CO-CONTRIBUTION & OLDER PEOPLE AT WORK
Well the government finally got a revved up version of its co-contribution through the Senate.
The better benefits are supposedly thanks to a reduction in the surcharge reductions! The new rules allow a small contribution for people earning up to $40,000pa of assessable income.
The co-contribution comes about because the Government is getting rid of the old $100 rebate for super contributions. This rebate, although worth two tenths of not much, actually cost the Government more than $450m in revenue each year for more than 450,000 taxpayers.
Given that this rebate was only available to low income earners making undeducted contributions, claims in the media that question whether or not lower income earners will be able to take advantage of the co-contribution are obviously mis-placed.
After allowing for the removal of the old rebate and the increasing numbers of people who get slugged with the surcharge, the co-contribution and the surcharge reductions don’t cost the government much at all.
Incidentally, it was claimed in the media that more people are getting hit by the surcharge because of that old chestnut ‘bracket creep’. This is not true. The surcharge is one of the few taxes where bracket creep has been removed because the thresholds are indexed by AWOTE each year.
But as good as these policies are, I wonder if they aren’t a bit mis-placed. Perhaps policy should be focused elsewhere.
There is currently a large debate about the dramatic aging of the population over the next 40 years and the need to get people to work for longer.
Getting people to work for longer is not hard. Make it harder to get the dole, especially for mature age workers, reduce the availability of the disability pension and raise the aged pension age to life expectancy each time a new life expectancy table is released and, last but by not means least, count the family home as an asset for Centrelink purposes.
Getting re-elected might be a tad difficult but it would solve the fiscal problems. I might even get a meaningful tax cut!
Another alternative is to open our borders again and let in lots of migrants as we did after World War II.
These are the policies which will be talked about for some time.
The notion of leaving the paid work force at 65 has always been a matter of convenience and has not been based on any actuarial, medical or fiscal considerations.
I contend that our national psyche is conditioned to such an extent that raising this age beyond 65 will be extremely difficult. During the early post WWII period, a statutory retirement age of 65 made electoral sense. More importantly, at the time, the birth rate was high and there was no reason to assume it would dramatically decline in the near future.
Many people are anxious to get out before age 65, as you will know from professional and personal experience. “By age 65, most people are spent,” someone said to me a couple of weeks ago. Some are, some aren’t.
Would they be exhausted if they were actually doing something they enjoyed? Would they be exhausted if they knew that they had to work for at least another 10 years before getting a government pension? Another 10 years of the SG might actually make it a worthwhile benefit.
But what is work? Aren’t retirees Australia’s primary source of free labour used by charities and siblings? This work certainly adds to the community but because there is no remuneration, and often no formal employment structure, it is assumed under the national accounts to have no economic value.
In effect, the government is paying these workers wages. This has not occurred because of any deliberate government policy. Able bodied retirees are keen to do something and finding real work is too hard if not impossible.
Work, even unpaid, delivers dignity and purpose.
Source: Tony Negline – All Things Considered
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