That great sector of the Australian community, retirees, is being set upon again by government. The issue has passed barely noticed in the media but the political consequences for the Turnbull Government are sure to be profound.
On January 1, 2017, changes to the aged care assets test will see more than 100,000 Australians lose their part pension payments in entirety. More than 300,000 will have their pension payments cut.
There is a perception many retirees are rolling in money. They have assets many could only dream of. Perhaps that’s why the media has shunned the issue.
Let me ask the question, who among us could lose 20 per cent of our household incomes and come away unscathed?
It gets worse. With the loss of the pension, the government will also cancel retirees’ pensioner concession cards which allow them to enjoy discounts on council rates, car rego, energy bills and public transport tickets. Back of the envelope, that’s three grand per annum retirees will have to find.
Full column here.
welcome to the land of FUBAR
https://www.theguardian.com/australia-news/2016/dec/14/centrelink-urged-to-stop-collecting-welfare-debts-after-compliance-system-errors
Not only does this send the wrong message, as highlighted in the article, it just seems like an unusual thing for a liberal party to be doing. I’ve got rental property that is owned outright and I can assure it barely covers smokes and drinks.
I have lost track of the price of Cubans and Dom Perignon Milton, please refresh your Uncle Henry’s memory?
They are trying to fix an out of control budget deficit Milton. They chose an easy target. (Who will show just how unhappy they are at the next election) Meanwhile billions are being thrown at shonky child minding, colleges with no graduates – and the list goes on. It’s shameful.
Just read your full column Mr Insider very well researched indeed and many Aged Pensioners will suffer financial pain at the hands of Turnbull in 2017. As an aside but also re Welfare I see the Great Welfare Recipient himself, ex ousted PM Tony Abbott, is sledging many who are legally on the DSP. The very man who has and is sucking on the Taxpayers teat has the front to have a go at the less fortunate in our Society. As a taxpayer myself I have no worries paying for Welfare that has been legally determined. Turnbull and Abbott, surely Australia we can do better than these two weak low has beens!
http://tinyurl.com/jojcsyx
JTI
I have no doubt that the arithmetic of your article is correct.
But it appears to be based on a fallacious assumption or assertion – encapsulated in the phrase ‘… I have paid taxes all my life therefore …..I should access the Age Pension…”.
The Aged Pension has never been a ‘universal’ entitlement, at least in modern times. When PJK introduced compulsory superann8uation, a reform for which he will be lauded, it was very clearly stated and marketed that the intention was to provide an alternative to the aged pension and over time reduce the National expenditure on such.
Now of course, it is possible to have a ‘universal’ Aged pension but not as a singular reform to the system. As our NZ brethren show, if incorporated as part of a suite of reforms, including:
A 15% GST
Income tax from the first dollar.
Capital Gains Tax without discount.
A very rigorous and tougher Welfare System.
A ‘balanced’ budget and
A relatively manageable national debt.
Non of the above are remotely possible in our current circumstance.
Superannuation was not intended as a ‘wealth’ creation tool to handover $$$s to the kids.
As has been pointed out over the other side, assets bordering on the limits, invested (even at today’s appalling rates, coupled with asset draw down can deliver liveable income, outside the Aged pension.
But this is just one manifestation of our National problem. Which at the risk of offending certain of your congregation I repeat as ” ..deliberately and willfully self-indulgent…:.
You might also notice the increasing articles on company failures, job losses and difficult trading conditions. the recession of which I spoke is I believe starting, in the real world, if not in the esoteric figures.
Our choices both political and economic are constrained by the realities of our National Wants.
Contributing to my historic political maxim – throw the Bastards Outand continue to do so – will I regret to say bring little or no relief, until the social pain is extreme.
whats wrong with the idea that we all mutually take care of each other PLMO? And if thats an idea worth considering whats wrong with implementing that idea via the tax system?
Personally, I think a lot of the problems today are the result of the opposite of a lot of the guys here whinge about. If people have security of income they are healthier and happier. Thats a good thing just for starters. But it also means they will contribute more and they can take more risks with what they want to do with their lives. There is too much pressure on the individual these days. conservatives give lots of lip service to family and community but all their policies are anti family and anti community. As for this same sex marriage malarkey, well, the nuclear family is called the nuclear family for a reason. The social norm for most humans for most of history has been to be surrounded by and live with extended family, clans and tribes. But it seems to me the bosses prefer an atomised and disconnected workforce to a happy society.
darren
I am sorry I don’t see the correlation between my comment and yours?
I am all in favour of mutual support. Indeed we can have any system of ‘social service & mutual support’ we want. Just as long as we are prepared to pay for it!!
