the $270-odd pw on which single pensioners are currently living. So yes, I am claiming that the effects would already be being felt. By ‘current elderly’ we may be talking about anyone over 65; if they’d been getting 15% super since 1996 and retired last year — well, look at the numbers yourself. I’m talking about ordinary people here, not people on five-figure incomes.
There are also the many imponderables of what is or is not expected of one as a woman in contemporary Australia, much less the Australia of the 1940s-60s, but another slugging match so soon about society, gender and culture isn’t anything I want to participate in, much less start.
Nor can I speak for the current elderly’s ‘hubbies’ in general or indeed mine in particular, having got rid of the only one of those I ever had (I’m a one-hubby woman and I’ve had mine, thank God) as soon as his general uselessness became apparent.
Its a bit odd that the retirement age for women is lower than for men when they live longer. Perhaps it should be set as a percentage of expected lifespan?
That would be a pretty rare situation though wouldn’t it (superannuation starting in 1985 for either men or women)? There were a few voluntary schemes around, but most people would have chosen to take the cash instead.
I think you’d be talking about a pretty small number of women. Given the lower retirement age and the extra superannuation payments don’t come out of nowhere, so probably would have been in lieu, at least partially, of wage rises and tax cuts.
I think thats being a bit unfair to hubbies - traditionally they might have controlled the finances, but at the same time many were also very seriously concerned about how their wives were going to survive after they had died.
And a great pity that is. How do they think their children are going to treat them when they need help after seeing how their grandparents were treated?
“BBB — Wow, that didn’t take long. I was counting down till someone got stuck into me for praising Keating and there you are like clockwork. Nice to know the predict-o-meter still works.”
I’m always happy to oblige, PC. I have a similar countdown, although it might be more properly described as a law. It goes something like this: “As an LP comment thread progresses, the probability that some hopelessly doctrinaire lefty will praise the great neoliberal reformers Bob Hawke and/or Paul Keating approaches one.” I must say, in this case it took a lot longer than I thought. So there you go, I am exceeding expectations, while you are falling a little short.
Question: don’t you feel a little uneasy that PJK effectively privatised the national pension system and effectively turned the whole population into sharemarket gamblers? Yikes!
BBB
Effectively.
BBB
BBB, there are plenty of people who would question my status as a hopelessly doctrinaire lefty or indeed any other kind, so it may be that your law has not quite yet kicked in. Most “genuine” “lefties” despise both Hawke and Keating as far too right-wing. And it may surprise you to learn that there were/are some things about PJK that I think were/are just wrong.
Different Chris — won’t go too far into these issues except to say that I’m not saying it all would’ve been rosy in the garden if PJK had got his way re super, just that it would have been better than it is. Agreed re the retirement age thing, which I think may be a hangover from the idea that women are more fragile tender plants than men, not unlike the three-sets-for-women rule in tennis which I also think should be abolished.
That my super situation, modest as it is (and getting modester by the day. Market goes up, market goes down; avert one’s eyes and wait, I say), is relatively rare was precisely my point — most women my age will be (even) worse off than me when we’re all reclining in the Sunset Lodge communal TV room on moth-eaten rugs made of crocheted squares, eating Home Brand tinned spaghetti and dribbling it down the front of our polyester tracksuits. Oh dear God shoot me now.
I agree that many hubbies were seriously concerned about the welfare of their wives in widowhood, but the women we are talking about are precisely those whose hubbies were not. I wasn’t indiscriminately hubby-blamin’, just tracking the path to old age of those who have ended up on a single pension.
Yeah, I do take it back, PC. It was an unfair characterisation.
BBB
“As an LP comment thread progresses, the probability that some hopelessly doctrinaire lefty will praise the great neoliberal reformers Bob Hawke and/or Paul Keating approaches one.”
Given that of all the LP threads currently listed under “Recent Comments”, this is only one that even mentions Hawkie or Keating, it’s hard not think of your law as more of a fable.
“not unlike the three-sets-for-women rule in tennis which I also think should be abolished.”
Hmm, I have a different take here. I reckon it should be three sets for all sexes in all ATP tournaments except the Grand Slams where it should be five sets for all. Like the difference between test matches and one dayers.
Also I suggest they should be allowed to use two rackets at once on court at Roland Garros.
Well bugger Keating / Hawke / Howard or any other Prime Minister in the last 30 years I’ve missed, exactly none of them did anything much about ensuring aged pensioners had somewhere decent to live. Granted, Whitlam had a bit of a go when he drove reforms in public housing because the Ronald Henderson found old people were in housing stress.
