ROSS GITTINS. Our oldies have never had it so good (SMH 5.11.2018)

Except it ain’t true. It was true once, but not for many years.

You might expect the Prime Minister to be better informed than the average punter, but Morrison is from the new breed of politician who see a leader’s job as to reflect the voters’ misperceptions back to them. Read the focus group reports, not the briefing notes.

Something Morrison clearly hasn’t read is the research briefs published last week summarising the findings of the Centre of Excellence in Population Ageing Research – an outfit funded by the federal government to ensure it (and the rest of us) are well-informed about matters such as the adequacy of the age pension.


According to the centre’s director, Professor John Piggott, of the University of NSW, “our analysis shows that standards of living of older people have improved over the last decade . . . Households reaching retirement age today have incomes about 45 per cent higher than those reaching the same milestone 10 years ago.”

That’s a real increase of 45 per cent, after taking account of inflation. How could it be possible? Because the pension is indexed to wages rather than prices, and wages grow by a per cent or two a year faster than prices (until recently, anyway).

As well, the Rudd government made a discretionary increase in pensions on top of indexation.

The centre’s figures show that 62 per cent of age pensioners get it at the full rate, with a quarter getting a part-rate pension because of their other income, and another 13 per cent on a part-rate because of the high value of their non-housing assets.

The centre finds that the rate of poverty (measured as less than half the median household disposable income) among everyone aged 65 and over is only a fraction higher than for everyone aged 15 to 64.

Our analysis shows that standards of living of older people have improved over the last decade

Professor John Piggott of the UNSW

Even so, by now it’s wrong to think of many people retiring with nothing to support them but the pension. Our retirement income system rests on three pillars, with the means-tested, flat-rate age pension being only the first.

The second pillar is compulsory employer superannuation contributions under the “super guarantee”, which began formally in 1992 and reached 9 per cent of wages in 2002. Today it’s 9.5 per cent.

By now, therefore, most people should be retiring with some super savings, maybe quite a lot. The centre says that, in 2016, the median (most typical) super balance for individuals aged 60 to 64 was $68,000, whereas the arithmetic average was three times that, at $214,000 – pushed up by a small number of very much higher balances (including mine).

The median is held down by the typically much lower balances of women, which average 64 per cent less than men’s. Even here, however, the centre says the gap has almost halved over the past decade.

The retirement income system’s third pillar is voluntary super contributions, which are “tax-advantaged”.

Compulsory and voluntary super contributions are already sufficient to mean that 40 per cent of people on the age pension have super and investments as their main source of income. And 20 per cent of older people have so much other income as to make them ineligible for the pension.

But the system actually has a fourth pillar: home ownership. (And a fifth: assets and other savings outside the first four pillars.)

Get this: three-quarters of age pensioners own their home. The centre estimates that, on average, living rent-free in your own home yields a saving of more than $10,000 a year. (As well, the oldest households receive health-related savings averaging about $25,000 a year.)

So significant is the fourth pillar of home-ownership that it’s implicitly assumed in judging the age pension’s adequacy – meaning the quarter of age pensioners who mainly rent privately arejustified in complaining about the trouble they have making ends meet.

About 40 per cent of renters aged 65 and over are below the poverty line. And, among those of them living alone, the poverty rate rises to 60 per cent.

If Morrison really cared about the elderly poor, he’d raise the pension rent supplement, which wouldn’t cost much.

In truth, however, his remarks last week were probably more about signalling: the aged – particularly the better-off aged; those dreading Labor’s plan to abolish unused dividend franking credits – should see themselves as part of his party’s “base”, whose interests he represents and will fight for.

Renters of any age aren’t part of the base. Nor are the young part of it – and others with a greater risk of finding themselves on the dole – so their interests take a lower priority. Don’t say he didn’t tell you.

Ross Gittins is the Herald’s economics editor.


Economics Editor, Sydney Morning Herald.

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3 Responses to ROSS GITTINS. Our oldies have never had it so good (SMH 5.11.2018)

  1. David Brown says:

    thank you Ross…

    and Pamela… for backing up… I was wondering how many people would read through to the near end of the article and would understand Ross Gittins’ reference to political signalling used by our Pentacostal PM Scomo to carefully select his hoped for base of voters.

    Abbott, Turnbull, Morrison in their turns as leaders of the LNP/Murdoch/Gina/IPA government have reduced the opportunities for people to own their own home, particularly as their first home. By reduced funding of financial industry regulation their are now many, perhaps mainly older people, who have lost their home ownership and have become renters. Anyone renting is doing it very tough now especially when on restricted short hours work, on the pitiful “New Start” with its privatised “Job Active” and other punishment schemes and any relying on pension rental supplements.

    Everywhere we look this government has punished the poor and rewarded the wealthy. Someone noted that the Pentacostals teach a distorted version of Karma… people that are born to rich families deserve to live on the backs of the poor.

  2. Deb Campbell says:

    Yes thanks for this Ross, accurate information is always useful but I do wish Scaremo and actually everyone else would stop assuming that those of us 60 and over are all about self-interest and greed and political and social conservatism.

    None of that is true about me, and I suspect of quite a lot of those of us who grew up in the 1970s.

    I for one am nothing but dismayed – horrified actually – by the fact that neither NewStart nor the pension rental assistance rates for those eligible have been increased for so long. I am not now nor will ever be ‘part of his party’s “base”, whose interests he represents and will fight for’, and I want to fight him, not have him fight for me, thanks very much .

  3. PAMELA CURR says:

    Thank you Ross Gittins for telling it as it is. I have listened to this bleeding guff from Pollies telling me how badly off I am for long enough. Fact is I have never been so comfortable and I see my fellow age compatriots in the same boat.
    With a part pension, Super and owning my own home I am on easy street like so many others. Not wealthy but comfortable.
    Your suggestion about increasing the rental supplement is a really sensible one. It is the people, mainly women who do not own their own home who are so disadvantaged in the rapacious rental environment. They absolutely need assistance.
    These bloody politicians are picking off people for elect0ral advantage and it is sickening. Telling the well off how hard done by they are is dishonest and unfair to those on pitiful new start and the homeless struggling on a pension.

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