On a budget: policy experts share their views

This is the first of our posts featuring 2014-15 budget reactions from policy experts, academics and the community sector. Below, Denis Fitzgerald and The Hon. Brian Howe reflect on critical themes such as health, ageing, and implications for social justice:

‘Solidarity, rather than walls’: Denis Fitzgerald, Executive Director, Catholic Social Services Victoria

An ‘them and us’ mentality seems to pervade the federal budget.  It speaks volumes for our sense of engagement with the world when our defence budget is set to increase by 6% in real terms annually to reach 2.0% of GDP. We are also introducing a border protection force, while our Development Assistance budget will decline steadily as a share of our national income.

Why this national reticence to reach out in solidarity, rather than to build walls?

It is incumbent on those of us who see the world in terms of cooperation rather than barriers to share our vision, expectations and our rationale with politicians and fellow citizens.  Only then can we reduce the levels of fear and unease that our defence budget and immigration policies are built on.

Broader implications of budget have not been considered: Professor The Hon. Brian Howe, University of Melbourne

Intergenerational Reports delivered by successive governments (2002,2007, 2010)  have warned of pressures of an ageing population, which is now more evident than ever as more ‘baby boomers’ retire.  However such reports were intended to scare more than to suggest possible directions of policy reform.

Australia has no plan to address the rapid ageing of our population. Rather than stimulating debate on possible policy options to address the onset of ageing, the Abbott government has included in its first budget measures designed to cut costs:

Firstly by placing a $7 charge on a visit to a Doctor. Secondly replacing indexation of pensions against average earnings, and thirdly by making the age of entitlement for future retirees age 70 by 2035.

Making these changes in a Federal budget without any serious public discussion of policy suggests that broader implications have not been considered.

The co-payment

The rationale for charging a co-payment appears to be to discourage over servicing or unnecessary doctor visits. However, it is well known that, for most part, older people suffer from chronic rather critical life threatening illnesses. Avoiding ‘over servicing’ by GPs should be addressed by improving primary health services, rather than imposing a charge on individuals that will attack the essential simplicity of universal health insurance.

Instead, we need to place greater emphasis on the development of preventative approaches to health care in seeking to build age friendly and active communities. Such strategies are likely to achieve more positive outcomes than deterring/delaying older people from seeking advice and treatment adding to the stresses associated with old age.

Pension Indexation

Unlike most systems in the OECD, the Australian social security system is highly targeted and designed to provide sufficient income to keep people out of poverty. For more than 40 years it has been linked to average male award earnings to ensure that the incomes of age pensioners are maintained at a relative standard to the rest of the community.

Over time, real wages tend to grow at about 1.5% (so that is 1.5% above inflation). Year to year it may not be much, but over a 20 year period it means that something which indexed by average weekly earnings will be 35% larger than something indexed to the CPI.

In the case of Newstart, being only indexed to the CPI, a family 10% above the poverty line in 1991 by 2011 falls to 20% below the poverty line.   It is well know that tax expenditure on superannuation will soon pass total expenditure on age pensions broadly favouring higher income groups.

It would be a tragedy if a country among the wealthiest in the world effectively set a poverty standard for its age pensioners and failed to address the massive inequities present in its excessively generous tax treatment of superannuation favouring higher income groups.

Pension at 70 Increasing the age of retirement

Providing an incentive to employers ($10,000) per employee over fifty is unlikely to achieve any more than a nominal response from employers who may be prejudiced against older workers and perhaps doubtful that they have the knowledge and skills to survive in a modern high pressure and productivity conscious workplace.

It is also very insensitive to the fact for many people especially experiencing great physical demands in work may not want to or be able to extend their working lives.

Of course most people may be living longer and fitter lives but that will not mean they will want to or be able to continue working without significant investment in education and or training or in encouragement to plan earlier for a more extended transition into retirement.  There is apart from the $10,00 incentive payment to employers no consideration ofthe issues that employers need to consider if they are to employ older people such as hours, flexibility, paid or unpaid, especially training (life long learning) and how to give older people choices as to when they work and how they work.

If The PM and the Treasurer had first raised these issues for public discussion and investigation they may have found people interested in how they might come to together to address the clearly serious issues associated with the now more rapid ageing Australian population.

Posted by Pauline McLoughlin