You know, we don’t necessarily have to solve that exact problem through raising the pension. We could invest more in public housing (where 9% of single aged pensioners live) or spend more on some other form of subsidised rental targeted specifically towards old people.
DD point me to these studies you mention “Yet if you go looking at studies of hardship most age pensioners aren’t poor, and most of the poor aren’t age pensioners.” The data in the Pension report has nearly 30% living in private rental or public housing. And you are telling me they aren’t poor?
It’s not lower, I don’t think. That is to say, since 1994 there has been no compulsory retirement age because it’s illegal due to anti-discrimination laws. So anyone employed since then in a job that came under the federal jurisdiction can work til they drop if they want and they have a permanent job. The female pension age was progressively raised to be 65 in steps. I forget when it became equal, but it’s in the relatively recent past.
As to PJK, in around 1987 or 1988 when he was at the height of his Treasurial powers you’d have found it very hard indeed - in my experience - to find any ALP members at all who would have had a good word to say about him. Sure, things changed when he became PM, and the ALP has also changed to the degree that it hardly has far fewer members who aren’t careerists or wannabe careerists, but the silliness of equating Labor and the left should be obvious. It only became a reflex habit a few years ago - I think it can be traced back to terminology that became common in the US via the influence of the blogosphere and the transfer of that terminology to this country via the culture warriors.
I certainly don’t regard the ALP as a left wing party in any meaningful sense.
And people who don’t think Dr Cat is right about the degree of female poverty in old age should consult almost any available published research on the question from almost any source.
Btw, there are lots of younger people who have quite poor prospects for old age. I’m 40. Now, it’s true that I made a choice not to do the public service job for life thing (and I had the chance), but having pursued the career I wanted to get into, for most of the time any contribution made to my super was the 3% minimum to casuals in the award - I’ve only ever had a total of 15 months on contracts providing for 17% super as opposed to sessional work in research or teaching - which is casual work (supposedly!)… I hope to catch up, and the average age in 2002 when people first got a permanent position in academia was 39 and I doubt it’s much lower if at all now, but I’m resigned to working for another 35 years or so if I’m able to. I’m also thinking that I should get into the housing market because of the 25 year loan thing so I don’t face the rental in old age thing. Of course it’s possible that I might make more than I’m expecting, but I’d be silly to count on it.
Now you may well say - hey, but not everyone wants to be an academic and spend years in insecure work and accumulating degrees. Sure! But there are tons of Gen X kids whose working lives coincided precisely with the big clean out of safe full time jobs in clerical, labouring, retail, banking, etc. who’ve only really got on track in the last few years because of a more bouyant labour market. But our entry into the workforce coincided precisely with massive structural upheaval in the labour market and the waves of downsizing and casualisation that accompanied the job losses.
Then there’s a very large cohort who never really got attached to the labour market at all in the early to mid 1990s.
Nabakov, the law merely asserts that there is an increasing probability that praise of Hawke and/or Keating will be forthcoming as time passes. It does not assert that each LP comment thread will in fact contain praise for Hawke and/or Keating. This is why the probability “approaches” one, as opposed to “reaches” one.
BBB
I defy you to find more than a few instances of praise for Hawkie on this blog, BBB! We have some standards around here.
“This is why the probability “approaches” one, as opposed to “reaches” one.”
Well then you could say the same about the likelihood of a Tim Blair thread ending up as a Susan Sontag lovefest if it goes on long enough.
But hey that’s OK. We all say stupid things from time to time. God knows I have. It’s just that on this damnable blogsphere, it all ends up your permanent record.
And I bet you can’t find any on the fabled Missy Higgins thread, nor yet on the more recent Norks Thread of Doom.
Nabakov, it’s a simple reworking of Godwin’s Law. You’ve never heard of it? Tim Blair and Susan Sontag, now that is stupid. Mark, Hawke usually gets a run, if at all, in general “if it weren’t for the Hawke/Keating reforms, we’d all be stuffed” terms. He’s a bit player in this because he doesn’t get himself in the news every six months and doesn’t publicly use words like ‘nong’. PJK is way ahead on that important metric.
BBB
2005 I think it was when it became equal. But many of the pensioners would have retired quite a bit before that. And although it wasn’t compulsory people did want to retire and many took the first opportunity to do so. The age cut off itself was a signal to people that they should consider retirement and the aged pension was there to support them.
