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Today's quote:

Sunday, May 7, 2017

Ask not what you can do for your country, ask what your country can do for you

 

If you've read this heading without noticing that it is a dyslexic version of John F Kennedy's famous inauguration speech in 1961, then you're most likely someone who was born into what Donald Horne in the early 'sixties called the "Lucky Country".

Donald Horne's book by that name was a hard-hitting critique of a country that was lucky but unfortunately run by second-rate people who shared its luck. Those second-rate people must change a social security system that is driving the "lucky country" into the ground.

As always, we had copied our social security system from somewhere else; in the case of the government-funded age pension from Bismarck - no, not the one they sank in 1941 but from that chap in the funny 'Pickelhaube' or spiked helmet - who had introduced a universal age pension initially set at age 70 which, very cunningly, was well ABOVE the average German life expectancy at the time.

The Australian Parliament introduced a means-tested pension, payable to men from age 65 and to women at age 60, in December 1910. At that time, with only four per cent of the population over the age of 65.2, and men having an average life expectancy of 55 years (59 for women), the financial cost of such a scheme was very small in comparison to today, when already 14 per cent of the population is over 65 and both sexes can expect to live well into their eighties.

Today the German system is funded through compulsory contributions levied on a person's earnings throughout their working lives whereas the Australian pension is still totally governme­nt-funded and paid out of general revenue. In short, the system is going for broke because, even assuming a person has worked all his life and paid income tax at the full rate (a very unrealistic assumption), those taxes - which, incidentally, are supposed to pay for government servic­es in the year in which they are collected - even if used for pension payments only, would by no actuarial calculation be enough to cover pension payments for perhaps another twenty or thirty (or more!) years after retirement.

And yet everyone, from those who pissed it up against the wall to those who plowed everything into their means-test-exempted homes, insists that the government's age pension is their birth right. What about the rights of future generations who have to repay the debt?

Today's pensioners have almost $1 TRILLION in equity in their homes which are exempt from the means test, and slowly questions are being raised if this huge treasure chest shouldn't be used to defray the costs of retirement. It is suggested that the value of a home in excess of a certain amount could either be used in the means test or, if the would-be pensioner insists on government-funded pension payments, those payments would be recouped when the property was sold, either on the owner's death or when he goes into aged care.

A very sensible solution to an impending financial disaster. Question is which spineless politician, busily accruing his own hugely generous non-contributary parliamentary pension benefits, will grow enough balls to advocate such a change. Not in my lifetime, I don't think!


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