Transcript of Interview - Mornings with Ian Henschke ABC 891 Adelaide - Positive Ageing, Economic Potential of Senior Australian’s, Age Discrimination, Tax Reform - 18 February 2013
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18 February 2013
E&OE Only
Topics: positive ageing, economic potential of senior Australian’s, age discrimination, tax reform
Ian Henschke: Now, we're talking about age now. Age before beauty, of course, with Minister Mark Butler, Minister for Ageing. Now, this I suppose is something that a lot of people are not looking forward to, that's the idea of continuing to work beyond the age of 65.
Now, it's apparently going to be a reality for many people. We had someone farewelled here the other day who was 60 and they were looking to heading off and having a wonderful time, and then I pointed out to some of the younger people at the farewell that they might be working 'til they're 70.
Mark Butler, is that going to be the case if you're, say, a 25-year-old now? Can you look forward to working 'til you're 70 before you get the pension?
Mark Butler: Well, not before you get the pension, but I think what we'll see is, to use a hackneyed old phrase, horses for courses. I think if people want to continue to retire at the traditional age of 65 then the pension is there for them to be able to do that. But the pension age of 65 was set 100 years ago when the average life expectancy for a man was in the 50s.
Now it's about 25 years greater than that, so if you reach 65 today statistically you're likely to live for another quarter of a century and what I know talking to seniors across Australia is that a number of people approaching the age of 65 don't necessarily want to retire. They don't want to work the same arrangements they did when they were younger, but a recent survey I saw said that only 40 per cent of people approaching the age of 65 want to retire. They certainly want to downscale the level of their work, but they don't want to leave the workforce entirely, necessarily. So it's really got to be a matter of choice, I think, and that's the point I've tried to make in the article in the The Advertiser today –
Ian Henschke: Although that article comes out in a different way, it says the pension bill rockets from $16 billion to $48 billion in 15 years. I mean, so, suddenly you - it appears from that that the Government has to find $30 billion extra. Is that correct?
Mark Butler: Well, those numbers are about right but, look, we've been looking at this as a country now for a good 20 years, and that's why Australia is in such a better position, really, than any other economy in the world on this point. Twenty years ago the Hawke and Keating Governments introduced compulsory superannuation. A few years ago we made changes to the pension that will make sure that these things are sustainable. We've been making hard savings in the budget that are focused on the long term so that we're able to say to people approaching the age of 65, the age pension is as solid as a rock. It is there for you to take up at 65 if you want to, but if you want to continue to work on a part-time basis then there are arrangements in place for you to be able to do that as well.
The discussion that older people have with me when I travel the country, if they are thinking about working, is that they're concerned that there is still very significant age discrimination in our workplaces, and so I think what we do need to have a national conversation about is getting back to a bit of respect for age and a bit of respect for the experience and the wisdom that older workers are able to continue to deliver to workplaces well into their 60s, and even beyond.
Ian Henschke: Well, in fact we had a very robust discussion here on this program which involved, I think, the Commissioner for Ageing coming down to see the Parliament here, 'cause she felt there was actually discrimination taking place, so I know that Commissioner for Ageing has said that she's spoken to you about this. So, I mean, is there a lot of work that you've got to do to, I suppose, ensure that people that do want to work are not being dealt with improperly and illegally?
Mark Butler: There's a lot of work we need to do. I think there is still a very significant cultural problem in our workplaces around age, and I'd like to say that that only cuts in at 65, but actually what our research shows is that age discrimination starts to cut in around 45. People over 45 report time and time again consistently to all of the authorities that they often go to interviews and are just looked through. If their date of birth is on their resumé, often they're put to the bottom of the pile.
Now, that is just not in the economy's interest, it's not in the interest of individual employers, firstly because older workers are valuable workers. I mean, research that the Human Rights Commission did over the last couple of years showed that an older worker was worth about $2000 per year more to their business than a younger worker because they have lower levels of absenteeism and they have higher levels of retention, so there is less turnover costs involved in over workers. Still…
Ian Henschke: And yet at the same time you've got your Labor colleagues here in South Australia saying they want to rejuvenate, say, the education department by offering what they call exit packages for, I think they refer to them as older, probably burnt-out teachers. There was a phrase they were using as if the idea of the - that they'd lost their enthusiasm and they wanted to get younger ones in. Is that just code, though, for reducing the education budget, because you can pay a graduate teacher a lot less than you can pay an experienced teacher?
