 Political Corrections
with Margo Kingston
A Super Idea For Golden Oldies
It's been a time bomb issue for ages – fewer and fewer working people will have to support more and more retired people as our population ages. That means higher taxes on the workers, and/or fewer benefits for the retired.
Solutions are varied. Big business suggests a dramatic increase in immigration.
The superannuation industry suggests dramatic increases in compulsory saving for retirement, from the current 9 percent to 15 percent, the minimum required for adequate retirement savings. (The Labor government had that target legislated for over time – The Coalition dumped it.)
The ALP suggests a population policy.
And what does John Howard suggest in his vision statement for a third term? Wait for it – get the elderly to keep working.
John Howard made a meal of the vision thing because, after stating that an aging population was the crucial economic and social policy challenge for the next government, he had virtually nothing to say about it.
He noted that by the time today's toddlers started their own families, the proportion of working age people to retired people would have fallen from five to one to less than three to one.
Yet on superannuation generally, where the government actively discouraged saving in its first term by imposing an annual 15 percent tax on the superannuation contributions of higher income earners, he had nothing – and I mean nothing – to say. 'We don't have a specific plan to lay out.'
Yes, it would be good if Australians put aside more money for retirement, but there'd be no increase in the superannuation levy to make them do it.
No, he wouldn't have a population policy, and no, he rejected increased immigration.
So what's the solution, given that he reckons he won't increase tax, and will cut it when he can?
Imagine a world where people between 55 and 70 kept working? Howard says he'll make it easier and more attractive not to retire, through 'incentives'. There is a vast and growing reservoir of talented older Australians who, 'if given the right encouragement over time', would slow down the impact of an aging population on our economy.
Did he see the irony of that remark, given the contrary thrust of the budget he brought down less than three months ago?
How many people will want to work past retirement given that he gave self-funded retirees a huge tax break – worth $1.2 billion over four years – in the first major discrimination against working taxpayers?
Howard gave self-funded retirees an effective tax-free threshold of $20,000 for a single person and $32,612 for a couple. Why on earth stay working and get taxed more?
And why stay working when Howard's just handed out much greater access to the seniors health card, giving self-funded retirees much cheaper drugs and the $17.20-a-quarter telephone allowance? And when he's lifted the threshold for the Medicare levy for retirees to ensure no tax is paid by singles earning less than $20,000.
You've seen the advertisements telling retirees that if they plan their strategies right, couples can now earn up to $52,000 tax free! How's that for a bigger burden on the ever-diminishing number on working Australians?
Howard's budget made the tax job for working Australians harder now, and verging on the intolerable as the demographics worsen.
Now he says there's a problem he must address. The incentives he'll have to give to encourage older Australians to work longer will have to be huge. And where's the money coming from for that?
Short term politics, long term vision. Credibility zero.
Email: mkingston@mail.fairfax.com.au
Margo's web diary - www.smh.com.au/news/opinion/webdiary/
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