Pension reform is about more than mere eligibility

In The Australian today:

The audit commission is right: there is a strong case for reforming the age pension. But those changes must be part of a broader restructuring of our retirement incomes system. For unless that system can provide reasonable income security in old age, the changes will prove neither economically desirable nor politically sustainable.

About Henry Ergas

Henry Ergas is a columnist for The Australian newspaper and the inaugural Professor of Infrastructure Economics at the SMART Infrastructure Facility at the University of Wollongong. The SMART Infrastructure Facility is a $61.8 million world-class research and training centre concerned with integrated infrastructure solutions for the future. Henry is also Senior Economic Adviser to Deloitte Australia. Prior to these concurrent roles Henry worked as a consultant economist at NECG, CRA International and Concept Economics. Henry's previous career was as an economist at the OECD in Paris, where amongst other roles he headed the Secretary-General’s Task Force on Structural Adjustment and was Counsellor for Structural Policy in the Economics Department.
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120 Responses to Pension reform is about more than mere eligibility

  1. James B

    What happened to personal fucking responsibility? Fucking save for your fucking old age, and stop relying on other people’s stolen money to fund your retirement.

    The aged pension should be completely phased out by 2030 at the latest.

  2. Phil Fry

    Other people’s stolen money

    ?

  3. Sir Fred Lenin

    We retired politicians support pension rises for us,crayfish are getting SO expensive ! We worked hard for youse,the least you can do us keep us in cmfort for life. Chools n kevvie.

  4. The focus on pension reform is completely muddying the waters with this budget. Pension reform could have waited until next year so that there could be a proper conversation and selling of it, not confused with the issue of the size of government in general, waste, and and so on.

    I am aware that they want to fix the “forward estimates” but that’s just a wonk’s game. Swan proved that forward estimates are fictions, and are mostly about getting accolades inside the beltway. Fix this year’s budget emergency this year, then move on to pension reform next year.

    After all, there are plenty of political tough decisions that they are squibbing right now, so I don’t see what the urgency is to talk about pensions. Other than this: despite being in power for 9 months, these guys have no clue about the true size of the government apparatus. And, not having a clue, don’t understand the scope of the problem before them.

  5. Eyrie

    To save effectively requires a zero inflation rate. Require the thieves running the Reserve Bank to do this.
    If inflation over the next 48 years runs like it did in the last 48 since the introduction of decimal currency what good will the super contributions of today’s 20 and thirty year olds be during their early contribution years. Compulsory super as structured is a con truly worthy of that spiv Keating.
    Take a look the value of the dollar has declined by a factor of 11 or more in 48 years.

  6. dan

    Eyrie friends sank all their savings into property precisely 48 years ago and are doing just fine despite inflation…

  7. Petros

    Funny how the Baby Boomers won’t be affected by the changes to the pension eligibility age. The selfish pricks always make sure they aren’t the ones paying the price.

  8. Andrew

    Eyrie, big deal. That’s 5-6% inflation. You telling me grossed up shares would not have kept up? Or any other asset class – including cash? I started my SMSF 4 years ago. CPI has been 2% and my IRR around 10%. Don’t think the RBA caused the inflation of 1973, which was OPEC’s fault.

  9. Kingsley

    On one level I am hesitant to recommend this as it is more regulation but I think there needs to be some legislation similar to part IVA in the tax act for social welfare ie in short hand if you have artificially arranged your affairs for the predominant purpose of accessing social welfare then you have breached the act. This should stop people who can look after themselves arranging their affairs for instance to access health care card etc. would also help change the mindset around these issues. In accounting and financial planning circles if you do not provide this advice to people it is seen as bad almost negligent advice . Do the same thing in income tax and you could go to jail.

  10. Ant

    Wasn’t compulsory superannuation supposed to ‘fix’ this problem?

    I still recall walking into the offices of the now defunct Australian Eagle with my dad when I started work paying $1040 p/a.

    The spiv behind the desk took out his graphs which showed that at worst by the time I hit 65 I would have accumulated well over $800,000, while at best I would be reclining back on a nice $3 million!

    32 years later I haven’t yet cracked $150k.

    It was my first experience with the saying “if it sounds too good to be true, it is”.

  11. MemoryVault

    Age pensions are a problem, we need to do something about it.

    I know, let’s set up a trust fund, we’ll call it the National Welfare Fund (NWF). We can force everybody to pay 7.5% of their wages into it for their entire working lives, paid along with their tax. We can call these payments a Compulsory Contributions Levy (CCL). That way we’ll have a healthy fund to offset against future pension liabilities.

    Oh sorry, I forgot. We did that in 1943. Menzies transferred payment of the CCL from the NWF, to General Revenue, in 1949, and promptly spent the proceeds. Fraser transferred the accumulated NWF funds into General Revenue in 1977, and promptly spent them.

    Okay, how about, in good years with a Budget Surplus, we transfer funds into a trust, to offset against future liabilities for public servant’s pensions . We can call it the Future Fund.

    Oh, sorry, I forgot. Howard already did that. KRudd replaced the funds with an IOU, and promptly spent them.

    Okay, how about we force people to contribute to private superannuation funds so they can look after themselves in their old age? We’ll get everybody to agree to forego some pay rises, in return for employers paying the equivalent of 9% into a super fund of the person’s choice.

    Now, age pension liability is an increasing problem looming on the horizon, so we want peoples’ super funds to grow as quickly as possible. How can we encourage that? I know, we’ll tax everybody’s contributions at 15%, meaning everybody’s fund has a built in initial “growth rate” of minus 15% pa. That should sure help things along.

    Seriously, it’s like watching a Three Stooges skit unfold.
    But without the funny bits.

  12. Eyrie

    Andrew, lets see how your SMSF looks after the next stock market crash that halves it. While investment even in cash may have kept up (barely) with CPI, cost of living is a different creature and the one that is relevant to the retiree.
    Also, even if your investments “kept up” you would have had a lot of money invested at a real interest rate of zero. Inflation wasn’t caused by OPEC. The price of oil went up. That isn’t inflation. I thought this was an economics blog?

  13. mundi

    The pension is at absurdly high levels. There is a claim that it’s still at the same portion of average wages over the long term, but that is only because they count the base pension only, while the amount people receive has tonnes of supplements.

    An elderly couple on a pension who owns there own home can have $650 per week of income, plus huge discounts to water, power, transport and other services.

    If you exclude rent/mortgage payments, pensioners have more money income than young people, especially most families. This is why all pokie establishments, especially RSLs and casinos, are packed with pensioners almost every day of the year, even in the poor suburbs.

    Couples on pension have more money than the average family with one parent working and one parent staying at home to card for children, plus rent/mortgage.

