35. Age Pensions

Hi. I am Greg and I want to grumble about proposals to raise the pension age.

I am not necessarily against changing the pension age, or tightening some of the restrictions so that we are not subsidising relatively wealthy people, but it is such a mono-dimensional debate.

“Be prepared to work until your 70” the headline says – but what does it mean for people who aren’t working? We already have a real problem of mature age unemployment – people who may have worked for 30 or 40 years, but who find themselves out of work and facing age discrimination in the employment market.

Sure, if you are a CEO, an academic or a highly paid consultant there might be jobs for 60 year olds which value that lifetime of experience, but for many people, if you are made redundant or out of work in your 60s it might be near impossible to get another job.

For those people, raising the pension age is not about the inconvenience of staying in work longer, but living for longer on the much lower unemployment income support rather than getting the higher benefits of the age pension. The difference is about $120 a week in the base rate, so raising the pension age may sentence older unemployed workers to another 1, 2 or 5 years of living below the poverty line.

If we are going to have a conversation about raising the pension age, can we have a real discussion which includes:

• how we are going to change workplace cultures to provide job possibilities for older employees;
• whether we can create a part-time job pathways for older workers to ease into retirement, or to just share work more fairly; and 
• how we can index pensions so that pensioners do not begin to slip backwards relative to the rest of the population – in the same way that those on CPI-indexed benefits like Newstart and Austudy have been left behind.

And finally, if we keep people in work longer, who is going to do the vast amount of volunteer caring and community work that younger retirees do – because there is no doubt that retirees care for grandchildren, aging parents and siblings, and are the backbone of many community organisations?

These are genuinely hard issues. Much easier to just cut benefits to vulnerable people in order to fill a revenue hole at the same time as we cut mining and pollution taxes.

I am Greg and I am grumbling.


This Grumble can be heard online or by podcast.
First Broadcast: 15 April 2014

13. Payroll Tax

Hi, I am Greg and I want to grumble about tax, and payroll tax in particular. Taxes are never popular, but payroll tax is particularly unpopular, being labelled as a tax on employment. However, given that it helps pay for vital state government services, the Productivity Commission speculated that it might be better accepted if it was called a hospital or schools levy.

But in any tax debate, we have to remember that Australia is not a high taxing country by world standards – the 4th lowest in the OECD, and South Australia is not a high taxing state. As a share of the economy, state taxes are about the same as the national average, and per head of population state taxes in South Australia are $300 a year less than the national average.

However, state taxes – especially payroll tax – have long been a bugbear of business and this week the Liberal Party promised a big cut in payroll tax from 2015 if they are elected in March.

I think payroll tax does need an overhaul, but I am not sure I would have done it the way the Liberals have proposed. They are not promising to cut the rate of tax, just to raise the threshold for when businesses start paying the tax. 8,000 more businesses will be exempt from the tax, but any threshold creates a tax disincentive for businesses expanding over the arbitrary threshold. I would have preferred a broader based tax with a lower tax rate for all businesses.

But I also think that simply playing with rates and thresholds is a missed opportunity for tax reform. One of the biggest problems facing workers today is insecure work. Far too many people are struggling on short term contracts or in casual employment. This creates uncertainty and stress for staff, and limits their ability to access loans, housing and to plan and build a secure life. If payroll tax relief is called for, wouldn’t it be better to offer it to employers who offer more secure forms of employment than to employers who maintain workers at the margins but who sneak in under an arbitrary threshold?

Obviously this proposal needs discussion and modelling of its effects – not least because many low paid casuals rely on the loading in their pay to make ends meet. But if we are going to have an election based just on cutting taxes, then I am going to grumble.

And looking at the opening pitches of the election campaign, I am Greg, and I am grumbling.

This Grumble can be heard online or by podcast at https://radio.adelaide.edu.au/gregs-grumbles-13/

First Broadcast: 29 October 2013