Norman Lindsay's "The Magic Pudding" tells of a magic talking pudding named Albert which, no matter how often he is eaten, always tops itself up to be eaten again and again. Published in 1918 as a children's novel, it may well describe Australia's overgenerous welfare system.
Under our welfare system, a couple over the age of 67 may live in their own multi-million-dollar house (which is EXcluded from any pension calculations) and still receive a welfare cheque of $1,653.40 a fortnight as long as the value of their assets other than their own house (which could be worth millions) is no more than $451,500 (or $693,500 for non-homeowmers) or their income is no more than $360 a fortnight.
Even if the value of their assets exceeds $451,500 and their income is more than $360 a fortnight, their pension does not cut off completely but only slowly "tapers off". The pension only cuts off completely if their assets exceed 1,003,000 (or $1,245,000 for non-homeowners) or their fortnightly income $3,666.80. That's welfare Australian style! MADNESS!
The Assets Test
and still receive a part-pension. THE MADNESS!
The Income Test
and still receive a part-pension. THE MADNESS!
And keep in mind that this is a totally unfunded age pension given to anyone, whether they have ever worked and paid taxes or not; and under the "tapering off" calculations, a pensioner receiving even just one dollar in pension is still entitled in full to all the other pensioner concessions, discounts, and entitlements far too numerous to mention (free medical services and pharmaceuticals being just two of them!)
The Keating Labor government brought in compulsory employee contribution beginning in 1997-98 but today, twenty-five years later, 80 per cent of Australians over the age of 67 are still on the Government teat for some sort of pension. Why? Because the pension system is too generous and does not taper off quickly enough. I show you how retired couple A with $400,000 in superannuation is better off than retired couple B with $1,200,000 in superannuation (do your own math!):
Couple A qualifies for the pension of $1,653.40 a fortnight
(and they receive all the other pension cash supplements and discounts)
Their $400,000 super at 2.25% deeming rate earns $269 a fortnight
The excess income of $65 reduces the pension to $1,620.40 a fortnight
Their total income is $1,889.40 a fortnight
Couple B with $1,200,000 in super does not qualify for any pension
(and neither do they qualify for any of the other pension benefits)
Their $1,200,000 super at 2.25% deeming rate earns $961 a fortnight
Their total income is $961 a fortnight
[if the superannuation's earnings rate is greater than the deeming rate, it increases both couples' fortnightly earnings without, however, reducing Couple A's fortnightly pension]
Someone with $400K is better off than someone with $1.2million!
The system is built on a massive disincentive because if you're going to lose the pension because you've got too many assets, you upgrade to a bigger house or you give your assets to your kids or you don't save any more and you just go on the Government teat for the rest of your life.
And the rest of us are paying our taxes to keep this madness going!
P.S. Yes, I did send the same message to Hon Amanda Rishworth MP, Minister for Social Services. She can't take away my pension; I don't get any as I've been a self-funded retiree for over twenty-three years!
P.P.S. If you want to know how far some people go to go on welfare, click here.
