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Joe Hockey says raising pension age would be 'fiscally prudent' Joe Hockey says raising pension age would be 'fiscally prudent'
(about 1 hour later)
The treasurer has intensified efforts to soften voters up for budget cuts in May, signalling that raising the pension age would be fiscally prudent.The treasurer has intensified efforts to soften voters up for budget cuts in May, signalling that raising the pension age would be fiscally prudent.
In a speech delivered in Washington, Joe Hockey pointed to just-released work from the International Monetary Fund which nominated increasing the pension age as a “worthy consideration” in achieving long-term budget repair.In a speech delivered in Washington, Joe Hockey pointed to just-released work from the International Monetary Fund which nominated increasing the pension age as a “worthy consideration” in achieving long-term budget repair.
“In fact the IMF fiscal report released just a few hours ago identified that Australia’s increased healthcare and pension spending alone, based on current settings, would mean an extra $93bn of government spending per annum by 2030,” Hockey said.“In fact the IMF fiscal report released just a few hours ago identified that Australia’s increased healthcare and pension spending alone, based on current settings, would mean an extra $93bn of government spending per annum by 2030,” Hockey said.
“That is the equivalent of an extra $61bn a year in today’s dollars, or the equivalent of an extra 4% of today’s GDP. To pay for the growth in health and pension expenditure, the government would need to raise the equivalent of the existing company tax,” he said.“That is the equivalent of an extra $61bn a year in today’s dollars, or the equivalent of an extra 4% of today’s GDP. To pay for the growth in health and pension expenditure, the government would need to raise the equivalent of the existing company tax,” he said.
Hockey said the ageing population had significant consequences for the federal budget: slower economic growth; reduced growth in taxation revenue; more demands for social services, such as health; more demands for income support, such as the pension; and providing aged care services.Hockey said the ageing population had significant consequences for the federal budget: slower economic growth; reduced growth in taxation revenue; more demands for social services, such as health; more demands for income support, such as the pension; and providing aged care services.
He suggested the demographic trends could not be reversed in the short term by either increasing the birthrate, or by boosting migration. Demography meant the government “must make some difficult decisions”.He suggested the demographic trends could not be reversed in the short term by either increasing the birthrate, or by boosting migration. Demography meant the government “must make some difficult decisions”.
Spending on the aged pension alone over the next decade would increase, Hockey said, by 70% in today’s dollars. The treasurer also identified achieving efficiencies in the health spend as a priority.Spending on the aged pension alone over the next decade would increase, Hockey said, by 70% in today’s dollars. The treasurer also identified achieving efficiencies in the health spend as a priority.
“We will need to improve competition and efficiency in the delivery of healthcare and we need to ensure that access to the pension system is prioritised for those most vulnerable. The IMF goes on to warn that increasing the pension age is a worthy consideration,” he said.“We will need to improve competition and efficiency in the delivery of healthcare and we need to ensure that access to the pension system is prioritised for those most vulnerable. The IMF goes on to warn that increasing the pension age is a worthy consideration,” he said.
Hockey repeated his recent arguments that everyone must make a contribution to the task of budget repair.Hockey repeated his recent arguments that everyone must make a contribution to the task of budget repair.
He pointed to a number of guiding principles, which included reduced protection and handouts for business, increased co-payments for government services for higher-income earners, and more targeting of the welfare system to boost the participation rate.He pointed to a number of guiding principles, which included reduced protection and handouts for business, increased co-payments for government services for higher-income earners, and more targeting of the welfare system to boost the participation rate.
The treasurer argued that government should not be active when the private sector could fulfil adequately the need or the function.The treasurer argued that government should not be active when the private sector could fulfil adequately the need or the function.
“Government benefits must be sustainable, fair and targeted to those in genuine need. Welfare must be a safety net, not a cargo net. We cannot allow vast numbers in society to remain in an entitlement culture,” Hockey said.“Government benefits must be sustainable, fair and targeted to those in genuine need. Welfare must be a safety net, not a cargo net. We cannot allow vast numbers in society to remain in an entitlement culture,” Hockey said.
“Those members of the community that are able to do so must make appropriate contributions to the cost of government services. And all members of our community must be encouraged and assisted to enter and stay in the workforce.“Those members of the community that are able to do so must make appropriate contributions to the cost of government services. And all members of our community must be encouraged and assisted to enter and stay in the workforce.
“In approaching Australia’s domestic challenges, our overriding philosophy is that the government should be active only where it is needed and where the private sector cannot adequately fulfil the function.”“In approaching Australia’s domestic challenges, our overriding philosophy is that the government should be active only where it is needed and where the private sector cannot adequately fulfil the function.”
Labor responded to Hockey’s pre-budget positioning by arguing the IMF assessment the treasurer was using to justify future cuts had, in fact, concluded that the Australian government had presided over the fastest budget deterioration anywhere in the world.
The opposition finance spokesman, Tony Burke, said the IMF found the budget deficit had widened since the Coalition government was elected last year.
The pre-budget period has seen the major parties locked in a legacy argument.
Hockey contends budget repair is necessary because of a significant spending and debt blowout under the Rudd and Gillard governments. Labor’s riposte is that the Coalition is, first, exaggerating the fiscal crisis by deliberate changes to the underlying assumptions and, second, contributing to the state of the budget with its policy decisions.
“Joe Hockey has presided over the fastest budget deterioration anywhere in the advanced world,” Burke said on Thursday.
“Joe Hockey has abandoned the cap on spending, changed longstanding economic assumptions and effectively cooked the books to justify the deep cuts he has planned in the May budget,” he said.
“For weeks we’ve seen selected leaking of all manner of cuts, Joe Hockey trying to get the GST back on the agenda and yesterday a proposed new tax on hospital visits – what is going on in the treasurer’s office?”