Government suggests Australians may have to work 'til 70


Australian Broadcasting Corporation

Broadcast: 14/04/2014

Reporter: Sabra Lane

Treasurer Joe Hockey has hinted the aged pension age may increase to 70 prompting Opposition criticism, while one Seniors group says it's willing to discuss the change if the Government's proposed paid parental leave scheme is dropped.


SARAH FERGUSON, PRESENTER: In less than a month, the Treasurer will reveal the Coalition's first budget, and in a move that's got everybody talking, Joe Hockey has flagged the prospect of lifting the retirement age to 70 to save on pension costs in the years ahead.

Political correspondent Sabra Lane.

JOE HOCKEY, TREASURER: Welfare must be a safety net, not a cargo.

TONY BURKE, SHADOW MINISTER FOR FINANCE: The priorities from this government are really clear.

JOE HOCKEY: We need to have a mature debate about the sustainability of our pension system and our aged care system.

TONY BURKE: The more needy you are, the more deserving you are, the more likely the axe is to fall on you.

SABRA LANE, REPORTER: In modern political times, prime ministers of all hues have courted the grey vote.

The aged pension was introduced in 1908. Within two years, 100,000 people were receiving it. By mid-2012, that had ballooned to more than 2.3 million Australians receiving the payment in full or as a part-pension. The pension soaks up about a 10th of the federal budget.

CASSANDRA GOLDIE, AUST. COUNCIL OF SOCIAL SERVICE: We do think there is a need to reform the aged pension. There are a number of areas where we think it is too generous, particularly for people who are receiving a part pension and who already have significant assets. We think the assets test has become too generous and it does need to be tapered back.

SABRA LANE: Before the election, Tony Abbott made his commitment clear.

TONY ABBOTT, THEN OPPOSITION LEADER (6 Sept., 2013): No cuts to education, no cuts to health, no change to pensions.

SABRA LANE: Yet for months now, senior ministers have warned the pension and associated payments are on an unsustainable trajectory.

JOE HOCKEY: Government benefits must be sustainable, fair and targeted to those in genuine need.

SABRA LANE: The previous Labor government had already legislated to push the retirement age from 65 to 67 years by 2023, but the Treasurer's indicating it could go higher - to 70.

JOE HOCKEY: But it may be the case that my generation has to work for an extra three years.

SABRA LANE: Social Services Minister Kevin Andrews has done nothing to quell the talk today.

KEVIN ANDREWS, SOCIAL SERVICES MINISTER: Australia's facing a major demographic transition. That huge Baby Boom generation are entering into retirement. There's going to be many more dependents and they're going to live longer. So unless we're prepared to continue to hock the future to effectively charge the next generation for our living standards today, then we have to address that.

SABRA LANE: Registered nurse Martin Gray isn't relishing the opportunity of working until he's 70.

MARTIN GRAY, REGISTERED NURSE: I'm very worried about having do that. I just don't know if I could do that. I really don't know if my body could physically take that at that age. I'm 41 now and I already find it tough, as do all nurses. So, at 69, coming up to 70, I hate to imagine how tough it would be.

SABRA LANE: A single aged pensioner currently receives $766 a fortnight. For couples, it's a little over $1,150. As well as lifting the qualification age, it's understood the Government's examining indexation. The pension's tied to a measure known as "male total average weekly earnings", and in recent years, that's risen at a higher rate than the Consumer Price Index. The Government's now considering linking the pension to the CPI.

And it's also being urged to include the family home in the assets test.

STEPHEN ANTHONY, MACROECONOMICS: If you included a means test and say you said that you would only pay the pension to someone who has a house that's worth less than, say, $1 million, you would save $1.2 billion right there.

SABRA LANE: Former Treasury official Stephen Anthony says the Government has to find $16 billion in annual savings to return the budget to surplus. Mr Anthony says pension eligibility should be tightened to only those who need it, with the vulnerable, like Indigenous Australians, quarantined from any changes. He says phased-in changes could save $4 billion.

STEPHEN ANTHONY: So all of a sudden you're at a quarter of what - the structural adjustment I'm talking about and no-one who's disadvantaged has yet felt any cut.

SABRA LANE: The Opposition rejects any changes, saying if pension's altered, it'll be a clear breach of Mr Abbott's pre-election promise. ACOSS says lifting the pension and the age at when people can access their superannuation should be open for discussion.

CASSANDRA GOLDIE: If you're going to lift the aged pension, you need to increase the level of the unemployment payment. Many of those people affected by waiting longer will be people who are struggling, they can't get into paid work. Right now, they'd be living on $36 a day for potentially another five years and we don't think that would be fair. So we need a package of reform here.

SABRA LANE: Mark Furness turned 65 today. He works in the National Seniors Group office and isn't retiring yet.

MARK FURNESS, NATIONAL SENIORS GROUP: I'm fortunate: I'm 65 and I've got a good job, but I feel for those people who aren't working once they're over the age of 50, 'cause it's very ,very hard to get work.

SABRA LANE: Seniors Australia says it's pointless lifting the pension age if employer attitudes to older workers don't change.

MICHAEL O'NEILL, NATIONAL SENIORS AUSTRALIA: If you don't have the jobs for people, then clearly the savings that you might think you make could well be gobbled up by continuation of unemployment benefits - whatever it might be called in the future - through to disability pensions.

SABRA LANE: He says seniors are prepared to play their part in finding budget savings. One area he questions is the viability of Mr Abbott's paid parental leave scheme.

MICHAEL O'NEILL: I think the paid parental leave scheme is clearly one that older Australians, and I suspect a broader part of the community, consider to be very generous, particularly at a time when we're talking about cuts being applied to other parts of the community.

SABRA LANE: The Government's conducting a separate review into other welfare payments, including the Disability Support Pension. The interim report will be handed to the minister, Kevin Andrews, within a week or so. There've been no public submissions for it and no terms of reference, but it's clear the Disability Support Pension's in the Government's sights.

KEVIN ANDREWS: The DSP for decades has been a dead-end payment. People have been put onto the DSP, and frankly, governments have forgotten them.

SABRA LANE: And that's another debate that has at least another month to play out.

SARAH FERGUSON: Sabra Lane reporting.