Late last year, the Grattan Institute released a report arguing that without corrective action, the Federal Budget deficit could hit $60 billion per year by 2023, or up to 4% of GDP, due mostly to rising health and welfare costs. Grattan also argued that the only part of the tax and welfare system that is not well targeted is for old people – a view supported by researchers from Curtin University, who last year found that welfare policies across the period 1984 to 2010 overwhelmingly favoured the elderly at the expense of the young.
Overnight, the OECD released a new report claiming that “the strong increase in real public social spending between 2007/08 and 2012 is mainly explained by pensions, leaving many families with children behind. [And that]…public social spending is somewhat below the OECD average.”
The OECD also noted that “relative poverty in Australia (14.4% of the population) is higher than the OECD average (11.3%)… [And] 10% of Australians report that they cannot afford to buy enough food.”
According to Fairfax’s report on the OECD study:
“Even after the pension rise, Australia’s public social spending as a proportion of GDP was low compared with other developed countries at 19 per cent, when the OECD average was 22 per cent.
…the Gillard and Howard government changes, which moved parents from parenting payments to the lower Newstart allowance and changed the indexation of family tax benefits, had contributed to a widening of the poverty gap among families with children.
Writing at Business Spectator, Michael Gawenda today raises similar concerns about the rise of welfare payments to well-off retirees, which he argues is both inequitable and unsustainable in light of Australia’s ageing population:
I am in receipt of a senior citizen’s card from the Victorian government that apparently entitles me to some free travel on trains and discounts at certain cinemas among other benefits that I have not explored.
I also discovered recently that I might be at some stage entitled to a Commonwealth health card if our combined taxable income, my wife and I, is below $80,000 — excluding any income we have from our superannuation pensions…
Treasurer Joe Hockey’s mantra about the end of the age of entitlement is hollow unless he means the entitlements of elderly, relatively well-off baby boomers. There is little evidence that this is what he means…
The fact is that in many ways, relatively well-off baby boomers like me are the greatest recipients of middle-class entitlements through superannuation tax concessions that amount to billions of dollars annually and for which there is really no justification except the fact that the baby boom generation is politically powerful.
Gawenda is spot on. The bluster over “ending the age of entitlement” lacks substance unless it tackles some of the biggest and fastest growing areas of Budget outlays: superannuation concessions and welfare payments to relatively well-off retirees.