    However, I do not support a means test. If two people earn the same money and pay the same tax they should get the same government support. If you punish the guy who brought a home, and rewarded the guy who just pisses his money away to have no assets in retirement, you will just end up with more pensioners who strategically dump thier property to friends/relatives.

    Everyone should get the same amount, if the government can’t afford it, cut the pension. The claims it is not enough are absurd. How many live in cheap communal living? Almost none.

  14. sabrina

    What is age pension and why?

  15. .

    Andrew
    #1292260, posted on May 5, 2014 at 8:25 am
    Eyrie, big deal. That’s 5-6% inflation. You telling me grossed up shares would not have kept up? Or any other asset class – including cash? I started my SMSF 4 years ago. CPI has been 2% and my IRR around 10%. Don’t think the RBA caused the inflation of 1973, which was OPEC’s fault.

    WRONG

    Countries which had high inflation at the time had high monetary growth. This is actually dealt with in undergraduate macroeconomics, see Blanchard’s text.

  16. .

    Now, age pension liability is an increasing problem looming on the horizon, so we want peoples’ super funds to grow as quickly as possible. How can we encourage that? I know, we’ll tax everybody’s contributions at 15%, meaning everybody’s fund has a built in initial “growth rate” of minus 15% pa. That should sure help things along.

    Insane bullshit from greedy governments.

    55% of taxpayers had their own retirement savings before that spiv Keating introduced superannuation, which he taxed three times…

    Pensions ought to be bought out as lump sums versus an annuity to a theoretical age of 105. We can fund it through asset sales the oldies have in theory funded. Think of it as a capital return plus dividends.

  17. H B Bear

    An elderly couple on a pension who owns there own home can have $650 per week of income, plus huge discounts to water, power, transport and other services.

    Couple pension rate is $635.30 a fortnight. The real issue is poorly targeted part pensions whose discounts for all the other services push costs back onto families and everyone else.

    Funny how the Baby Boomers won’t be affected by the changes to the pension eligibility age.

    Don’t worry Petros – as a Gen Xer you should have got used to whatever government largess you might be eligible for disappearing right before you can take advantage of it by now.

  18. mundi

    Super is a fraud from start to finish. The average super fund since inception, has averaged less return than a term deposit savings account. Yet if you try and SMSF into a savings account, you are hit with regulation and third line forcing so stringent it will cost thousands per year.

    The average super return is less than the mortgage interest rates – but try to SMSF by paying off your house and you will got to prison. You can invest in anything *except* your own future assets.

    We all know what will happen with super. It will end up being a means test for the pension, and both will end up with the same absurdly high access age. My guess is it will just be used to offset the pension. I can hear the fries already … why should doctor X get to retire years before janitor Y….

  19. .

    Yet if you try and SMSF into a savings account, you are hit with regulation and third line forcing so stringent it will cost thousands per year.

    It’s different when the government does it.

    The average super return is less than the mortgage interest rates – but try to SMSF by paying off your house and you will got to prison. You can invest in anything *except* your own future assets.

    Of course. Paying off your largest debt and asset – why would we call that a savings plan?

    If we axed super, a lot of taxes and planning regs, the average mug coulkd get wealthy by paying off their mortgage and buying a series of positively levered, cashflow positive, eventually fully owned, 100% equity residential properties.

  20. H B Bear

    Keating’s great superannuation revolution is starting to look pretty suspect. It has created vast pools of sticky, “dumb” money that the banks financial services companies are helping themselves to at up to 3x the cost of overseas equivalents.

    Projections still show 4 out of 5 people will be dependent on the pension in full or in part decades from now. What a joke.

  21. mundi

    H b Bear, the couple rate is $635 EACH per fortnight, plus another $15 supplement.

    So a couple get $651 per week of income. Plus generous discounts on all government related expenditure.

    One of the reasons pensioners are so poor is they refuse to shard housing. 4 pensions could have $1650 per week income. Or two couples $1300 per week.

    Hardly struggle street.

  22. MemoryVault

    Insane bullshit from greedy governments.

    55% of taxpayers had their own retirement savings before that spiv Keating introduced superannuation, which he taxed three times…

    Exactly my point, Dot. I’m a bit of an economics naivete, but to the best of my knowledge there is nothing the average punter can invest in, that has shown a consistent return of plus 15% over a relevant time frame, say 30 to 40 years. That means the very best the average Joe Blow can hope for is something approaching what he can “save” in his lifetime, in real dollar terms. And that’s without the ravages of inflation as described by Aussiepundit above.

    That means, in today’s dollars, and today’s life expectancies, the average couple are going to have to “save” a million dollars, or $500.00 a week between them, every week, for 40 years.

    I know there are some smart arses there bragging about their SMSF’s and debating shares against property. All they are displaying is a lack of knowledge of the Economic Law of Gravity, which dictates, “that which goes up, must eventually come down”.

    My grandfather bought residential property before, during, and after the Great Depression. It took until 1957 for prices to return to what he paid pre-1930.

  23. Aussiepundit

    Like knighthoods, the constitution, and the ‘well off’, pensions are the wrong thing to be focusing on. It may be a long term problem, but is not a contributor to the “budget emergency” – which is about the current situation. If there is a budget emergency, then fix that first. Worry about the long term stuff another time.

  24. MemoryVault

    We all know what will happen with super. It will end up being a means test for the pension, and both will end up with the same absurdly high access age. My guess is it will just be used to offset the pension.

    Precisely what Hockey and Cormann are working on right now.
    The vehicle will be “Infrastructure Bonds”.
    And they’re coming soon to a Super Fund near you.

  25. johanna

    Spot on, Bear. When I resigned from the public service some years ago, I cashed out my super – the alternative was waiting for several years to be eligible for a $100 a week pension. I worked out that I would have to live to be 90 just to get the principal back. (I was in one of the later schemes, not the very generous ones of earlier times.) And mine was still a whole lot better than those commercially on offer.

    For people who are trying to feed their families and pay off a mortgage, this forced appropriation of a chunk of their income into the hands of spivs (Michael Williamson was on the Board of my super fund) is a huge ripoff. By the time they retire, if they ever can, who knows what changes governments will have made to pension and super rules? All they know is that vultures (including the government) are constantly circling their super funds, and that career bureaucrats in Treasury are firmly convinced that anyone who owns a home in their old age is a potential target for “savings” which they themselves will not be subject to. No means or assets tests for their publicly subsidised pensions!

    In the face of this, any government which is stupid enough to attack age pensioners who have worked and sacrificed to buy a home will be a one-term government, if that. And raising the pension eligibility age just means that old folks will go on the DSP instead, which has pretty much the same entitlements (health card etc) attached to it.

    Meanwhile, grandiose schemes and a million small examples of wasting public money and attacking productivity and investment go on apace. What a bunch of idiots the political class are.