Yes, Chris, but getting back to what Dr Cat was saying, the pattern of female employment hasn’t been long term employment followed by retirement. Note also in the executive summary of the report the large number of people going straight from other benefits to the aged pension.
One valid criticism that can be made of Keating’s claims now about the super issue as a universal income panacea for old age is that it’s still far too work centred and based on false assumptions about continuous, secure and full time work being the norm. In effect, it’s either a middle class white collar or an old fashioned blue collar norm - and much more relevant to men than women. Women of all ages are far more likely to be in casual and part time work than men, and to have longer periods outside the workforce.
Still too many middle class assumptions!
There were a lot of female clerical workers in their 40s and 50s for instance in the public and private sectors who were displaced and involuntarily “retired” in the 90s through downsizing and technological change who in many cases ended up on unemployment or disability pensions waiting for the day when they would get an increase in payments through turning 62 or whatever. There was a lot of focus on male blue collar workers in a comparable position, but I can assure you this isn’t an insignificant cohort.
Mark - I agree - one reason I think its important to try to keep women in touch with paid employment while having children, and to encourage even single parents into paid work when their children start school.
You do have a good point about a casual and part time workers - it makes it even harder to save up enough for retirement. Super isn’t the panacea, but it was probably the easiest and most effective thing to do and I would welcome any increase to the compulsory contribution component even if it came at the expense of wage rises or tax cuts.
I think we have done a big disservice to those who get retrenched in the 40s and 50s and not putting enough effort in retraining or even getting them into lower paid work than they were in before. At least then they would have had some super contributions for their retirement.
Yes, me too, Chris. I don’t buy the more grandiose claims Keating made - via David Love as his amanuensis in Unfinished Business - the book that came out last week - ie would make us the financial powerhouse of Asia, insulate us from global economic trends etc. But it - or something with a comparable outcome - does seem to me to be a worthy way to go for basic social reasons.
The 90s was a very tough period for a lot of people. An unfortunate confluence of the old labour market for many people disappearing before the new had really established itself. So as I’m suggesting, it radically reduced the life time earning potential of many who couldn’t effectively enter the labour market at the time and of those who the labour market discarded.
Basically, I think it needs to be realised that it’s not just that baby boomers will be reaching pensionable age without adequate super - there will be many others reaching pensionable age later on for whom we are going to have to collectively pay the costs of not doing “structural adjustment” at all well in the 1990s. Keating is partly to blame for this, but Howard is possibly more so - on the demand side for labour - because of the mass dismantling of training programs and disinvestment in voc ed that occurred in 1996.
“now that is stupid”
Well you started it with a wild freewheeling assertion which you then quickly qualified out of statistical probability when called on it.
Chris (a different one), we can increase the SG to 15%. But it would be shockingly regressive. It would amount to a new 6% payroll tax, smashing low-paid workers either side of the margin. A possible solution is to cut company tax at the same time (although not all employers are corporations, so there would still be employment effects). This would effectively privatise the current budget surplus, or at least a substantial part of it.
BBB
BBB, this isn’t a polemical question, but:
Where’s the evidence that there were employment effects when compulsory super lifted to 9%?
It may be, as I’m suggesting, that there were no such effects because low paid jobs were rapidly being casualised at the time, but I’m interested as to whether you’re basing the comment on evidence or assumptions.
Incidentally, the fact that an awful lot of low paid workers are casuals - and only entitled to 3% super - is one big reason why Keating’s scheme in its current form wouldn’t necessarily benefit the people most in need of it.
Mark, clearly if you make labour more expensive it will be purchased in lower volumes. This is why not even the ACTU wants the minimum wage raised to, say, the average wage. It’d be a disaster. Similarly, but to a lesser extent, a new 6% payroll tax (on full-time workers) would hit workers who are on the cusp of employment, or on the cusp of unemployment. I don’t see how that could be controversial. The original SG was phased in during the recovery from the last recession, so it was no surprise that unemployment dropped at the same time. A cynic might suggest that it was a very good time to introduce a payroll tax where the proceeds were privatised within the funds management sector.
It’s interesting that you mention casualisation. Did it ever occur to you that casualisation was, to a large but not exclusive extent, due to labour market regulations that made full-time employment less attractive from employers’ perspectives?
