Busting myths about baby boomer burdens
Date: January 4, 2015 Kaye Fallick
My mum Betty is frail. She needs to use a walking frame to get from her bed to her bathroom, a few short metres away. She is 87 and now resides in an aged care facility in Croydon where she depends on the physical and practical support of myriad health care and nursing personnel. But she is not a net drain on the federal budget or the economy. At 87 she remains a strong contributor, one among many such older Australians.
It's high time we reframed our perceptions and prejudices about our older citizens and recognised how very much they have given – and continue to give – to our society. Here are just three myth busters worth considering when you next hear a federal government minister tell you the "age of entitlement" is over and older Australians need to pay up.
Spending per capita on the aged
Australia is one of the meanest nations when it comes to older people. The HelpAge International Global AgeWatch Index ranks OECD statistics on spending on pensions as a percentage of GDP. Our report card in the 2014 index was mixed, except on income security where we performed particularly poorly.
The index reported that "Australia has the lowest ranking (61) in its region for the income security domain, and the highest old age poverty rate in the region (35.5 per cent). It also has below average pension income coverage (83per cent) and relative welfare rates (65per cent) compared to other countries in this region." In fact, Australia spends an average of 3.5 per cent of its GDP on age-related spending against an OECD average of 7.8 per cent, as reported by think tank Per Capita.
Challenging the dependency ratio
Dr Katharine Betts, from the Swinburne University of Technology, has analysed the population spike related to baby boomers and the related fluctuating dependency ratio in her paper "The ageing of the Australian population: triumph or disaster". She concludes that fears that a reduction in the proportion of tax-paying workers will be unable to support a growing proportion of age pensioners are unfounded: even with no further growth in labour force participation rates, the dependency ratio is expected to decline from a current 53.6 per cent to about 44-46 per cent by 2061 – still higher than the mid-1960s of 42 per cent. "By today's standards, the economy [then] was prosperous. Few jobs in developed countries now require muscle power and more people are completing the higher levels of education needed for white-collar and knowledge-based work," she says.
"Moreover, the health and cognitive abilities of older people are better today than they were among older people in the past. All of these changes mean that a shortage of tax-paying workers does not have to cloud our future."
The ruler we use
The way we measure GDP and the value added by older Australians is flawed. We see the "take" in the form of welfare, but rarely the give in the form of unpaid work, volunteering, child-minding and intergenerational transfers of wealth.
Dr Kathleen Brasher, from Council on the Ageing Victoria, tried to put some numbers on these flows of capital at a national COTA forum on ageing last July. She values the volunteering efforts of older Australians at $74 billion per annum, and the intergenerational transfer of wealth at $53 billion.
Furthermore, in 2011 49 per cent of children aged 12 or below who were receiving childcare (including after school care) were looked after by grandparents (Australian Bureau of Statistics).
This leads us to a basic flaw in the May budget. It refuses to acknowledge the inputs of senior Australians, while berating them for becoming "leaners" rather than "lifters". The government has continued to reel from the shock that its socially inequitable budget was roundly rejected by ordinary Australians. So the heaviest of guns – Scott Morrison – is being positioned to tame this recalcitrant populace and force through changes to welfare that will see young people on Newstart go without basic support for up to six months, a re-indexation of the age pension, which will result in $80 less per week within 10 years, according to the Australian Council of Social Services, and an increase in the official retirement age from 67 to 70, whether there is work available or not.
The only hitch to Morrison's agenda, of course, is an increasingly unpredictable Senate crossbench.
So, back to Betty, and why I refuse to call her a drain on the public purse. Just like your mum, dad or elderly aunt, Betty first went to work in 1941. She was 14 and her dad William, a chronic asthmatic whose heart gave out, had just dropped dead in front of her. He had served as an airman in World War I, but there was no disability pension for William, and he was left to eke out a subsistence on a tiny plot in north Croydon, trying to support his wife and young daughter as his health failed.
The death of her dad meant that Mum was forced to find work as a typist in the city, involving a lengthy daily commute by horse then train. She worked at various jobs, barring a short break to have two children, until she was 60. By then, due to consistent saving and a very frugal lifestyle, she and Dad were largely self-funded in retirement.
Along the way they contributed to the university education of four grandchildren, untold hours of child-minding and similarly extensive community volunteering until their late 70s. Today it is her own savings upon which she has drawn to fund the bond and daily care fees in her new home.
So don't let the government's rhetoric cloud your judgment or stoke an intergenerational war that is both false and unnecessary.
Betty is just one of hundreds of thousands of older Australians who continue to pay their own way and contribute far more than they have ever received in social service payments. For 40 or 50 years they paid taxes, which built the kindergartens, schools, universities, roads and airports that subsequent generations have enjoyed. Upon retirement they gave back with countless hours of volunteer work, within the family and community, and intergenerational transfers of wealth which our GDP simply doesn't measure.
It is high time we took stock and recognised their contribution. And spoke up to protect the meagre pension entitlements they so richly deserve.
Kaye Fallick is the publisher of www.yourlifechoices.com.au.