  26. Notafan

    Age and invalid pensions have been paid out of consolidated revenue since 1908, the 1945 social security levy was introduced to pay for unemployment benefits, as clearly documented in the Joint parliamentary committee reports at the time.

  27. Andrew

    Andrew, lets see how your SMSF looks after the next stock market crash that halves it.

    Um, we’ve had Q3 2011 in that time. Don’t remember it halving. In fact, my return was +5.85% in that quarter.

    Going back to the GFC, over any measure of “full cycle” there was no problem although measured Oct 07 to Feb 09 wasn’t pretty. GFC had nil net impact on my net worth.

    It would be quite an achievement for a stockmarket crash to halve my balance given I’ve run a beta under 0.3x throughout. In fact, one of the largest investments is a T/D at 8% which I’m pretty confident will not halve.

    While investment even in cash may have kept up (barely) with CPI, cost of living is a different creature and the one that is relevant to the retiree.

    If you’re going to invent your own CPI I can’t really help with that. Pensioner cost of living has, if anything, gone down as people have thrown more and more free or subsidised services at them.

    Also, even if your investments “kept up” you would have had a lot of money invested at a real interest rate of zero.

    Which they didn’t. They made CPI+8%.

    Inflation wasn’t caused by OPEC. The price of oil went up. That isn’t inflation. I thought this was an economics blog?

    Yes OK, write a whole economic text about a throwaway line. The RBA wasn’t the cause of all global inflation. There was a significant supply side shock in a whole bunch of stuff. We had a Labor govt, which didn’t help. I’m as monetarist as the next guy, but simply saying countries with high monetary growth had high inflation is to reverse cause and effect.

  28. .

    I’m as monetarist as the next guy, but simply saying countries with high monetary growth had high inflation is to reverse cause and effect.

    Um no.

    This is actually dealt with in undergraduate macroeconomics, see Blanchard’s text.

    Where he quotes empirical data and analysis of the issue.

  29. .

    I know there are some smart arses there bragging about their SMSF’s and debating shares against property. All they are displaying is a lack of knowledge of the Economic Law of Gravity, which dictates, “that which goes up, must eventually come down”.

    Which is why investments with the shortest payback period on real cash returns are best.

    Theoretically, you the biggest dividends possible as soon as possible.

    Land is different unless we have a full on recession. Supply of housing is so constricted because of taxes and excessive regulation. Those copping rent since the end of the Vietnam War would have earned serious after tax cash returns.

    PS Andrew

    Don’t tell me M3 causes M1 growth. I’m already well aware of that. You are saying however excess base money doesn’t cause inflation. This is nuts.

  30. To save effectively requires a zero inflation rate.

    Precisely. Artificial perpetual inflation through government intervention to avoid deflation economic correction tilts the playing field in favour of borrowers over savers. In this context superannuation is used to shift economic burden from governments to the productive sector by reducing the effect of government borrowing. This was only considered necessary due to the incentive to borrow created by the aforementioned government intervention.

    As an extreme example of economic perversion, the US being the reserve currency enables it to borrow at an effective rate of 0%. Combined with the effects of fiat currency and government intervention creating perpetual inflation, US government borrowing is at an effective negative rate. This renders US government borrowing a net benefit. After all, who wouldn’t borrow at negative rates in the absence of deflation? Borrow $1million and pay back $900k! US government debt and debt growth are inevitable under such circumstances.

  31. john malpas

    A solution that the elderly might consider is the free bed and breakfast one.
    You just sink an axe into somebodies head and wait for the police to arrange your future.
    Do it thoroughly though.
    For shorter spells swearing at vibrant folk might be the ticket.
    After all you kinow that saving money for old age is futile

  32. frederic

    The Hon Christopher Pyne:
    I refer to your reported comments justifying the apparent proposal for an increase in the highest tax rate.
    From a personal point of view I am certainly opposed. For me this is effectively a “Thanks for voting Liberal, here is your bill for $35,000 over four years” tax.

    On a wider scale though the proposal reeks of incompetence and is massively destructive. The bigger problem for me and my colleagues in health is that every single one of my middle-income patients will really feel the effect of this tax. They are already significantly downgrading their health insurance such that many aren’t actually covered for hospital admissions. If my billing goes down by $15,000 per year due to this – which is very likely – then I get $7,500 less after tax, the government loses its $7,500 it would have taxed me, and I’m down say $5,000 due to the deficit tax as well. So, net I have lost $12,500, the government has lost $2,500 and the economy has lost the wealth that would have been created via the transactions which haven’t happened.

    I am very disappointed to be sending an email like this to a Liberal MP and never thought I would have to.

    Sincerely,
    —-

    That’s my fifteenth email to an MP and still haven’t received a reply.

  33. Rabz

    That’s my fifteenth email to an MP and still haven’t received a reply.

    I never heard back from them either, funnily enough.

    So no more votes from me, you arrogant dunderheads.

  34. Eyrie

    Andrew, let me guess, you are nowhere near retirement age.
    2011 wasn’t a stock market crash BTW.
    Stick around mate for when the stock market goes nowhere for 10 years or more in nominal terms while inflation rages like for example the 1970s.

  35. dianeh

    Is part of the answer that there should be no tax on entry into super, instead making all withdrawals taxable income?

    My thought is that we would all have an extra 15% in our accounts based upon our current investment and if earnings are also not taxed, then super would grow faster. Start with more, keep more of the earnings – keep more people off the pension. Treating super as deferred income would also mean that tax could be adjusted for behaviour when accessing the super. Take it out before retirement age (with exemptions for hardship or sickness) or in a lump sum, then put a penalty tax on top of the marginal tax rates.

  36. Infidel Tiger

    That’s my fifteenth email to an MP and still haven’t received a reply.

    I never heard back from them either, funnily enough.

    So no more votes from me, you arrogant dunderheads.

    Start emailing marginal seat members and tell them you can’t wait to campaign against them.

  37. H B Bear

    H b Bear, the couple rate is $635 EACH per fortnight, plus another $15 supplement.

    Hardly struggle street.

    Agreed and apologies … just as well I’m not in charge of austerity. If you own your own home the rate of the full pension is certainly adequate. The immediate need is to tighten up the assets test.

  38. Infidel Tiger

    For every dollar of debt levy I pay, I will match that in donations to unseat marginal seat LNP members.

  39. MemoryVault

    dianeh
    #1292426, posted on May 5, 2014 at 11:36 am

    Sorry Daineh, but why does it have to be so complicated?