I am firmly of the belief that ‘my generation’ of geriatrics is the most selfish in our community. Having had access over say 50+ years to low unemployment, free tertiary education, ‘reasonable’ house prices, advantageous real-estate investment regimes and longer-term superannuation alternatives; we now whinge about a clearly defined scheme not being what we want it to be!!
Yet at the same time, we see no dichotomy between National deficits and debt and ‘annuity’ income beyond 65 yrs being tax free (for some, incidentally not for me).
I note with a degree of despair the articles on the ACTU robo-phone campaign on this issue. The more so that the ALP, again walking both sides of the street; didn’t vote for the changes but not only refuses to promise repeal but actually absorbs the savings into their fiscal plan!! And then their acolytes indulge in this border-line disinformation campaign.
All the more “… deliberate and willful self-indulgence’.
It was because you wrote:
“But it appears to be based on a fallacious assumption or assertion – encapsulated in the phrase ‘… I have paid taxes all my life therefore …..I should access the Age Pension…”.
Paying our taxes is what, ultimately, binds all of us together as Australians. Whether those taxes are spent wisely or are levied fairly is a whole different question, but it is the paying of taxes that links us all together as Australians. And every Australian (with the possible exception of those so disabled that they require care all their lives) pays taxes – even dole bludgers pay their GST… Taxes are the glue that binds us all together as a society. The insidious American notion that each man (or woman) is their own kingdom and therefore shouldnt pay taxes is the notion that founded the USA and that will, ultimately, destroy it. That idea needs to be constantly combated, while still ensuring sure our taxes are fairly levied and wisely spent.
Sounds like you are on a recruiting mission.
What of the Pensioners who have nothing? Are renting, No or very little Super? There only income is the Pension and have NO investments? It is all relative but those with $500k have more choices than the oldies I help out.
I’m actually not having a crack at you for a change but those that are asset rich and income poor are in no better boat Dismayed. That’s one of the things JTI is trying to point out I believe. This is an incredible own goal by the Coalition but I think Yvonne is right and ON will be the beneficiaries of this. That leaves me with a problem as I will never vote for a party that would form a Coalition with ON and I think we will see that in Qld around about April. Incidently that should be just about the time the pension cuts will really be starting to hurt.
All kudos to you for doing a bit of work with the old folk.
Not work, just helping to make life a little easier with staples and bills.
if they’re renting they are screwed….pooched bigtime
In a situation such as you describe the pension is not enough to live on Dismayed. Very sad. What makes me even sadder, and madder, is that the younger generation often seem to view the elderly as a burden on society, who are depriving them of their “instant gratification” lifestyle needs. They easily forget that they owe their very existence to their forebears.
They want us to die to free up the housing and job markets.
A pithy observation – offered in in jest (and devoid of fact)?
I think it is a sneaky way of trying to increase consumption. They are “encouraging” a spend down of Capital.
Only problem being Dismayed, that a fair whack will be spent overseas – on expensive holidays- not here. The whole thing is disastrous – as mr Turnbull will find out at the next election no doubt.
Problem is we’re living longer too. A case for voluntary euthanasia. Would ease burdens all round
Do you oldies remember for that long ??
Are you saying youre my mum, yvonne?
I cannot believe the timing of this article JTI. I feel like Annie!
Spoke to aveey close old Aboriginal mate from Western Qld just yesterday afternoon and he told me he is losing $200 a fortnight down to $39.00.
He has two rentals and a small commercial property in the town in which he lives. He accumulated these assests over a lifetime of bloody hard work. They have been valued at just over one million dollars all up but due to the gas mob leaving they aren’t worth that he reckons and he can’t sell them anyway as nobody is looking to buy. Also he wants to hand something onto his children and many grandchildren. He should be allowed to do this! He has paid tax all his working life which commenced as a sleeper cutter and stockman when he was 13. First child was born in a tent on the banks of the Maranoa river while he was cutting. The amount of young aboriginal kids he has put on the straight and narrow is legendary. That alone would have saved the government the two hundred a fortnight.
His wife returns home this afternoon from hospital after having suffered a bad stroke. They are pillars of the community and proud members of their people allong with being proud Australians and are getting the shaft. Frigging terrible. Merry bloody Christmas one and all and the reason I’m not in the best of moods at the moment.
Thanks, Razor. I don’t think any sensible person could argue there need to be savings made nor that there shouldn’t be some adjustment to who receives the OAP and how much but the policy is wrong headed. It actually will encourage people to save less for their retirement.
That stinks Razor. Commiserations to your mate. Having worked out in those parts in a modern, soft kind of way and seeing how some people get impressed with themselves just for going there, I cannot believe how tough some of those people were and still are. Massive respect.
