Federal Treasurer Josh Frydenberg has come under fire for comments regarding Australian seniors and the pension. In a speech to the Committee for the Economic Development of Australia, Frydenberg suggested that seniors will have to retrain and work past the current pension age as the pension is costing the economy too much money.
National Seniors chief advocate Ian Henschke says the Treasurer could be unintentionally engaging in ageism by implying the older generation is somehow a problem and a burden.
“We’ve heard this before in descriptions like ‘tidal wave’ and ‘tsunami’. Rather than stigmatise older Australians, we should blame previous treasurers from 1980 who have stood by and watched this happen,” he said.
Aged Care Insite spoke with Henschke to discuss whether those on the pension really are a burden to the economy.
Josh Frydenberg announced this week that he wants people over 65 to retrain and get new jobs and then he described them as an economic time bomb. John Maynard Keynes famously predicted that we would all be working less and retiring early and working fifteen hours a week.
What happened and why are we going to working until we are 70 or 80?
Well, Australians who want to work, should be allowed to work. The problem we have in Australia at the moment is that we have almost got a structural problem with our economy where the consultants come in to workplaces and they say things like chop at the top and grow at the bottom or get rid of your old workers and replace them with younger workers.
Now, that has been going on for the last fifteen or twenty years and, as a result, we have got a real issue and I think that the issue of ageism is one that has to be confronted at a state government level, a federal government level and also in the private sector. It runs through our society and it is the last of the great ‘-isms’ to be tackled. Sexism is unacceptable and racism is unacceptable. But, it seems that ageism, in a way, is acceptable. Although, we would say that it is not, and that is the thing.
We have joined with the Benevolent Society, Australia’s oldest charity, to run a campaign that is called ‘Every age counts’. And I believe that every age does count. We should not be separating older and younger people and people in various age categories.
Everyone has value, everyone has the right to be in the workforce for as long as they wish. But we see things such as state government in particular in recent times wanting to downsize their departments. In South Australia recently, they announced a hundred jobs would go in the health department and they are offering redundancies to the over 50s.
They did this recently with the education department in that same state. I understand that it happens around the country.
You would not accept it as being appropriate policy if we said we are going to offer redundancy packages to all the Italians or we are going to offer redundancy packages to all the people with dark skin or we are going to offer redundancy packages to all the women. But we do think it is acceptable, apparently, to offer redundancy packages to all the people that are over 50 and in some cases, target people over 50.
One of Frydenberg’s arguments is that as the cohort grows, the cost of the age pension will go up, which seems, maybe, common sense, but some modelling quoted in your media release said that compared to twenty years ago, the costs have fallen from 2.9 per cent of GDP to 2.7 per cent of GDP.
So where is he getting his numbers and is he trying to portray seniors as a burden?
Well, one of the issues is that the cost of the age pension in Australia is often used as a reason to say that we have got a ballooning problem, but, in fact the actuarial firm, Rice Warner, who I have a great deal of respect for, put out a paper in 2018 and Michael Wright was the author of that paper. The paper is available online.
That firm looked at the cost, on average, of GDP through Australia and where it will be in future. That paper points out that the generation report of 2002 actually got the figures wrong. It is possible to predict things incorrectly, so we can only just deal with the facts as they stand. The facts, as they stand at the moment, is that the cost for the community as a percentage of GDP, of our pension system in Australia, has actually fallen, not risen over the last two decades.
And common sense would tell you that it is going to be the case because we have brought into the Australian retirement income system the concept of superannuation for all, so that we now have the superannuation guarantee and we also have the ability in Australia to have self-managed super-funds. My understanding is that there around a million self-managed super funds.
We also have hundreds of thousands of self-funded retirees and that number is growing rapidly. Also, the number of people who will be reliant on full pension will decline into the future and the number of people who will be part-pensioners will grow as the number of full-funded has increased.
Michael Wright, in his paper, has actually shown that in 2038, a little under twenty years from now, the percentage of GDP that will go to the pension will be about two and a half per cent. This is far less than other comparable countries around the world. And this was as a result of the Hawke-Keating government, recognising that there was a growing demographic of the Baby Boomers, because we have known about this for a long time. In a sense, the previous government of 30 years ago had the foresight to bring in a superannuation system. Keating always understood that it would be the pension topped up by superannuation.
