For three years Tony Abbott and company told us
all our political problems were caused by Labor, and if only we elected
the Coalition our problems would be no more. For three years Labor told
us the budget would be back to ever-growing surpluses in next to no
time.
And for six years - which coincided with our biggest
boom since the Gold Rush - both sides of politics told us Australian
families were having terrible trouble coping with the rising cost of
living.
They encouraged us to feel sorry for ourselves,
accepted the blame for the heavy burdens we were labouring under, and
implied they could do more to help.
What they didn't tell
us was the truth: that for most of us, wages and pensions were rising
faster than the cost of living - meaning our standard of living has
actually been improving - but that this was due partly to the resources
boom, which couldn't last, and partly to the government doing more for
us in the budget than it could afford to go on doing unless we were
prepared to pay a lot more tax.
In the recent election
campaign both sides promised a much enhanced scheme to help the disabled
and significantly increased funding for schools. To these Abbott added
more generous paid parental leave, abolition of the mining tax and
abolition of the carbon tax.
What they didn't tell us was
that, when you go out beyond the next four years, they had no way of
paying for their promises on top of all their existing commitments,
which will get ever-more expensive.
So the stories we're
hearing now of the federal and state governments' longer-term budget
problems must be coming as an unpleasant surprise to a lot of people.
First
we had a Productivity Commission report reminding us that increased
spending on age pensions, age care and healthcare (for everyone, not
just the increasing proportion of old people) - not to mention the cost
of superannuation tax concessions - would put growing pressure on the
budget, and do so at a time when a smaller proportion of the population
was working and paying income tax.
The commission
recommended that the age pension age be phased up to 70 and that old
people who own their homes be required to borrow against them to help
cover the cost of their aged care.
Then we had a report
from Melbourne's Grattan Institute estimating that the combined federal
and state government budget deficit is likely to grow to $60 billion a
year over the coming 10 years.
The institute provided a
menu of tax increases for the politicians to pick from: broadening the
goods and services tax to cover food and private spending on health and
education, removing the tax-free threshold for payroll tax, getting rid
of the health insurance tax rebate, restoring the indexation of petrol
excise, making the family home subject to capital gains tax, eliminating
the 50 per cent discount on the gains tax, or getting rid of negative
gearing.
On the spending side, the pollies could cut
spending on transport infrastructure, halve industry support, increase
university HECS fees, greatly increase school class sizes, cut defence
spending or make savings on healthcare.
But Grattan zeroed
in on retirement income support. It's already planned to phase up the
age pension age to 67 by 2023, but the institute proposes lifting it to
70 by 2025. It's already planned to lift the minimum age for access to
superannuation from 55 to 60 in 2024, but the institute proposes lifting
it to 70 by 2035. These two measures would save about $12 billion a
year.
It suggests including the family home in the assets test for the
age pension (saving about $7 billion a year) and reducing the tax
concession on super contributions for higher income-earners (saving $6
billion).
This story that the budget will come under
pressure is nothing new. We've already had it from three reports
prepared by Treasury, from previous Productivity Commission reports and
many others.
So let me ask you: What sort of conclusions and
recommendations do you expect the Abbott government's commission of
audit to come up with? My guess is, not very different to what we've
been hearing - though, since it has been contracted out to the Business
Council, it may go out of its way to direct the pain away from big
business and the well-off.
Since we have to make a lot of
tough choices if we're to avoid the North Atlantic economies' record of
racking up ever-growing budget deficits and debt for decade after
decade, I think pushing back the retirement age makes a lot of sense -
more sense than many of the other items on the list.
The already retired
and all those not far off retirement wouldn't be affected. But the
notion that, despite ever-greater longevity, better health and less
physical work, we should remain free in perpetuity to live in
taxpayer-funded retirement for 30 years or more is insupportable.
For
at least the past six years self-centredness has reigned supreme, with
everyone - from big business to alleged battlers - demanding the
government do more for them, but insisting others pay for any
improvements.
It can't go on. Let's hope Tony's got the ticker to turn things around - and do it fairly.