Mark Butler: Look, I haven't seen those announcements so I can't really comment on them. I mean - and obviously any system, education or otherwise, wants a balance in their demographics because if you do rely too much on workers of a more senior age then in 10 years time or 15 years time you're going to have a big exodus and have real problems maintaining and sustainable workforce. So I understand the idea of a balanced workforce in terms of age, but I think, if anything, we've got the balance wrong.
We don't pay enough attention to the value of older workers, both for an individual business or government department, if you like, but also for the broader economy because we've got this extraordinary demographic shift happening at the moment where, in a matter of 10, 20 years, the makeup of our population is going to be dramatically different to what we've understood it to be, really, for most of the last several decades, and that is overwhelmingly a very good thing. It's a product of us living longer, healthier lives, but we're just going to have to have a think about some of the traditional approaches to work and to retirement so that we can make sure that Australia continues to prosper, both as individuals but also as a broader nation.
Ian Henschke: We're talking to Mark Butler, Minister for Mental Health and Ageing, about his vision of Australia in the next 10, 15 years where a lot more older people will be working. Apparently at the moment 40 per cent of older people would like to keep working beyond the retirement age. If you've got some thoughts on this, give us a call on 1300-222-891, you can talk directly to the Federal Minister.
Brian has done that from Murray Bridge. Good morning, Brian.
Caller Brian: Good morning, how you going?
Ian Henschke: You question for Mark Butler?
Caller Brian: Yes, I have. He just mentioned that 65 was the retirement age or the pension age pretty well across Australia. I'm 56 at the moment, I was hoping to retire around 65, but I get no pension benefits or anything like that until 67 because of my age.
Ian Henschke: Is that correct, Mark Butler, that the age is being pushed up? This is what I said the other day when we were having a farewell for one of our colleagues here, I said by the time - one of the 25-year-olds was there, I said you might be 70 before you get the pension. Isn't that correct that the age gets pushed out as the years go on?
Mark Butler: Well, what we announced in 2009 when we delivered the largest ever increase to the amount of the pension is that over the years from 2017 to 2023 there will be a gradual increase in the pension age from 65 up to 67, and from our point of view that is where it stops.
Ian Henschke: Okay, so Brian's right, he will have to wait 'til he's 67 if he's 56 now?
Mark Butler: Well, 2023 is the year when the pension entitlement age moves to 67. That is a change that's being made in most Western countries. You're seeing it in the UK, the US, a number of European countries are making a marginal increase to the pension entitlement age in recognition of the much higher average life expectancy that we see in Australia. As I said, the 65-year-old entitlement age was struck by Andrew Fisher in 1909 when he introduced the aged pension, at a time when average life expectancy of men was in their 50s and for women, for that matter, was in the 50s as well. So this is something we've kicked out, really. We announced it in 2009, to take effect in 2023, and it essentially pays for the very significant increase in the amount of the pension that we put in place in 2009, the largest ever increase to the pension.
Ian Henschke: Alright, well, I have just done the maths and I'm not brilliant at maths, but if it's 2013 now and 2023, and Brian is 56 now, 10 years time he'll be 66 so he has to wait a year for his pension. So I take it that is correct then, Mark Butler?
Mark Butler: Yep.
Ian Henschke: Okay. And you're saying that there will be no further increase to the old age pension. Is this a core promise for 2023?
Mark Butler: We're being crystal clear that this is - as far as the Labor Party is concerned at least, this is it. We've made a change to the amount of the pension, with a big increase, and we've foreshadowed a gradual increase in the entitlement age from 65 to 67, an increase that steps up over six years between 2017 and 2023.
Ian Henschke: Okay.
Mark Butler: And as far as the Labor Party's concerned, that is it.
Ian Henschke: Alright. So you'll fall into that category yourself, won't you? You'll have to wait 'til you're 67 to get the pension, by the sounds of it, won't you?
Ian Henschke: Alright. Let's go to our next caller, Dell from Cavalli Park. Good morning, Dell.
Caller Dell: Good morning, Ian. Good morning, Mark. A member of my family's 66 and somewhere I read that there's some form of a $20,000-off tax break for people once they reach retirement age. Can you explain what that means, please?
Mark Butler: Well, last year we increased the tax-free threshold, which is the amount of money people can earn without paying any tax at all, up to about $18,000. So that's for all Australians, a very significant benefit, particularly for lower-income Australians. But if you add to that some things that have traditionally been called the senior tax offset, then seniors over 65 can earn, I think, up to about 28, $29,000 without paying a dollar in tax. These were changes that took place at the same time as the introduction of the carbon pricing regime. There is a very significant tax-free threshold now for seniors. That's right.
