Yes, according to Fairfax, with the story reprinted in The Guardian, and then picked up by other media outlets. For the record, the ABC also got it wrong by saying it was all people over 60. It was all people over 65.
But the article was misleading in other ways as well.
Poverty here is defined as receiving incomes less the 50% of median equivalised disposable household income*. According to the OECD report Pensions at a Glance 2015 35.5% of people over 65s live in poverty in Australia compared to 12.6% for the OECD. Only Korea at 49.6% is higher.
Bruce Bradbury at Club Troppo reckons the whole concept is off beam because it ignores the cost of housing and Australia’s relatively high rate of home ownership. Quoting some very old figures and with a bit of a guess he reckons the poverty rate is about middling and around 15%.
It would be nice to know. He says the pension rate is very close to the poverty rate, so the percentage above and below depends heavily on calculation methodology. A small change and a large percentage shift.
That makes Australian pensions anything but generous by community standards. We spend 3.5% of GDP on pensions, less than half spent by the OECD which comes in at 7.9%. We have 15% of the population over 65, nearly the same as the OECD at 16.2%.
You may recall Di Natali and The Greens selling out on pension eligibility when they agreed to these changes:
- From 2017, the assets test threshold for home-owning couples will be lowered from $1.15 million to $823,000. For single home-owners it will drop from $775,000 to $547,000. In addition, the current taper rate will double from $1.50 to $3.
The economists, the politicians, and the better off professional class who seemed to favour this asset stripping of prudent middle Australians are unaffected. Now they are having a rant about people not spending all their superannuation when they retire. Shock, horror, some are even leaving it to their kids.
Apparently the problem is an irrational fear of running out of money when you are old and frail and unable to earn any more!
- “Most people are naturally risk averse, and so will tend to hang on to their savings, in order to avoid running out of super if they live longer than expected,” Dr Reeson said.
“They may also wish to ensure that money is on hand to deal with possible large expenses, which could be a new hip or a new roof.”
Well, Dr Reeson, what do you do when you are old and poor and need a new hip or roof?
One contingency that we might save for is the need for residential care. In that case the family home can come into play. It didn’t when my mother had to go into aged care in the 1970s.
A particular problem arises when one partner goes into care and the other wants to remain in the family home.
In any case those with enough resources ($823,000 for couples and $547,000 for singles) never to receive a dollar of pension, may find their assets stripped at that point if they are not lucky enough to die in their sleep or similar while in relatively good health.
Today The Australia Institute is recommending that capital gains apply to mansions worth over $2 million. Apparently the family home exemption will cost the budget $46 million in 2016 alone. 55% of that windfall flows to the wealthiest 20%.
But the LNP won’t touch it and Labor are “not interested”. Presumably they want to avoid a scare campaign that they are coming after everyone’s home.
So the poor and increasingly middle Australia are meant to leave the world with nothing, while the rich carry on regardless, completely unaffected.
It’s time we looked comprehensively at ‘end of life’ income/wealth provisions with equity as a major focus. And treat oldies as though they are entitled to more in life than bread on their plate.
* Corrected 14.1.16. In the earlier version I had “mean disposable household income”.
Update: For Australian household income and wealth information, see this ABS site.