To be a Prodigal’s Favourite—then, worse truth,
A Miser’s Pensioner—behold our lot!
O Man, that from thy fair and shining youth
Age might but take the things Youth needed not!
—William Wordsworth “The Small Celandine”
The 1973 Charlton Heston film Soylent Green depicted a dystopian future in the year 2022 whereby old people had reached their “used-by date”. They were processed into a green biscuit, “soylent green”, to supply food for the younger generation. You didn’t have to care for the old—you just ate them!
Ten years later another insightful film, The Ploughman’s Lunch, depicted Jonathon Pryce as a journalist, clawing his way to the top, totally indifferent to the plight of his ageing, helpless parents. This lefty film was meant to be a comment on the selfishness of Margaret Thatcher’s Britain, but on close examination it has much in common with Rudd’s Australia.
When confronted with the question as to whether they could survive on a single-person’s retirement pension of about $280 a week—with an almost Marie Antoinette flourish, the Prime Minister and his Deputy, chose, instead of “let them eat cake” the more contemporary aside, “some are doing it tough”. A more honest answer, and one closer to the truth, might simply have been, “Tough!”
Now, following the Wall Street meltdown and the fear of a local economic recession, the Rudd government is going to make a special one-off payment to pensioners ($1400 single, $2100 for a couple) just in time for Christmas. Labor ministers are urging the recipients to spend it all quickly. This is hardly the actions of a compassionate government endeavouring to redress a social injustice. Rather it is a shallow exercise in using retiree pensioners as a means of “firing up the economy”.
The aged must be thrilled to find out that they are still of use to the nation, even if it is just as a cog in the machinery of economic rationalism. As one minister pointed out, the move gets extra cash into the economy and gets the pensioners off our back until next July. Brilliant! But where’s the justice, or reform, in that?
Today we are experiencing a decline in the way retiree pensioners are perceived in society, and the right they have to expect a “social dividend” from the stable and wealthy society that they have, through their working lifetimes, helped to create. There appears to be—from certain academics, journalists, bureaucrats and politicians—an attempt to deny the right of the elderly to a fair and reasonable retirement pension.
The current wails of woe circle around a dubious dictum, or fallacy, that Australia can’t afford the cost of an ageing population. In a recent article in the Australian, Jeremy Sammut, from the Centre for Independent Studies, claimed:
“The old age pension system was not structured to replace the earnings people forgo when they retire. It was designed to provide a safety net for those who have failed to provide for their own retirement.”
He went on to say:
“The expectation, in other words, has been that people who are retired or about to retire should have provided for themselves during the 30 to 40 year span of their working lives by purchasing their home, by accumulating assets and by investing and saving.”
Sammut further claimed, “it is essential to keep the pension at the present rate to discourage people from trying to shift the cost of their retirement on to others”.
It is interesting to look at the key words in the two preceding paragraphs: safety net—failed to provide for their own retirement—should have provided for themselves—shift the cost of their retirement on to others.
At this point it is worth examining a few aspects of what is going on in this Orwellian debate. Australia is a commonwealth—the implication in that word is that the wealth of the “public assets” of this country is owned by all of its citizens—hence, “common wealth”. It is also a given, or it was a given, that part of the taxes collected during a person’s working lifetime went towards the payment of a future retirement pension.
While no separate trust exists for pension moneys to be accumulated (unlike other nations) the inference in the Australian Constitution was certainly that the Commonwealth government enact laws to provide retirement pensions. This started in 1908. It is not a “poor persons’ pension”, nor a “destitute persons’ pension”—it is a “retirement pension”. The key is age: at sixty for women and sixty-five for men.
In examining the shift of status of pensioner retirees from respected “elder citizens” to “a drain on future generations” it is worth looking at the use of the weasel-words involved. Somehow in the last decade or two the retirement pension, disability benefits and unemployment benefits became a “single item” in the jargon of government bureaucracy and “ministerial budget fiddling”. Somehow the three merged to be commonly referred to as “social security payments”.
In truth, the aged retirement pension is an “entitlement”. The disability pension is a “safety net”, and the unemployment benefit is a “handout”. Citizens of Australia have a claim to the “safety net” when disabled and a “handout” when they are unemployed. Retirees have an “entitlement”, restricted only by an asset and income test.
In stating that pensioners have failed to provide for their own retirement, Sammut plays games with both words and figures. A large proportion of today’s retirees would have started their employment at age fifteen and would have had a working life of fifty years (for men)—not the thirty to forty claimed by Sammut. Few would have been professionals or bureaucrats, so the chance of receiving a fat government or company-subsidised superannuation benefit was, until recently, almost non-existent.
But all this actually avoids the intriguing question about this business of a commonwealth. And that question is: “If a proportion of a citizen’s taxes go into the general accumulation of ‘Commonwealth assets’, surely their ‘financial interest’ in those assets continues after their retirement?” In other words, citizens become “shareholders” in the national assets that they have helped to create. And a citizen’s “shareholder interest” in those valuable assets continues while they are still living.
