19 September 2016
by Mark Hearn
Pension poverty: your reward for 25 years of economic growth
Pension poverty. That's apparently what to expect if you're about to retire on the age pension after doing your bit to provide Australia with 25 years of unbroken economic growth.
Almost one third of Australians on the age pension are living in poverty. That's the finding of a new study funded by the Benevolent Society and others into the 'adequacy', if that's the right word, of the age pension.
The base rate of the age pension is $794 a fortnight; the poverty line is $851.
Only about a week ago both the government and the opposition claimed credit for Australia's world-beating economic performance. I don't recall either Prime Minister Malcolm Turnbull or Opposition Leader Bill Shorten claiming credit for the shortfall between the age pension and the poverty line.
How do you define pension poverty? It's not too hard: for example, it's when an old-timer pours a bucket of tepid water over his body because he can't cover the cost of a shower.
On September 15 the ABC was one of few news media to focus on the pension poverty report. Everyone else seemed fixated by the Turnbull government's craven backdown on reducing superannuation entitlements for the wealthy.
Great news: wealthy people will now only be able to put aside up to $100,000 a year and still be rewarded with a generous tax concession. But wait a minute: let's pause on 'tax concession', that glib piece of financial code. It links insidiously with another. A tax concession is somebody else's pension poverty. After all, governments can't fund everything, can they?
Indeed, like overheated lyrebirds, the Turnbull government and the Labor opposition extravagantly display their brilliant commitment to 'fiscal responsibility': they both claim credit for passing $6 billion in spending cuts through the federal parliament.
Despite Labor's success in preventing cuts for those receiving social security payments, the Turnbull government's omnibus spending reduction bill will do its bit to deepen the pit of pension poverty.
As the Australian Council of Social Service observes, "low-income families will still be hurt by the loss of the energy supplement from family payments. A single-parent family with two teenage children will lose $284 a year, or $5.50 a week". The march towards age-pension poverty often starts young, in entrenched patterns of poverty.
One base pattern weaves another. A few years back the ABC's 7.30 focused on the inability of a recently-retired woman to pay her electricity bills. Each winter night she exercised the free choice of penury: either turning on the radiator or the oven. She could not afford to do both.
That woman was a retired school teacher. She educated our children. How did we reward her? Pension poverty.
And how did that woman, employed for many years in the relative security of the public sector, end up in poverty? There's a story with a long history.
It began in the early 20th Century, when our young nation made a choice: to fund an age pension on one hand, and pay women less than men on the other. About the same time the Commonwealth created a bureau to track the vital statistics of our nation.
Over the course of the 20th and early 21st centuries what became the Australian Bureau of Statistics traced the underfunding of the age pension, and the accumulating consequences of paying working women less than men.
In 2010 the consequences came home to a small flat in the suburbs, when one hard-working, retired woman could not adequately warm herself or feed her body.
The Bureau of Statistics starkly illustrated the history of why that had happened. A cruel graph line showed her falling off a cliff the moment she retired.
Each year of earning less than a man accumulated in an absence of financial security, a lack of savings. Once retired, the ABS records the inevitable collapse of women's income in a steeply plunging black line. It falls from modest prosperity to nothing in the scan of an eye.
Men do better, but only by degree. Once dependent on the age pension, many of them will end up in the same degraded place.
Twenty-five years of unbroken economic growth: sounds great, but it's like the graph line plotted by the ABS: what happens when you get to the end, and you find yourself staring down the cliff face?
Whose charity would you like to call on? The Benevolent Society? Australia's first charity, as it describes itself, knows the long history of people in trouble, left to cope on their own and finally falling on the relief of private charity. Historian Tanya Evans has described how these troubles grind on from one generation to the next in her history of the Benevolent Society, Fractured Families. It's actually about the 19th century, although as you read it you might find the hardship stories disturbingly resonant.
Don't look to your federal government to provide shelter. They're too preoccupied with dazzling you with the bright plumage of fiscal responsibility.
Although you'll be relieved to know that the Turnbull government has found a whacking $50 billion to publicly subsidise company tax cuts. Who says there's no role for government in the free market?
Now $50 billion would fund a few pensioners the price of shower, wouldn't it?
You might have to be quick to scroll the headlines of pension poverty. The September 15 article disappeared from the ABC News web page within a few hours. Perhaps the article wasn't 'trending', and so quietly faded from site, so to speak.
History is like that; it goes into hiding, neglected in the stampede into the future. But that does not mean our history has gone away. It turns up everywhere, in a humble suburban flat, or encoded in the abyss between the age pension and the poverty line.