This is a disgrace and like you JTI, I have one friend who will have his pension cut and is not happy , because for the first time ever he voted for the Coalition, as he naively thought the Malcolm Turnbull would make a difference. I don’t think we will ever qualify for a pension and probably fair enough too, because of the work we do and the fact that we can do it until we are past 70. Traveling around Australia this year we came across a lot of older people having a great time, but still worried about losing part of their income because of this government. Not sure they’ll be voting for Mal’s mob again.
Dismayed (from last blog) yes I see your point about using data to support your side during a debate, but there are some on here (and I am not referring to you actually) that use articles in newspapers as their only source of information. The best thing as far as I am concerned is to summarise the article and then post it.
This issue will have a huge impact on the next election, Penny
the big question is where is the disaffected voter going to park his vote. It will not be laborgreens so one obvious direction is paulines party
Agree totally Jack and Penny.
If Shorten wants it all he has to do is reverse this appalling ill-conceived raid on pensioners.
Otherwise the votes will most certainly go to One Nation. And that will be worthless as she will never seize government. Although having said that, I guess if Trump can, anything could happen!
Yvonne – your assertion that it is an “appalling ill-conceived raid on pensioners” may stand up if you’re simply referring to the “politics” of the decision. Otherwise your assertion is “ill-conceived “in itself.
See my various comments elswhere in Jack’s article that inform the basis for my view.
Carl,
It may be appropriate in some instances, but, for example, for non-homeowners, it is manifestly unfair. There is no backup asset for them and yet, as Jack points out, they will lose 20-50% of their income
a one seat margin would only require a tiny impact methinks JTI.
The libnats have taken “crash through” out of the phrase “crash through or crash out”.
I see Surpository has been indulging in a bit of dole bludger bashing today on “the Peoples Friend” 2GB. Of course its the old story about bad backs and depression or in his view just feeling a bit sad. Obviously he has had no experience or he would know who debilitating depression is. Clearly he has never had to apply for the disability pension or he would know how hard it is to get it. My wife suffers from depression and other ailments and the hoops she had to go through to get the pension.
The saddest thing of all is there are a lot of idjits out there who think he should be PM again.
Anyone who bags people with depression clearly hasn’t had anything to do with it UQ. I sincerely hope your wife has it under control at the moment and is feeling good in herself.
She has been on what she calls happy pills for the last 10-15 years. Says that they really smooth things out for you. She recommends that I take them so I don’t get worked up by politics…
My dad was pretty much crippled by work injuries by the time he was 55. So much so that they wanted to retrain him – but he didnt like young tafe people telling him stuff he already knew through experience so he packed that in. When he became of pensionable age he couldnt get the pension because my mum was still working. Luckily my mum has always been great at budgeting. Without her my dad would have been screwed…
My mum and dad get a small UK pension but due to some bureaucratic warfare between the two countries their Australian pensions (where they spent most of their working lives) gets punitively punished because of the UK pension (which you get if you have worked for a period in the UK).
I am seriously worried about what the future holds, don’t have enough Super. Daughter now 24 has had to resort to an online Science degree with uni of New England majoring in neuroscience after having two previous TAFE courses cancelled. Son 22 still hasn’t made his mind up because he’s scared he’ll pick the wrong thing and no decision can’t be a wrong decision, his psychologist is slowly getting there with him and the big elephant (well woolly Mammoth) in the room keeping employed in your mid fifties until you can offload the kids and the house to move somewhere cheaper. Let’s not forget the elderly parents in the equation for those of us in the “sandwhich” generation.
I’m avoiding my cousins Christmas Eve do this year because I’m so fed up of a bunch of pretty well off retirees whinging on about how can they get more out of Centrelink, I could say forgo a couple of those overseas trips they do every year and never seem to enjoy, but I won’t…….nearly did last time but the husband saw the danger signs and shoved a glass of wine in my hand.
Kids in their early 20’s today are a bugger at deciding what they want to do Tracey. Also I think the weekly media stories about what jobs won’t exist in 10yrs only exacerbate the situation. Only advice I can offer, being there myself with 1 and just through it with another 2 is to enjoy the wine 😀
Geez, Razor I’ve just gone past 50 and I still don’t know what I want to be when (and if) I grow up.
Tracy, if your son has the interest for it you cant go wrong with starting with a basic commerce degree. It sets you up for a number of options in future in case you change your mind about what you want to do. and a commerce degree is ALWAYSA handy no matter what you want to do. For example if you decide to set up a yoga and vegetarian school (or whatever you can think of) the commerce degree will help. Combine that with a language (japanese or chinese) and you cant go wrong as a starting point.
Couldn’t agree more with that advice dazza!
Thanks Darren and Razor he is leaning towards commerce/business and he is also interested in politics but the anxiety just kicks in.
Unlike Mr Abbotts opinion of depression/anxiety it is all too real for those who have to deal with it, been about eight years and it’s not a quick fix. His psychologist comes up from Bowral once a week to see his Sydney patients so luckily I haven’t had to find someone new. Starting to feel there may be light at the end of the tunnel within the next twelve months hopefully.