    Let people set up a separate account with a bank, super fund, accredited investment house etc.
    Monies paid into that account, directly by the employer, attracts no tax.Nada. Zip.
    Monies withdrawn from that account as income replacement (when unemployed, sick, injured, disabled, or at retirement), attracts no tax. Nada. Zip.
    Monies withdrawn at any time for anything else other than income replacement, counts as taxable income in the year that is withdrawn.

    End.

  40. Aussiepundit

    pension reform will have no impact on the budget emergency.

  41. .

    dianeh
    #1292426, posted on May 5, 2014 at 11:36 am
    Is part of the answer that there should be no tax on entry into super, instead making all withdrawals taxable income?

    It shouldn’t be taxed at all. It is forgone income that could be used to pay down personal debt or start a business which is more tax effective than being a wage earner

  42. .

    MV: Too simple. Not enough spivs clipping tickets. Cue nonsense about consumer protection etc.

  43. .

    Infidel Tiger
    #1292435, posted on May 5, 2014 at 11:42 am
    For every dollar of debt levy I pay, I will match that in donations to unseat marginal seat LNP members.

    What a beautiful set of numbers, as our former Commonwealth Treasurer used to say.

  44. Fisky

    Start emailing marginal seat members and tell them you can’t wait to campaign against them.

    Write a cheque to the Labor Party campaign fund, scan it, and send that to the marginal Lib candidates.

  45. Andrew

    Eyrie, please stop beclowning yourself lecturing me about investments, stock market history, or implying that my super return is fungible with the ASX200. The dominant beta in my SMSF has been the Credit Suisse LLI, not the ASX or any other stock index. I mentioned 2008 in my response too. My stock market delta was brought down by a half in 2007, into foreclosure properties. Therefore 2008 had no persistent impact on the status of my pension funding. Nor did the yield crash of 2011- have any effect given bank yields available at 4-6% real. If I ever run out of investment ideas I’ll be sure to ask the Cats for help, but since you imply an inability to keep up with 5.5% CPI over 48 years I’m not sure you’ll have much to contribute compared to the professional traders here.

    Dot, I’m saying no such thing.

  46. johanna

    So a couple get $651 per week of income.

    Funnily enough, not all pensioners are couples. Try living on $325 a week as a single person. My rates, insurance, maintenance and utilities alone are around $100 per week. And none of those things are moving in any direction but up every year. I’m not a pensioner, but assure you that at this rate public housing will end up picking up the bills for more and more age pensioners, given that even those who own very modest homes are now perceived as blood-sucking plutocrats who should be forced to impoverish themselves by selling their house back to the bank via a reverse mortgage or forced to live like students.

    So, pensioners should warehouse themselves in batches to save money! Heck, why don’t we just build barracks for them. Think of the savings!

    Luckily, the electorate’s reaction to this kind of crap will be in the form of a large boot to the backside of the proponents.

  47. MemoryVault

    Lots of comments in the threads over the last week, by people claiming to have “written” to their members and/or the Liberal Party. But I bet few, if any of them, actually did.

    What they mean is they sent an email.
    Arranging some pixels on a screen then hitting the “send” button, is not “writing” to anybody.

    Pollies have filters on their inbox.
    Your target pollie in all probability will never even see, let alone read your email.
    Your email ended up in the “Complaints about the Debt Levy” folder.
    At the end of the day it will be counted, along with the rest, and tomorrow morning the total number received will be reported at the morning briefing meeting.
    That’s it.

    If you are really pissed, write a proper letter.
    Stick it an envelope and post it.
    If you are really, really pissed, spend a couple of dollars and send it Registered Post with return signature required.

    A written and posted letter is worth a thousand emails.
    A Registered letter is worth ten times that.

    Trust me on this.

  48. Notafan

    For how many generations have people, no longer capable of undertaking paid employment, been able to live for twenty or thirty years in a house by themselves or with a spouse while having a guaranteed cash income free healthcare, cheap medication and a whole bunch of other free stuff?
    Maybe two generations since world war Two, before that it was shared housing, boarding houses and the like and very few lived as long.
    It’s demanding expensive surgery for a 92 yo who has a life expectancy of less than a year, allowing people in their 80s undertaking university degrees etc.
    A lot of what people demand from the government should be provided by family, just like it was in the past and is in other parts of the world.
    People want their independence, but not really.

  49. dianeh

    It shouldn’t be taxed at all. It is forgone income that could be used to pay down personal debt or start a business which is more tax effective than being a wage earner

    I agree superannuation should be a choice, not a requirement but I think that if you invest tax free into super that when you eventually receive the income/withdraw your funds that it should be taxed, same as any investment. It could be taxed at a flat rate rather than marginal tax rates, it doesnt matter. WHile there is still a govt pension I would also like to see a tax penalty on lump sums to discourage people who take their lump sum, blow it and then claim the pension.

    MV, I also agree about deferred income, and it is a method I favour for maternity leave. Let us defer income into designated accounts and let us withdraw it when we need it, whenever we need it, and we pay tax at the marginal rates on withdrawal. Too easy and that is exactly why the govt doesnt allow it. You dont need a huge dept to oversee it.

    However, we are talking about retirement and unfortunately, while human nature being what it is, many people still think they will get a pension and they are therefore not inclined to save for their retirement. There then needs to be a few extra rules around it to make sure people use their retirement savings for retirement.

    Super does not need to be so difficult, it does not need so many rules. But simplifying it is probably not in the best interest of the large industry super funds, the unions or the public service.

  50. Dan

    MV I kind of agree but with a recent bad proposal after emails I was called and invited to meet with a federal senator; a marginal seat MP corresponded further and went to PM&C after his email deluge. The proposals were dumped. Some important people sent emails and the MP was able to discuss them in detail. But yes written is always better.

  51. Monkey's Uncle

    Funnily enough, not all pensioners are couples. Try living on $325 a week as a single person.

    Funnily enough, the government pays single pensioners more than half what it pays couple pensioners. Perhaps acquaint yourself with some basic facts.

  52. Dan

    I don’t think the pension is actually supposed to be some kind of lifestyle option. Any more than the dole is. At least not any more.

  53. Ellen of Tasmania

    So, pensioners should warehouse themselves in batches to save money! Heck, why don’t we just build barracks for them. Think of the savings!

    Sounds awful, Johanna.

    My solution would include families & ‘Granny flats’. But there’s barriers to that option too with so many building regulations.

  54. Pedro

    “To save effectively requires a zero inflation rate.

    Precisely” – wrong. It requires an interest rate above the inflation rate. I think that is just simple arithmetic.

  55. .

    I’m as monetarist as the next guy, but simply saying countries with high monetary growth had high inflation is to reverse cause and effect.

    Okay Andrew, I’ll give you a fair shake, but what else can that mean?

  56. Ellen of Tasmania

    People want their independence, but not really.