BBB
I’m not sure what you mean there if you posit a direct causal link. The big increases in casualisation came after regulatory restraints on it were removed by the Workplace Relations Act 1996. That suggests that those employers who went down that route employed a labour utilisation strategy that suited their conception of their best interests (although often it works against people’s actual interests in terms of turnover, knowledge base, loyalty and indeed productivity in terms of effort made), not necessarily that it was cost driven. Sometimes employing casual labour is just as expensive if not more expensive - the on costs in an accounting sense aren’t all that different in a practical sense, and there are other big costs associated with turnover and training to mention just some.
That’s a generalisation that has some truth but it’s not the absolute law you think it is. A lot more factors into the price of labour rather than supply and demand, and it’s better - when working with the labour market as it is rather than economy wide modelling (which usually fails to find the effects predicted) to think of it as as a series of quite sticky and overlapping sub-markets subject to a lot more factors other than both the macro-economic “big picture” and the ostensible rational calculation of individual economic actors.
BBB - I don’t think the extra 6% needs to come from employers. Eg a portion of future wage rises and tax cuts could go to superannuation instead, which is basically what Labor has suggested with a mix of employee and government contribution. Its very nanny statish, but I think its clear many people are unable to save unless forced to do so as the temptation to spend now is too great.
Mark - yes and people need to understand when contributing to super now when times are good that they need to put away extra voluntary contributions to compensate for the future when they may be out of work.
I’m quite sympathetic to the current retirees and those retiring soon as the situation was quite different throughout their working lives with a much higher expectation of government support. Those in 30s/40s now though should know better.
I do think that casuals should get full superannuation, perhaps some compromise could be done so its partially funded through lower hourly rates and partially from employers.
One of the reasons for compulsory super, Chris, was that the psychology of “will have to retire one day” doesn’t really kick in for a lot of folks til their mid to late 30s.
Plus if most of your work is casual or short term contracts, any saving you do really has to go into tiding you over the times you have no work or less work.
I think Nic Gruen may have even written on super in his “default settings” suggestions. That is wage rises automatically flow to increased super by default unless the worker actively opts out and you could make it an opt out each year.
Only compulsory super really works as there are times in most peoples lives when cash right now is more important to feed kids, tide over while looking for jobs and such.
Mark, I was merely posing the question about casualisation. I am not asserting a causal link, although it is plausible in my opinion. When did the 9% come in? You would expect a casualisation effect to become apparent only when the differential between full-time and casual SG rates was sufficiently large. Was this around 1996? Turnover/training is a real cost, but I suspect businesses more easily overlook those kinds of costs than they do fairly direct increases in wage costs under the SG.
“That’s a generalisation that has some truth but it’s not the absolute law you think it is. A lot more factors into the price of labour rather than supply and demand, and it’s better - when working with the labour market as it is rather than economy wide modelling (which usually fails to find the effects predicted) to think of it as as a series of quite sticky and overlapping sub-markets subject to a lot more factors other than both the macro-economic “big picture” and the ostensible rational calculation of individual economic actors.”
Look I agree with this. The labour market is different from a market for the supply of goods or services. It has a much higher degree of stickiness, as you call it, at least in the short-term. But it is not so different that it can defy the laws of supply and demand in the medium or long terms. The effects may well be very marginal. But then it doesn’t seem so marginal to those actually at the margin.
BBB
By the way, Mark, here is some Centre for Workplace Culture Change (no idea who they are) material on casualisation growth rates that doesn’t really gel with the idea that the WRA reforms were responsible:
“Official statistics confirm the substantial size of the casual workforce in Australia. According to the conventional ABS measure, persons who were ‘casual employees’ or ‘employees without leave entitlements’ in their main job numbered over two and a quarter million (2,239,900) in August 2003, and they represented 27.6 percent of all employees (or around 23.6 percent of the total employed labour force). (1) Most important, the official statistics also point to a trajectory of strong growth or casualisation. Thus the number has risen from 850,000 persons or 15.8 percent of all employees in 1984 (see Figure 1). The rate of growth was most powerful in the 1980s and early 1990s, but it has slowed down in the period of employment growth since the mid-1990s, just keeping ahead of the expansion in other forms of employment.”
http://www.accessmylibrary.com/coms2/summary_0286-6599772_ITM
BBB
If memory serves, BBB, the 9% came in in 1995? Ish, anyway.
