Bad policy: Younger workers will bear the burden of pension age backflip

While welfare and seniors’ advocacy groups almost universally welcome the decision, Brendan Coates a fellow with the Grattan Institute condemned the  move. He told the Australian Financial Review, “Raising the pension age was one of the few things the government had done to make sure older Australians were pulling their weight in helping ensure the longer-term sustainability of the budget, and now it’s gone.”

The Prime Minister made the surprise announcement on the Channel Nine network yesterday in response to a question by a viewer.

The proposal to raise the qualifying age for the age pension from 67 to 70 beginning in 2025 was flagged in Joe Hockey and Tony Abbott’s 2014 horror budget which saw a range of ‘zombie’ measures targeted at welfare. It remained a Coalition policy despite never being legislated, with Scott Morrison a major supporter before yesterday’s surprising turn-around.

Mr Coates said politicians liked to suggest that blue-collar workers in physically demanding jobs were the major winners of a lower pension eligibility age but the real winners were people in white-collar jobs who would become eligible for part pensions earlier.

“That everybody from teachers to accountants and lawyers,” he said.

Federal budget analyst Chris Richardson, a partner with Deloitte Access Economics was also reported in the AFR as saying the backflip was “good politics but poor policy given the inexorable influence of an ageing population.

“If you’re a government behind in the polls this is a standout thing to do. It’s popular and it doesn’t cost you a cent for a very long time. But it’s poor policy. Every day we do nothing on this front is a day in which we put an increasing burden on a smaller slice of the population.” 

Anti-poverty advocacy group Australian Council of Social Service wants the government to go further and raise the rate of Newstart “so that people who are looking for paid work can keep the lights on and put food on the table”.

Chief executive Dr Cassandra Goldie said, “The reality of Australia’s labour market is there is only one paid position for every eight unemployed or under-employed applicants.

“Age discrimination means it is harder to find paid work as you get older.

“People who are unemployed and not yet pension age must survive on Newstart, which is up to $175 per week less than the age pension.

“Everyone agrees that you cannot live on Newstart. People are having to sacrifice daily essentials like eating three meals a day, catching public transport, turning on lights, fridges and heaters, and visiting health professionals.”