    People want other people’s assistance without the need to feel obliged. Government becomes the middle man to assuage all sense of obligation. We’d all feel differently about government assistance if we had to collect the money each week directly from our neighbours/family/friends.

  57. johanna

    Notafan, how many generations have had access to antibiotics and immunisation? Only recent ones, right? Bunch of bloody softies. What about those new-fangled horseless carriages? They should all just walk, like back in the good old days.

    These sorts of arguments are invalid and unproductive. We are both individually and as a society immeasurably wealthier than we were 100 years ago. Why is this a bad thing?

    Just because when everyone was poorer many elderly people had more miserable lives doesn’t mean that it was desirable. If we can afford to give them dignity and privacy in their declining years, why is that so terrible? And, we can afford it, but our braindead politicians prefer to waste billions on things like the NBN, Gonski, pink batts, $900 handouts and numerous other fripperies which do not have anything like the same benefits in terms of producing a decent and humane society.

  58. entropy

    I can’t see how the family home can be fairly means tested. A house in Vaucluse is worth a bit more than a house in Elizabeth. And applying a nominal value would be just bullshit. What could go wrong?

  59. Rabz

    OK – the pension with all supplements is $421.40 per week for a single person, $635.30 pw for couples.

    Just don’t spend it all at once.

  60. Rabz

    What could go wrong?

    Yes, land tax valuations spring to mind.

  61. Pedro

    “I’m as monetarist as the next guy, but simply saying countries with high monetary growth had high inflation is to reverse cause and effect.”

    It does, sheesh, Uncle Milton better hand back that Nobel prize. High inflation makes governments print money! And I guess controlling inflation requires a wage and price freeze.

  62. Dan

    Students need to live with parents, parents with children unless they can afford otherwise. Subsidized independent living was good while it lasted.

  63. Pedro

    “I can’t see how the family home can be fairly means tested.”

    Use a threshold about the ABS median price for the area. Nothing’s perfect, but some pensioner mouldering in an old beachfront home worth a bucket is even more imperfect than that test. I don’t see why you would put the home in a different category from other savings. I expect there is also an efficiency gain in encouraging people to sell a big home to move to a smaller one.

  64. Notafan

    Can we can afford it, when we get down to two working for every one on benefits for example?
    I’m not saying we shouldn’t do anything at all but where is the line in the sand as to what society should provide?
    In the first instance people should be responsible for themselves, the financial planning/ retirement planning industry is geared to getting everything from the government instead of only seeking assistance when it is really needed. I’m no apologist for Labor’s waste either.
    Gough removed the means test for over 70 pensioners, Malcolm brought it back. The assets test was brought in to stop 1980s millionaires getting pensions and people who were forgoing interest income by holding money in non interest bearing accounts to get the pension.
    It seems getting free stuff can stop people from behaving rationally.

  65. johanna

    Notafan, you have drunk the Treasury Kool-Aid. From Henry Ergas’ article:

    For starters, claims about increases in dependency ratios are wildly exaggerated: while the share of older people in the population is rising, the share of children has fallen, so the ratio of dependents to the working age population is no higher now than at federation.

    Moreover, the share of women who work has risen dramatically, while days lost to injury and illness have decreased, so the effective labour force is a far greater proportion of the working-age population. As a result, dependency ratios, properly measured, have been falling, not rising.

  66. mundi

    Means testing via assets is so unfair.

    So just give full pension to those that piss their money away and are still renting? Result is more people pissing their money away and still renting.

    I say: scrap the pension. Support themselves by reverse mortgaging their house if they have to.

    For the others, establish communal living centers. Food health shelter. That is all. Charities and family an provide the rest. Works in counteries way poorer than australia.

    This will encourage proper use of super and less leeching off government just to pass your home onto your kids.

  67. kurt

    Surely we should be discussing raising the retirement age for women. Women live 6 years longer than men and rarely do the physical work that bars working to 70. If men lived 6 years longer than women does anyone seriously think men wouldn’t be working longer? After all, for decades we actually retired later!

  68. Notafan

    Joanna I said taxpayers, not people of working age, :)
    I’m sure most people are happy to support their children, and I know there are less per household, but will they be happy to support older people who had the opportunity to save for their retirement?

  69. Andrew

    Okay Andrew, I’ll give you a fair shake, but what else can that mean?

    Just because I recognise the possibility of two sources of inflation (supply side costs, and monetary expansion) doesn’t mean I ignore or reject either. Nor does it mean I am ruling out monetary authorities worsening supply-side inflation. But in a hypothetical example, if all inputs doubled in price due to some natural disaster causing a short-lived shortage then:

    - I would not expect my monetary authority to attempt to halve the level of economic activity in a misguided price stability exercise, and
    - when monetary aggregates adjusted, I would consider this a RESULT of inflation and not a CAUSE (even though theoretically there might be an element of conscious choice available to the central bank).

    Don’t cry, there’s lots of monetary inflations you monetarists can still point to (and some monetary deflations, if you’re into that sort of thing too).

  70. Andrew

    For starters, claims about increases in dependency ratios are wildly exaggerated: while the share of older people in the population is rising, the share of children has fallen, so the ratio of dependents to the working age population is no higher now than at federation.

    Wow, a dependent ancestor is economically equivalent to a dependent descendant. It’s going to take a while to ring all 1.3bn Chinese and give them the good news about their 4 grandparents so we’d better get cracking.

  71. Andrew

    I can’t see how the family home can be fairly means tested. A house in Vaucluse is worth a bit more than a house in Elizabeth.

    Isn’t the issue that if you choose to live in a Vaucluse in a $3m house, that you don’t expect the pension? If you sell it, you could move and live like a multi-millionaire in Guildford because, well, you ARE a multi-millionaire.

    I don’t particularly care either way – if the govt means tests they should create a reverse mortgage facility at the cash rate as a public service (user pays valuation and documentation fees at a competitive conveyancing rate). If not paying 9% compound, the home equity will last forever.

  72. Andrew

    My grandfather bought residential property before, during, and after the Great Depression. It took until 1957 for prices to return to what he paid pre-1930.

    In 30 years the rent / imputed rent would have a non-trivial return presumably? We’re talking about investments here. If you bought Jakarta real estate in early 1997 unhedged you probably didn’t go brilliantly well either. But this was kicked off by a ridiculous non-sequitur about 48 years of CPI and the claim that investment is only possible at a time of 0% CPI.

  73. Combine_Dave

    Students need to live with parents, parents with children unless they can afford otherwise. Subsidized independent living was good while it lasted.

    Pretty much sums it up. I have no issues with students living away from home (builds character), with elderly parents/grandparents living independently (quality of life) or mothers staying at home with their kids (best for the child). However I have no desire for my tax monies to subsidise either. Pay for it from your own pocket or not at all. Don’t expect the government’s supporting hand from cradle to grave.