There have also been changes made to the eligibility of the pension and also the pension taper rates recently, which means that these people are no longer eligible for the pension because they have changed the way that that actually works, so I would say that one of the problems is that it is almost a bit of a urban myth to say that pensions are blowing out over time because the facts do not bear that out.
Of course, there will be costs related to health care and aged care, as we have more people going into their older years. That is not denied, but lumping the older community together as being the burden of society is a form of covert ageism.
We have to be careful when we view people that way because we must also recognise that older Australians do a lot of unpaid work, particularly of volunteering and caring. And, so when people leave the paid workforce, they take up, well, the unpaid work.
So simply saying that older Australians are going to impose a cost on the community is negating the fact that they are great contributors to the community. And, perhaps no more so than in the area of caring.
If those people stopped doing that work and people went into aged care homes, or people who have children who are being cared for who have got disabilities were cared for by the state, that would actually cost a lot of money. So, I think we have got to recognise that it is not a simple equation. Older people are not a cost to the community, because, older people are in fact saving the community hundreds of millions of dollars a year
Older Australians are an asset; they are not a liability.
Frydenberg used the term ‘economic time bomb’ when describing this cohort and we have seen this sort of language, like ‘grey tsunami’ used, time and again. Language from the top used in that way contributes to the larger problem with ageism and I think that it has contributed to some of the aged care problems that we have seen this year. How do we combat ageism?
I think it is very difficult to combat because we have created it through the policies that we have allowed to happen, and if we are going to deal with a problem, you first have to recognise that you have got one. I am not sure that Australians are prepared to confront the fact that they are ageist because it is only when you reach a certain age that you realise that it is actually there and it is happening.
It happens when people lose their jobs, as I have described before, and then you hear of people having to apply not dozens of times but hundreds of times. I spoke to a man yesterday who told me that he knows of someone who has applied for 300 jobs since they lost their job at 59. The ABC has got a story today about a person who has applied for more than 200 jobs as a mature aged worker.
I do not know how to combat this other than to make people recognise that we could bring in policies that stop people being pushed out of work. For example, we should publish the age profiles of organisations, so that they have to reveal what their age profile is. By that I mean if you were working, for example, at a bank, the bank would say what proportion of their employees are between 20 and 30, 30 and 40, 40 and 50, 50 and 60 and 60 and 70.
And then mirror that against the profile of the Australian workforce in general. If they, for example, alert people to companies who have deliberately ageist policies and we call them out. But, the other option would be for the federal government to show leadership as well and state government to show leadership by not having targeted, either voluntary or involuntary, redundancies for people over the age of 50.
Ian, it has been a big year for advocacy in the seniors and in the aged care space. We have heard a lot of the bad. Were there any positives this year?
Well, I think the royal commission and the retirement income review, which are both happening this year, are very positive steps because they recognise that we have got a problem. And if you are going to address a problem, the first thing you have to do is recognise. The aged care royal commission is part of the process of reforming the problem. The fact that the royal commission report was called Neglect, was a very powerful term to call an interim report.
I do not think that we have ever seen such a strong interim report in a royal commission in Australia. Normally, interim reports are not so strongly worded because they are looking towards the final report, but I felt that the aged care royal commission interim report, was a wake up call for Australians and for the government and for the people in aged care, who are working there, to say, ‘You cannot turn away from this problem’.
The retirement income review, which is also going to be looking at the way that people retire in Australia, is also going to have to deal with the fact that we have got hundreds and thousands of people who in their 50s and 60s are out of work and, therefore, using up their retirement savings. And often drawing on their superannuation for emergency purposes.
So, I think those two things are at least a positive.
The disappointment is that the retirement income review has ruled out assessing Newstart and yet Newstart is part of that issue. A lot of these issues that we are dealing with are going to grow because every second voter in Australia is now over 50. So what we know is that it is another positive that older Australians are now making their voices heard through organisations like National Seniors.
Older Australians are no longer out of sight, out of mind. The royal commission into aged care has made sure of that. Older Australians are now flexing their political muscle. In fact, if there was a lesson that came out of the last election, it is that you cannot afford to ignore old Australians and, if you do so, you do so at your electoral peril.Do you have an idea for a story?
Email [email protected]