Re - casualisation - there’s a nifty table (I) in this paper - which is for the period 88-97. It’s true that casualisation didn’t take a massive upswing from 96, but it looks to have taken a jump upwards (particularly for males), with an earlier jump associated with the early 90s recession.
http://www.oesr.qld.gov.au/queensland-by-theme/economic-performance/labour/research-papers/casual-employment-aust/casual-employment-aust.shtml#Casual%20Employment%20in%20Australia
Note that the paper suggests that the variables most associated with casual employment are size of firm (positive) and unionisation (negative). De-unionisation was certainly one of the aims of the WRA, but it picked up on a trend in management strategy that had been there previously, and I think I should have been clearer in suggesting that what was disctinctive about the WRA changes was the new possibility of the “full time casual” which makes a big difference when we’re talking super. That’s what I was getting at in terms of “big increases” - it’s a different measure - of hours worked. You’ll have to forgive my imprecision of language at this hour! And I should have emphasised more the accentuation or legitimation of what was underway anyway. Apologies!
Note also - re the previous discussion - the fairly constant disparity between % of the male and female workforces in casual employment.
No problem. All we need to find now is a survey asking casual employees whether they want more hours, and for the responses to be presented on a male/female basis, and we’ll know the extent of the problem you and others have identified. It’s too late for me I’m afraid.
BBB
Well, too late for me, too, BBB, and there are such surveys around but you also need to ask people whether they’d prefer permanent part time or full time work and not just more hours, otherwise you don’t get an accurate picture.
In terms of the other problem I identified - that is lots of people in the 90s exiting the workforce or only being insecurely attached to it - which I’m also arguing has a big impact on current and future retirement incomes policy - I suspect you’d need a research grant or at least some serious time because you’d need to bring together a lot of longitudinal data sets. But you can get there less exactly looking at unemployment data disaggregated by length of unemployment and age and gender from the 90s. Anyway, depending on the timeline I might do a submission urging the gov’t inquiry to take a look at it, and maybe produce a paper on it.
“Plus if most of your work is casual or short term contracts, any saving you do really has to go into tiding you over the times you have no work or less work.”
Indeed, Mark. And for that reason, I wonder whether it would actually be better to allow people in those circumstances to cash out their super immediately, rather than having it locked away till retirement.
There is one big problem with super for casuals. Even if it were raised to a higher % rate than it is now, it would still represent a relatively small amount, generally speaking, compared to what full-time permanent workers are accumulating.
Which means that super fund management fees will have a disproportionate impact on casuals. The annual fee may be capped at a maximum equal to the annual growth of the amount invested — but that means, with a relatively small amount of super earning 0% per annum, it’ll be worthless by the time I retire.
So, let me have the money in my pocket right now, I say! That way I can pay off my credit card (charging 18%) sooner.
My mother recently retired (aged 67) on a pretty healthy super (very much helped by Howard’s last budget (and she probably voted for him too, but we can’t help that)). She had absolutely zip at aged 48 due to a nasty divorce, and hadn’t had paid work in 25 years.
Went back to Uni, got a job, invested in super (with additional contributions, being a commonwealth job), geared herself and took advantage of property boom, and is now sitting pretty.
The point of this tale? Dunno. But she wont be getting a pension or asking for handouts.
Francis @50 - agreed, most people will always find a reason to need the extra money now - even if its just so they can stretch a bit further to get the house they really want. Compulsory saving is the way to go even if its suboptimal for some.
Paulus, those are reasonable points, and casuals would be well advised to ensure insofar as they’re able that their money goes into an industry rather than a private fund, but I don’t think the fact that the earnings of casuals will typically be lower is necessarily a justification for not increasing the rate - at least from 3% to the standard 9%. By necessity, some will end up with higher super than others because some earn more than others. Obviously super is not going to end up being a panacea for everyone, but that doesn’t mean we shouldn’t maximise its impact.
I’m not with you on withdrawing super. I could use mine to pay off my credit card debt too, but I’m sure that would be against my long term interests. There are existing provisions to allow people to withdraw super if they’ve been unemployed for longer than 6 months.
“DD point me to these studies you mention “Yet if you go looking at studies of hardship most age pensioners aren’t poor, and most of the poor aren’t age pensioners.”
Try this, or this. Or this or this. I don’t have time to chase up more, but I could.
Most studies do indeed find that it is private renters (not so much public ones, whose hidden rental subsidies are pretty generous) doing it tough. But if age pensioners privately renting age pensioners are doing it tough, imagine how a privately renting disabled person who’s not quite disabled enough to make disability pension is doing - as I noted, their base payment is only 80% of the age pension. Then there’s all those poor buggers - mostly young - who can’t even get in to the rental market.