  74. johanna

    Andrew, a dependent child doesn’t put a roof over their own head, which they have paid for, as 70% of pensioners do. A dependent child costs whoever is supporting him/her the direct costs of food, shelter, clothing etc. But taxpayers provide child care including after school care, 13 years of school (noting public contributions to non-government schools), a range of direct subsidies like transport concessions, back to school allowances etc, subsidised school holiday activities, recreational facilities like skate parks and sporting facilities, special public library facilities, plus their parents get tax deductions which means that others have to pay the taxes to fund the above. Then there are things like ABC Kids, a whole range of separate programs for mental health, drug education, road safety and who knows what all. There are school medical and dental services and free immunisation programs.

    If their parents are on welfare, they get all their living costs met by taxpayers, very often including heavily subsidised public housing.

    I doubt that apart from health costs, a child is much cheaper for taxpayers than a pensioner living in their own home.

  75. .

    Don’t cry, there’s lots of monetary inflations you monetarists can still point to (and some monetary deflations, if you’re into that sort of thing too).

    What are you talking about you arsehole?

    You were wrong and demonstrably so and bloviated away until you felt it was appropriate to unnecessarily insult someone.

    Just shut up if you’ve got nothing useful to say.

  76. Andrew

    Boy the monetarists are easily upset. I was wrong??? Not the bloke who said it is not possible to save unless the CPI is 0%? Next you’ll be getting fired up in defence of Numbers.

  77. .

    Not the bloke who said it is not possible to save unless the CPI is 0%

    That wasn’t me. Don’t teach your grandfather to suck eggs either, even if they’re not an economist or trader/broker/analyst.

    That’s obviously wrong but what if there is a crash after such inflation causes credit misallocation?

    There is a good bet a lot of equity will be wiped out and all prices will be permanently higher. This in effect may wipe out savings.

    0% inflation in a wide band is better than this fear of any deflation at all causing a catastrophic recession. The non financially literate have their investment decisions complicated by an inbuilt policy bias to inflate. This reduces aggregate investment and returns – it makes us poorer and lowers our living standards.

  78. .

    Next you’ll be getting fired up in defence of Numbers.

    Clearly I have deeply you offended you! I must endeavour to make recompense to scour such a low opinion of myself from your mind…

  79. entropy

    Isn’t the issue that if you choose to live in a Vaucluse in a $3m house, that you don’t expect the pension? If you sell it, you could move and live like a multi-millionaire in Guildford because, well, you ARE a multi-millionaire.

    Ahh, but no doubt the dear little old lady quietly living out her last days in the family home will be terribly, terribly frightened of the mean ol’ govnment after that nasty brute of a husband left her for a younger model, and all she got was the house. Where will her children, many no doubt employed in a noble profession, like nursing disabled children, stay when they come to visit if she is, kicked out of her home of fifty years?

    How about we not worry about the value of he house too much, and let her stay, but she can access the pension against the equity in her home, to be paid back when she drops off the twig? Surely her children who will inherit don’t want their poor mum to be inconvenienced and would agree?

  80. stackja

    entropy
    #1292841, posted on May 5, 2014 at 5:59 pm
    How about we not worry about the value of he house too much, and let her stay, but she can access the pension against the equity in her home, to be paid back when she drops off the twig? Surely her children who will inherit don’t want their poor mum to be inconvenienced and would agree?

    Makes sense to me.

  81. Notafan

    Many of the things government is mentioned as providing were provided in the 1960s and 1970s too, playgrounds not skateparks, no after school programmes or driver education but there were free holiday programmes, immunisations, kindergarten, unlimited access to baby health centres, free dental care for low income earners at the dental hospital, school nurses doing lice checks, little athletics, free school milk, school health checks and public libraries.
    There were generous tax deductions for education expenses up until the 1980s when they were folded into the tax free threshold, and the ETR was a very limited deduction for two or three years when they became the schoolkids bonus, also slated to be abolished.

  82. entropy

    You could set a threshold that would let the kiddies still inherit a decent whack, say $500k, then anything above it could be an equity offset to allow access to the pension. So if the house was worth $1m they might use up a hundred k over a few years. Someone whose house was worth less would not have to pay. An offset at all.
    The problem will be potential inheritors objecting to the government avoiding its responsibilities and taking their money! Even though it is their parents’ money. Also the issue of a family member wanting to move in once they have bundled Dorothy off to the nursing home. Who pays then?

    I recall Bob Ellis making a song and dance about it when the Howard Government was looking at the value of the house when putting people into nursing homes.

  83. entropy

    I think you will find it wasn’t the government providing a lot of that stuff, notafan. The government of course, has since crowded out things like church run vacation care.

  84. stackja

    entropy
    #1292880, posted on May 5, 2014 at 6:24 pm
    The problem will be potential inheritors objecting to the government avoiding its responsibilities and taking their money!

    To me government responsibilities have nothing to do with families. My parents did not expect government to pay their bills. The law at the time allowed some government assistance with child endowment payments. Dad worked six days a week. Mum at stayed home doing house work. I went to school. That was the way it was in the 1950s.

  85. stackja

    entropy
    #1292882, posted on May 5, 2014 at 6:27 pm
    I think you will find it wasn’t the government providing a lot of that stuff, notafan. The government of course, has since crowded out things like church run vacation care.

    I remember visiting relatives in school holidays. And Scouts camping. The church are now vilified by the abuse RC.

  86. Notafan

    Free milk was definitely government, I think Whitlam cancelled that, as was the state lice checks, school holiday programmes were at state school, the baby health centre and immunisation were either council or state government, little athletics might have been volunteers but it was council owned sporting facilities

  87. Notafan

    We also had public libraries in the mid 1960s and on at least one occasion I attended a school holiday activity at the library too!

  88. johanna

    it could be an equity offset to allow access to the pension. So if the house was worth $1m they might use up a hundred k over a few years.

    If you look at the life expectancies of pensioners, unless you think they are all going to start suddenly dying in their early 70s, $100k doesn’t go far. Realistically, a couple could lose around $600k worth of equity (at current prices, assuming that no interest is charged on the offset) before they drop off the twig or go into care.

    There seems to be a presumption that most pensioners live in mansions or at least in desirable parts of Sydney or Melbourne. In fact, 30% or so rent, and most of the rest live in houses or units worth not much more than $600k. That’s why reverse mortgages with banks are not a solution for most homeowners. With accruing interest, you could be penniless and homeless in 15 years, after spending much longer than that saving for a deposit and paying off the loan.

    A pensioner living a a $3m joint in Vaucluse could barely afford to pay rates, maintenance and insurance using the whole of their pension. This mythology of thousands of multi-millionaires sucking on the public teat is leftist propaganda which seems to have been swallowed whole by some people here.