Tracy, the good thing about a commerce degree is that even if your son starts it and doesnt finish it he will still find it useful. First year generally starts with the compulsory basics: management, finance accounting and business law, business maths, and economics. Not a thrill a minute, granted, but very useful in a practical way even if you dont go past first year. Ive suffered from depression on and off most of my adult life so I know what thats like. I also know that when you feel youre going forward and making progress the depression is not so bad. Id suggest that, if your son is interested, he maybe tries a couple of units on a part time basis. That way he can see what Uni life is all about and maybe get involved in a few other things at Uni that might perk him up a bit. Depression is a bit like how the army trains its infantry to deal with ambushes – the quickest and safest route out is taking it head on. It might not always work, and it might not be a suitable appraoch for everyone, but I have found it to be a reasonably good rule of thumb.
Tracy: the thing your son should be thinking about is what he wants to do with a commerce degree. They are useful but there are an awful lot of commerce/business graduates. The best do the boring hard yards of audit – which is where serious accounting skills are honed and they are then set up for life. But it isn’t easy.
My cousin is a double Phd neuroscientist who runs a neuroscience devices company he founded (developing therapies he created). He is pretty busy so I don’t know how much time he has but if you want email me and I can try and put him in touch with your daughter.
Thanks for the offer Simon, she will definitely think about it.
Tracy,
I’ve got similar worries to you, only they’re magnified somewhat, as our boy is four years old and they need a lot of space at that age, i.e., we basically need to stay in our large house until he moves out. His mother wants to keep him at home until he’s 30!!
Most of the people I know here are like your cousins, i.e., they’re either retired and are on a decent pension through their super scheme, or will be in the future.
I really can’t avoid the Xmas thing, as it’s one of the few times that I get to see my mother in Melbourne, but I did convince everyone that only the kids will get presents this year.
Thanks for putting this issue up on lights, Jack. A pet subject of mine at the moment. Because it is so unfair. Especially when those affected read of the billions being thrown at shonky education schemes etc. Not to mention the rest.
As I commented over the wall, we now have a ridiculous situation where it is actually more beneficial for those affected by this rule change in the middle of the game, rather than go into riskier investments, to spend up big in order to get back to the reduced asset level and retain the same income.
It will land up costing the government far more than it would have had they not got greedy and gone for the line of least resistance.
I feel for those having to contemplate seeking employment of some sort – it won’t be easy. This government clearly does not understand that someone with over $542,500 and not a home-owner is not well off. Not by any means.
A plan dreamt up by public servants on a guaranteed retirement income.
I take it Turnbull has taken the votes this will cost him into account. Because, if I understand the demographics correctly, they represent a substantial portion of his voter base.
A lot of people think having half a million in assets makes you rich, Yvonne. At a modest assessment a portfolio of that size is worth around $20,000 per annum in income. People should ask themselves how they could live on that because the government is expecting many older Australians to do exactly that.
Exactly Jack. The people that devised this are public servants who have a guaranteed pension for life.
I fairly recently overheard two such persons chatting – the one saying to the other ” I’m just hanging in a little longer so that I can get what I’m earning now – to do nothing for the rest of my life” Fair dinkum.
Sums it up really.
There are a lot of folk out there who have been hit hard and are worried
Yvonne & JTI
Your relay of the conversation might well be accurate but your knowledge of the background could very well be partial.
To indicate a possible scenario I use my own. In addition to my employers contribution, I have been variously obliged to:
Contribute 5% of my pre-tax income from my post-tax pay.
Contribute 5.5% of my pre-tax income from my post-tax pay
Contribute a minimum of 5% of my pre-tax income from my post-tax pay
With a choice of increasing this last requirement to a maximum of 10% – I chose 8.5%.
The outcome after some 30 years, was that my ‘pension’ was such that as long as you know what points to the ground I will be ineligible for the Aged Pension.
Now that I chose to use the superannuation system as a ‘wealth generating’ mechanism by entering a ‘mandatory contribution’ and a ‘voluntary contribution top-up’ does not detract from the original aim of the superannuation system.
The aim was, and is to deliver an alternative to the Aged Pension.
The tax treatment of contributions, earnings and payouts were, are and remain predicated on this clearly articulated aim.
That many choose not to recognise this ‘reality’ does not make the alternative viewpoint valid.
To return to your observation; those public servants having ‘pensions for life’ might very well have been forced to contribute, and indeed chosen to supplement, their entitlements long before PJK’s reforms.
Depending upon your view, ‘compulsory super’ started either in 1947, 1983 or 1992!!
this is how you vote…… this is what you get
https://www.youtube.com/watch?v=f8Ne9sRcSrM