Ignoring the problem of our age

November 11, 2013

By Emily Millane

There’s a simple dichotomy in Australian politics. Progressives care about what’s fair and just. Conservatives care about freedom and efficiency. Different yardsticks for different policy agendas.

In the area of ageing and longevity, the first eight weeks of the Abbott Government have demonstrated a shocking ineptitude in making decisions which stack up against the principles the Liberals went to the election with – efficiency, productivity, and sound economic management. The government is failing its own philosophical test.

Most recently, in a press release headed ‘Boosting Productivity and Delivering Effective, Efficient Government’, the Prime Minister announced the abolishment of the Advisory Panel on Positive Ageing.

The reason, in the Government’s own words, was “to streamline government and reduce duplication where activities are no longer needed or can be managed within existing departmental resources”. Put another way, if it’s not a cash spinner, it’s not worth it.

The panel was six months away from releasing a landmark report on how to turn our ageing society into an asset. How to house a burgeoning older population. How to encourage older Australians to remain productive members of society. A government with a real efficiency agenda would have at least waited to receive the findings of the panel. A government with insight would have understood that the panel’s findings would also have a bearing on economic growth and the fiscal position.

Secondly, Joe Hockey also announced this week that the Government would scrap a raft of announced but unlegislated taxes and superannuation measures – referred to as a ‘backlog’ in the efficiency vernacular. One of these measures was to reverse the Gillard government’s proposed increase on taxation for those earning more than $100,000 of income from superannuation in the draw down phase.

Never mind that this change is regressive. That’s up to people on low incomes or in casual work to figure out next time they see how little superannuation they have and therefore plan to draw an aged pension even sooner. The Government’s reasoning behind this change was to create “operational certainty for businesses and consumers”. However if the whole point of superannuation is greater self-reliance and to lift the burden on the state pension, where is the efficiency of penalising hard working Australians in their ageing years where they are even more dependent on welfare?

By removing the tax on high income retirees, the Government argued it was making an efficiency dividend. However, by removing the tax on high-income retirees, the government diddled itself of revenue at a time when public revenue is in decline. What happened to the budget emergency? As the press release itself acknowledged, not proceeding with this and other measures will negatively impact on the underlying cash balance by $2.4 billion over the current forward estimates period. And that’s just by the government’s own estimates.

Thirdly, in a bookend to this measure, the government is also scrapping the $500 superannuation payment for people on incomes of up to $37,000. People on low and middle incomes receive no concessions to save for their retirement. To return to the government’s vernacular, these people are not ‘incentivised’ to save.

Again, it is stating the obvious that this measure is grossly unfair. It will affect the most vulnerable members of society. However it is those same people who will rely more heavily on the aged pension, public housing and other government benefits if they struggle to save for themselves.

As ABS statistics released this week told us, life expectancy in Australia is the longest it has ever been. Life expectancy has increased more than 25 years since the turn of the 20th century. We will have 1.8 million people aged over 85 in 2050, and one in four people aged over 65 by 2056. Running about scrapping public bodies and fiddling with taxation to serve a small-state agenda is not the way to respond to this inevitable demographic shift. The Government’s inability to accept the gravity of longevity and ageing is of concern to us all, not just for older Australians.

Efficiency is not served by ignorance. Whether it is climate change or ageing policy, the fair and efficient solutions will not emerge by ideology alone. On its record thus far, the Government has failed the fairness test and its own efficiency test too.