  89. Eyrie

    Andrew, get a life. Most of us have more interesting hobbies than investing. I can understand making things and selling them for more than they cost or providing services that people can not or don’t want to do themselves but the financial world is full of sleazoids and spivs passing off what they do as value adding.
    A couple of months ago I met a Danish electronics engineer who has a nice business advising big banks and other financial institutions on risk management. That’s how he makes his money as he’s never worked as an EE but developed some interesting software. He told me he isn’t silly enough to try to play the investing game.Hmmmm…..

  90. hzhousewife

    Students need to live with parents, parents with children unless they can afford otherwise. Subsidized independent living was good while it lasted.

    So most country kids should be disallowed from tertiary education?

  91. Notafan

    Tertiary can to be online, plenty of off campus students already, isn’t that what’s NBN for?
    I did a university course like that for a few years with phone tutorials and on line submissions seems to work okay.

  92. calli

    So most country kids should be disallowed from tertiary education?

    Years ago, country kids would board with city based relations…not just for uni but for apprenticeships as well. It was seen as perfectly normal. Before governments took over all the minutiae of life, people were actually able to shift for themselves and solve complex problems.

    Now, it’s ‘if da gubbbermint won’t do it then I can’t do it’.

  93. johanna

    I don’t want to be treated by a doctor with an online degree. I don’t want bridges to be built by engineers who have never attended a lecture or a tutorial, or received direct, on the spot feedback from their teachers. And I certainly don’t want my food or medication to be tested, or my radioimaging read, by someone who has never been in a lab.

    I guess those careers are out for country kids, unless their parents are loaded..

  94. hzhousewife

    Notafan, of course you know that the NBN has not been rolled out everywhere yet .
    I had an employee just today tell me she has given up on wireless internet at her house ( in a town of 40000 population)as it is taking an hour to load a page. Telstra has told her she is in a queue for wireless internet but they have run out of capacity so waiting time 6 months plus.

  95. .

    No, of course not.

    This is why there are res schools, residency, pracs and placements.

    You can learn theory on your own.

    Radiographers would have minimal lab experience as it is.

  96. hzhousewife

    oops
    given up on (regular) internet…

  97. Boambee John

    “Agreed and apologies … just as well I’m not in charge of austerity. If you own your own home the rate of the full pension is certainly adequate. The immediate need is to tighten up the assets test.”

    I could possibly live with the family home being asset tested, but only the post-inflation capital gain element. If you paid $25,000 for it 40 years ago, use the inflation record over those 40 years to price-update it, than test the excess (if any) between the adjusted figure and the current value.

    Might not always produce the government’s (Treasury’s??) desired result, however!

  98. Boambee John

    “Write a cheque to the Labor Party campaign fund, scan it, and send that to the marginal Lib candidates.”

    Don’t send the cheque, however, the Liars Party would only waste it!

  99. Boambee John

    “Tertiary can to be online, plenty of off campus students already, isn’t that what’s NBN for?
    I did a university course like that for a few years with phone tutorials and on line submissions seems to work okay.”

    The first time our son visited his university, it was for his graduation ceremony.

    Distance/internet education is the way of the future, though there will be a painful adjustment period for the current universities and their staff.

  100. Notafan

    I don’t think I was suggesting it had to happen today.
    Of course sometimes there has to be prac work etc, and for medicine and engineering I am sure scholarship programmes (and Austudy) will continue to exist.

  101. Monkey's Uncle

    For starters, claims about increases in dependency ratios are wildly exaggerated: while the share of older people in the population is rising, the share of children has fallen, so the ratio of dependents to the working age population is no higher now than at federation.

    The obvious difference is that children are largely supported by their biological parents directly, while retirees and the elderly are largely supported by compulsory state social transfers. Most people don’t mind working hard and making sacrifices to directly help those that are closely related to them. People tend to be a bit more reluctant to do so simply so the government can forcibly take it away and give it to random strangers.

    The issue is clearly not just some notional ‘dependency ratio’. It is the incentives for people to continue to produce the resources and capital upon which any system depends. And if people have fewer children, it means that there are fewer workers and taxpayers from the next generation to keep the system going.

  102. Monkey's Uncle

    I doubt that apart from health costs, a child is much cheaper for taxpayers than a pensioner living in their own home.

    Even if that was true, the difference is that children represent future productive citizens whereas the elderly represent past productive citizens.

    If a larger share of society’s resources are devoted to paying out past promises and a lesser share to supporting future contributors, it does not take a genius to work out that this will not be sustainable in the long term. It would be like a company saying ‘never mind that we have to pay out more retirement benefits to former workers. We will save money by not having to train as many new workers!’. I am sure that company will have a bright future!

  103. johanna

    The obvious difference is that children are largely supported by their biological parents directly, while retirees and the elderly are largely supported by compulsory state social transfers.

    Nope. Most older people have worked and saved to purchase their own shelter (which, by the way, is often available to members of the younger generation who through circumstances or/and fecklessness cannot provide it for themselves). They own a roof, clothes, appliances etc – none of which children can provide for themselves. And they pay taxes, like GST and rates.

    Even if that was true, the difference is that children represent future productive citizens whereas the elderly represent past productive citizens.

    Yep, those “past productive citizens” are a real problem, and the quicker we deal with them, the better …

  104. Monkey's Uncle

    Joanna, if the elderly are able to provide for themselves presumably they don’t need the pension, public health care, concessions etc. So what’s the problem? Good. I am glad that is settled then.

  105. Monkey's Uncle

    Yep, those “past productive citizens” are a real problem, and the quicker we deal with them, the better …

    In other words, you cannot sustain your argument based on some silly talking point about real dependency ratios. So instead you resort to your standby argument that I am such a horrible, nasty, meanie.

  106. Notafan

    The opportunity to save for retirement is /was there and if people chose to consume rather than save, they might have to bear the consequences. We have been told since the early 1980s not to expect to get a pension.
    One last thing, people who were educated in the 50s and 60s got a half decent education with a proper curriculum, today’s children, not so much.

  107. johanna

    Henry Ergas has already illustrated the point about dependency ratios. People don’t have 6 or 10 kids these days, and the ones they do have are much more productive.

    The elderly are indeed much better able to provide for themselves, because individuals and societies are much richer. They can have washing machines instead of Ma having to handwash everything. They have fridges, freezers and microwaves. Some of them (shock! horror!) even manage to afford cars so that they can do their own shopping and otherwise attend to the administration of life. Why, they should be walking or catching the tram like their grandparents! That would show them (whoever “them” might be).

    All this Puritanical, greenie, leftist bullshit that some people here have fallen for just illustrates how far this ideology has pervaded allegedly conservative politics.