Look, I’m not saying that age pensioners are all living in clover (though suprisingly many are). I’m just saying that an increase in the base rate is a very untargetted way to help them, and that in any case there are large groups who are, on average, doing it a lot tougher than age pensioners.
I’m not going to get into arguments about compulsory super, except to say I consider it the biggest public policy disaster in Australia since WW2. And foreseeably so.
Could you explain why, though, dd? You’ve been asked a number of times on the previous thread.
I don’t share - as I said - all the hyperbolic claims that PJK has made for it - but I can’t see how it’s a “disaster”.
And what about WW2 was such a policy disaster?
[grammatical ambiguity joke - requires no response]
FDB, I’ve been thinking about this comment ever since you made it. I don’t know how serious you were, but if you really meant this then I think you must know some truly awful people. I know a lot of people in my own demographic (early-mid 50s) and I can’t think of a single one of them who has not kept a careful eye on the health and well-being of their own parents, in many cases including financial support of some kind or other. It’s true that almost all of these people get periodically exasperated with whatever remains to them in the way of parents, for reasons I’m sure everyone can imagine, but there are none who would neglect them or let them live in physical discomfort or financial worry, much less rip them off.
Whoa there Prof Pussy!!!!
Whoa!!!!
My parents are a couple of top-notch peeps, whom I owe a great deal more than they could possibly afford me in death. I’m currently extending financial support to my Lady Friend’s disabled folks. I’ve got one grandparent left, who is still the rallying point for that entire side of the family. My maternal grandmere dropped off this time last year, and I still choke up on thinking about her going down so slow and painful.
You must have me mixed up with another FDB.
FXH, FDB, what’s the difference?
BDX
PC that was FXH
I’m just getting over my outrage at being confused with FDB - the shame. I cannot tell a lie - PC it was me. I don’t mean everyone is selfish but a bloody lot more than I would like to think are.
As far as I can see all my friends would or already do physical caring and financial caring for their parents and relatives. I cared for my father (sadly I’ve already lived longer than my mother did) and other friends have thrown in careers to care for their parents. But its by no means as common as one would wish.
I have experience in aged care on the organisational side. I have seen enough to know that while I support Voluntary Euthenasia for my own sake/life I’m very, very cautious about how it should be framed in light of my experience of how things work in the world.
A middle aged daughter abusing staff and demanding that her mother’s account be used to reimburse the first class airfare from Sydney plus hotel costs to visit mother in Nursing home, a son constantly ringing to ask if mum has been to bank and has cash, daughter asking “Surely the doctors have got something to fix her for good” when the person is only old and frail not suffering.
I could go on with tales of family members standing over and threatening elderly for money, not visiting or caring and then breaking in and rifling through the house before the funeral, commandeering the car and of course giving the biggest wreath and best speech at the funeral.
I could go on but a bunch of first hand anecdotes do not nake the best evidence and I might be judged cynical.
There are lighter moments:
recently a friend’s mother had earlier mild dementia as well as being frail and had to go into care. She was happy and largely with most faculties working about 80% but at times would be anxious. She rang my friend a few times and slowly the story came out that a man was entering her room at night and frightening her.
We went over and spoke to staff. They hadn’t seen or heard anything but would pay extra attention. We then had another big chat with the mother.
The full story was the guy would come through her window most nights and stand naked with a full bottle of Johnny Walker in his hand. He wanted her to have some whisky and he wanted to get into bed with her. He frightened her because everyone knew she never drank. Other than that he seemed nice.
We didn’t call the police. But had a full medication etc review. She was found to have a urinary tract infection. When it was fixed she calmed down and the man never appeared again. Most people don’t realise but urinary infections in the elderly, especially women, can cause all sorts of powerful symptoms which thankfully often disappear on sucessful treatment.
Some references for those interested:
Acute confusion in elderly persons, especially those with dementia, has a wide differential diagnosis. The most common causes are infection (principally respiratory tract, urinary tract, or skin); new medications; and electrolyte disturbance. http://goliath.ecnext.com/coms2/gi_0199-2386223/Urinary-tract-infections-in-elderly.html
Urinary tract infection (UTI) is one of the most common infections. Women get urinary tract infections more often than men.
Women who have had three urinary tract infections often continue having them.
Four out of five such women get another UTI within 18 months of the last UTI infection.
http://www.racgp.org.au/silverbookonline/2-0.asp
Urinary tract infection in the elderly or in people with Alzheimer’s can profoundly affect, not only their health, but can result in significant behavioral changes.