Commonwealth assets include physical items like highways, airports, public buildings, land, warships and Canberra—indeed tens of thousands of items of Commonwealth infrastructure. State assets such as hospitals, schools, roads, bridges, railways and rolling stock, and buildings, are all assets mainly paid for by taxpayers during their working lives. Similarly, local government assets are mostly created by citizens paying rates and taxes. Retiree pensioners continue to pay council rates after retirement.
An idea of the size of the potential “public assets” in local government alone is something in the order of $227 billion. In 2001 the replacement value of just New South Wales “road assets”, which includes highways, state roads, traffic facilities (2780 signals and 300,000 signs) was $39.6 billion. The total value of assets owned by federal, state and local governments comes to about $1,285 billion, which according to the nice lady at the Australian Bureau of Statistics who watches over such things, is a very much “undervalued” estimate. How do you value things like national parks and intellectual property, such as the law, which doesn’t come cheaply?
So to answer Jeremy Sammut’s issue of pensioners “shifting the cost of their retirement to others” perhaps Sammut might better ask, “What is the existing working population (particularly the younger set) doing about paying for the use of assets provided to them by the retired generation?”
A classic example of this question, and the younger generation’s attitude to the elderly, appeared on the ABC’s Q&A program recently. A young member of the studio audience, Michael Jossum, asked:
“There has been some talk of raising the aged pension this week—and if you raise the pension now it means slugging people like me with high taxes for the next fifty years. Shouldn’t people be taking responsibility for their retirement income?”
Michael, who appeared to be a bit over twenty years of age, might possibly answer this question: Does he think it fair that as a young person, he can go out and buy a car, then use, without question, $39.6 billion worth of public roads and highways in New South Wales, without having paid a cent towards their capital cost?
Michael’s question drew a response from a Q&A panellist, Tim Wilson, from the Institute of Public Affairs. Wilson appeared to suggest that the aged pension was a “false promise of socialism”. Now this creates an interesting question in what is a complex moral and financial issue. Is the wealth (assets) created during the past fifty years by governments investing citizens’ taxes in Australia’s infrastructure, owned by “the state” (as in countries like China, Cuba, Vietnam and the former USSR), or are we a commonwealth, in which the assets are owned by the nation’s citizens? Are we just functionary units of a soulless state or are we all “shareholders”? If we are shareholders, aren’t we entitled to dividends?
Wilson’s reasoning seems to be slightly skew-whiff. If Australian citizens are “shareholders” in the national assets of their nation, then a fair dividend in the form of an aged pension would seem to be a absolutely capitalist concept; as far away from Wilson’s “false promise of socialism” as you could imagine.
Much of this new attitude to the elderly can be found in the daily press with not-so-subtle words aimed at attacking retiree pensioners. George Megalogenis in the Australian likes to use expressions like “the grey lobby” and “big-picture handouts” as though retiree pensioners were some sort of street-corner beggars. His use of expressions like “appease pensioners” is a loaded phrase with all the connotations of the 1930s “appeasement” of Hitler.
A striking comparison emerges when comparing pension benefits between “the bloke down the street” and say Commonwealth Members of Parliament like Peter Costello, who for eleven years controlled pension outlays. Costello will retire on about $170,000 a year. A single aged pensioner will get a bit over $15,000. That is $3270 a week for the former Treasurer compared to $280 a week for a single retiree pensioner.
Fully aware of the increasing drain on Commonwealth budgets, Costello created the $50 billion “Future Fund” as a quarantined trust for future public servants’ superannuation payouts. The fund contains the proceeds from the sale of, you guessed it, Commonwealth assets like Qantas and Telstra. Perhaps there is an explanation of why Commonwealth assets can be sold to guarantee bureaucrats’ pensions, yet aged pension entitlements are somehow “a drain on the next generation”.
Complementing the wails of anguish about increasing payments to the aged are the accompanying shrill cries about the aged living longer and incurring additional health-care costs and straining government budgets—and therefore having to be supported by current and future taxpayers. All this has the smell of freshly baked soylent green biscuits. Little consideration is given to the hundreds of billions of dollars of health-care infrastructure that has been provided for and is available to the younger generation courtesy of the previous generation of retired taxpayers. The major advances in medical science and technology didn’t come flying in from outer space. We have these things to hand because previous taxpayers paid for them.
With the October meltdown of superannuation funds and the thud of the unexpected it might be time for a re-assessment of the aged pension as a valued “social contract” rather than the negative “drain on young taxpayers” that it is now promoted as being. Perhaps it is time to raise the issue as to who the real “freeloaders” are, and send in a bill?
It does seem incredible that much of the “chattering class” can busy itself with causes like illegal immigrants, gay marriage, abortion, feminist insecurity, curtailing exotic weeds and the need to stop the tails of Jack Russell terriers being shortened—yet remain silent about the needs of the most vulnerable members of society. Enjoy your ploughman’s lunch. A biscuit, anyone?