  108. Monkey's Uncle

    Henry Ergas has already illustrated the point about dependency ratios.

    Joanna, I have tried to explain to you why Ergas’ argument is conceptually flawed bovine excrement. Your response is to simply assert that Henry says it, and so it must be so. Go ahead then. Resort to appeal to authority. Hide behind the opinions of others.

    I find it hilarious that you trumpet the fact that the elderly are able to live better than previous generations as glorious progress, and yet in the same breath you and others lament how terrible it is that younger generations have higher expectations than previous generations! Economic progress for me, but not for thee!

    All this Puritanical, greenie, leftist bullshit that some people here have fallen for just illustrates how far this ideology has pervaded allegedly conservative politics.

    Like complaining about how greedy and materialistic the young are, and how they are not happy to live in a ramshackle bungalow? Is that the kind of Puritanical, greenie bullshit you are talking about?

    Joanna, your solipsism and stupidity brighten my day no end.

  109. johanna

    You moron, my whole point is that later generations have (quite rightly) higher expectations. With good reason. We have been getting wealthier.

    So, we don’t expect old people who are unemployable to live in seedy boarding houses if they are unlucky enough not to have family to look after them. We don’t sit by while they suffer or die from lack of proper medical care. And if you imagine that private charities used to fix up these problems, you are in the category that thought that Barnados (a) fixed social problems and (b) didn’t attract every pedo in town.

    Lift your game, pal.

  110. Tel

    Most older people have worked and saved to purchase their own shelter (which, by the way, is often available to members of the younger generation who through circumstances or/and fecklessness cannot provide it for themselves).

    The “median multiple” after World War Two was about 2 which is to say that a median house purchase was double the typical median household income (and that’s for a single income household which was the standard at the time). No in Australia the “median multiple” is over 5 and that’s for a two-income household. In other words, older people just had the benefit of cheaper houses, and they weren’t heroic savers or great achievers or anything like that. A good fraction of workers in major cities spend more than two hours each day travelling to and from work, some spend more than four hours each day travelling.

    The same generation that demanded free tertiary education under Whitlam, now demands free medical care, and they get it because the politicians have no choice but pander to the largest demographic. Hence the boomers have always been and will always be, the “me” generation.

  111. johanna

    Tel, you idiot, in post-war Australia there was an acute housing shortage which went on for well over a decade. I do wish that people who pontificate on these issues did a bit of basic research.

    There were nowhere near enough houses for the returning soldiers and their sweethearts who wanted to start families. Rents were astronomical in the cities. People crammed in (unwillingly) with relatives and friends, or lived in boarding-houses, because they had nowhere else to go.

    The Golden Age never existed. Learn a bit of economic history, and get over it.

  112. Tel

    johanna, you idiot, these numbers have been extensively surveyed. Look them up.

  113. Tel

    As of the third quarter of 2010, the 7th Annual Demographia International Housing Affordability Survey placed the median multiple in these metropolitan areas at 3.6, well above the pre-bubble average of 2.9. Since World War II, the median multiple has generally been 3.0 or less, though in metropolitan areas with more intense land-use regulation (such as “smart growth” or “urban containment” policies), higher median multiples have been routine.

    http://heartland.org/policy-documents/7th-annual-demographia-international-housing-affordability-survey

    Clear enough for you? Even an idiot could figure that one out.

  114. johanna

    This measure is widely used [by whom? Johanna] for evaluating urban markets, and has been recommended by, amongst others, the World Bank and the United Nations, and is used by the Harvard University Joint Center on Housing.

    Your credibility her has been done for good. The UN, the World Bank, and some greenie-funded subset of Harvard, are your sources.

    Meanwhile, back in post-war Australia …

    Just appalling.

  115. Tel

    If you don’t like those guys, try “The Real Story of Housing Prices in Australia from 1970 to 2003″:

    The 160 per cent real house price increase over 30 years places Australia close to the top of the OECD league for house price increases. As reported by Tsatsaronis and Zhu (2004), who analyse international house prices also from 1970 to 2003, only the UK, Spain and Netherlands experienced real house price increases of a similar magnitude over this period. Real house price increases in most other OECD countries ranged over this period from minus
    10 per cent to plus 100 per cent.

    You are seriously going to argue against the statistics showing Australian housing is getting less affordable? Think first, please.

  116. Tel

    Oh look, there’s also these guys, yet another group come to the same conclusion.

    http://www.prosper.org.au/wp-content/uploads/2014/02/Prosper-Australia-Senate-Housing-Submission.pdf

    Turn to page two and there’s a graph with real housing price index (i.e. adjusted for inflation). What’s that about the dreadful housing shortage? Hmmm, seems to be a tiny ripple in price somewhere around 1950 which lasted only two years. Scratious! At the same time, we have a graph of household debt to GDP ratio which was at an all time low during World War Two and in the aftermath. It’s been growing ever since, until it hit the wall at just less than 100% in the financial crisis of 2007. Yes that’s right, the boomer generation lived on accumulating debt, and it’s documented and the stats are right there.

    Also check out “Figure 6: Total Land Values to GDP Ratio (1910 – 2013) & Housing Stock Value to GDP Ratio” and you can see it reaches a temporary peak in 1931, then falls to a minimum in 1951 and has been rising from there. So in a nutshell, land was most affordable in 1951.

  117. johanna

    Blah, blah, blah. Never mind the economic history of Australia. Never mind the fact that it is physically impossible for a market to exist at prices that are more than people are able to pay. Never mind that the housing market is a subset of desirability and availability. Nup, I demand to be able to live where my parents lived at the same price as when they bought their place in the 1950s – it’s a human right, I tells ya!

    There is no shortage of cheap housing in Afghanistan, or Lower Woop Woop in the north of South Australia. Off you go.

  118. Monkey's Uncle

    Blah, blah, blah. Never mind the economic history of Australia. Never mind the fact that it is physically impossible for a market to exist at prices that are more than people are able to pay.

    Never mind the fact that the housing market is clearly not a free market, and there are all sorts of government interventions that artificially inflate housing prices. Never mind the fact that housing is an essential good, and so people generally cannot simply walk away or opt out of the housing market if prices get too high.

    Nup, I demand to be able to live where my parents lived at the same price as when they bought their place in the 1950s – it’s a human right, I tells ya!

    But apparently it’s a human right for the elderly to live better than previous generations of elderly at the public expense. I tells ya!

  119. johanna

    I never said that the housing market is a free market. Obviously, it’s not. What I said was that in the end, it cannot charge more than people can afford to pay.

    I also never said that it is a “human right” for elderly people to live better than previous generations. But since everybody else is living better than previous generations, singling them out for exclusion is difficult to justify.

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