As reported by the
SMH and elsewhere, it appears likely that eligibility conditions to receive the pension in Australia will be tightened in order to cover the cost of raise the rate for Single pensioners to 67% of the Couples Pension rate (it's currently 50%).
The driver for these changes are, as usual with a Labor government in power, "Equity" considerations. The current pension assets and income tests mean that some relatively wealthy seniors are being paid a pension. Labor is firmly against the idea of "middle class welfare".
Ignoring the fact that the "wealthy pensioners" are the same cohort that probably paid nearly all of the taxes that provided the pension to the previous generation of pensioners, I have to question the fairness of any "equity" argument that only looks at the current snapshot of people's situation.
A moral, compassionate society should obviously care for the paupers, widows and orphans, sick and demented that would otherwise end up starving and homeless. However, the provision of pensions is extended to a much wider group of people, raising the question of who actually 'deserves' to get a pension. As is often the case, equality of opportunity is being confused with equality of outcome.
Consider the hypothetical cases of Bob and Bert, two 70-year old retired bus drivers. Both are married, have two grown up kids, and rely on the pension for their retirement income. However, Bert is living in rented accommodation, and has a much lower standard of living (less disposable income) than Bob, who is living in a modest house with no mortgage. The value of Bob's home is currently not included in the assets pension test, but that may soon change, severely reducing or possibly eliminating his pension income.
However, is this really fair? Bob worked to 45 years, paid his taxes, and lived a fairly frugal lifestyle so he could afford the mortgage repayments on his family home. At the same time, Bert has always rented his accommodation, and enjoyed consuming his higher disposable income while he was working. Although they had exactly the same take-home pay, Bert was dining out and going to the theatre each week, while Bob was drinking beer in front of the TV and worrying about his mortgage repayments. For some reason, Labor thinks it's "inequitable" that Bob can now afford to dine out and go to the theatre using his pension income, while most of Bert's pension income is being spent on his rent.
To my mind, since both Bob and Bert earned the same income and paid the same amount of taxes over their working lives, they are both equally entitled to receive a pension. Having blown your income at the race track or down the pub very Friday night should not make someone more 'deserving' of a pension.
Australia already has moved some way towards a self-funded retirement system, with compulsory superannuation ensuring that in future generations the Bert's and Bob's of the world will have both accumulated similar retirement savings and neither will require (or get) a government (tax-payer funded) pension. In the meantime, I can't see the justification to take money out of Bob's pocket and give it to Bert.
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