Ian Henschke: Oh well, that's probably one of the reasons why a lot of seniors would like to keep working. You can get your full pension and get up to almost $30,000 from working in another job.
Mark Butler: Well no, you don't necessarily get your full pension if you're earning $29,000, it's still income tested, but you're not paying tax.
Ian Henschke: Not paying tax.
Mark Butler: The tax-free threshold. And you would still, I think, be entitled to a part pension at that income level.
Ian Henschke: Okay, alright. Judith from Port Pirie, good morning Judith.
Caller Judith: Good morning. I've been quite interested in listening to what you're talking about. I actually work permanent part-time at a local private college, and I work 15 hours a week, my husband is disabled, and I'm his full-time carer, so I'm entitled to work 25 hours a week. But, the days that I do work, he goes to the Port Pirie Industrial Therapy place at the hospital, where they care for him during that time. Now, I'm not entitled to the Pension Bonus Scheme because I don't work enough hours, but I do get my husband and I - with our pension, because I work 15 hours a week, we do have a small amount deducted from our pension each week.
But I'm very happy to keep on working, and I plan to work until I'm well into my 70s if my health allows me to.
Ian Henschke: Well, there you go, Mark Butler.
Mark Butler: Well Judith's story is one I hear very, very often. I mean partly it's because people want to keep earning the money and, you know, have a financially more secure older age, but also people turning 65 today are healthier than 65 year olds have ever been in human history. And they are able, if they want to, to continue to do active work.
But the point we want to make is that that's got to be a matter of individual choice, and if you want to go onto the aged pension at that age, then you can do so, and that is there for you to able to do so. But if you want to be able to continue to work, we want a culture in Australian workplaces that values your right to be able to work, and the value you bring as an older worker.
Ian Henschke: Now look, Mark Butler, this story that's in The Advertiser today's got a headline saying you'll need to work longer, Minister. Is that a misrepresentation of what you were trying to say? Because from what you're saying there, this is not going to be compulsory, or even a compunction on people.
Mark Butler: Well, unfortunately, this is the nature of the beast with media headlines. I mean, I don't think the headline reflects anything I've said in the story, and as I've tried to say to your listeners, this has to be a matter of individual choice. The thing I've heard in the two and a half years I've been Minister for Ageing, as I've travelled the country and literally talked to thousands and thousands of seniors at different forums, is that so often they actually want to continue to work.
I mean the survey I talked about earlier, says that only 40 per cent of baby boomers want to retire at 65…
Ian Henschke: [Talks over] Oh so only 40 - so 60 per cent want to…
Mark Butler: …60 per cent don't.
Ian Henschke: They want to keep working?
Mark Butler: That's right. They overwhelmingly usually don't want to continue the sort of work arrangements they had as younger people, so they want to scale back the hours, they want a bit more flexibility, which is why last week Bill Shorten announced that we will be introducing a legislative right to request flexible work for people over the age of 55.
We've seen in the UK that this can be very beneficial for older workers. So it's got to be a matter of individual choice, but we've got to have systems in place as a Government that value older workers continuing to work. So, from 1 July 2013, this year, for example, older workers will be able to get superannuation for the work that they perform after 65 for the first time.
Ian Henschke: Well that's a great change. Glad we've heard that. Now, on another matter, though, do you think if you'd got the mining tax right, and we'd done it the way Norway did, and have a Sovereign Wealth Fund, and had all this money tucked away, we wouldn't have to worry about this issue? I mean it would be - there would be less need for people to work to fill this gap which is, what, $32 billion in pension bills.
Mark Butler: Well, I mean, Norway's commodities boom happened many, many years ago, ours really only started in the mid part of last decade. So, we haven't had that long to prepare for it, and as you know, our Government has been trying to put in place taxation arrangements for the mining sector that recognise its value to the Australian economy, but also recognise that the resources that are being dug up are owned by the Australian people. And so the benefits of that boom should be spread to them.
The major change that we made as a country was, as I said earlier, the Hawke and Keating Government's decision to introduce compulsory superannuation. Australian workers now have about $1.4 trillion in retirement incomes because of that decision. And that amount is growing every year by an extraordinary value.
So, we did make changes, different to Norway's decision, but we made changes to introduce compulsory savings for Australian workers, which is one of the reasons why we're in such a better position on this question than really almost any other advanced economy that you can imagine.
Ian Henschke: Alright, thank you very much for your time this morning. Federal Minister Mark Butler there, Minister for Mental Health and Ageing.
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