""If you included a means test, and only pay the pension to someone who had a house worth less than $1 million ... you would save $1.2 billion right there," he said."
So what carrot is the welfare lobby offering to keep the donkey pulling its cart Paul?
Fear of starvation? That won't work - As the welfare lobby reckons it will feed them.
Fear of never owning a home? That won't work either as the welfare lobby reckons it'll provide them one to live in. And if they should ever be silly enough to get one of their own, it'll just take it off them to fund their dotage anyway. Which the welfare lobby reckons should be its job apparently?
Fear that the welfare lobby just might be full of shit and not able to deliver on its promises? Yep, I can see that having some potential.
In my encounters I haven't found one. Now you want me to accept some 7 year old research by the Brotherhood of St Barnabas that clearly couldn't have included boomers as proof that the boomers are fiddling the system.
I don't have a problem with a little tightening of the rules, I said that earlier.
Any expressed market opinion is my own and is not to be taken as financial advice
"The Grattan Institute estimates that $3bn in pensions goes to people with assets, including their home, of more than $1m, while another $5bn in pension payments goes to people with assets between $750,000 and $1m." "The OECD believes that inheritance taxes could perform a much more important role in helping countries close their budget deficits."
"ZARA Grayspence is one of the unlikeliest pensioner millionaires in Australia, whose Sydney house, like one of the flowering seeds in her immaculate garden, grew in value around her.
The 92-year-old painter and former Mosman councillor told The Australian the two-storey house, by Reid Park in the exclusive suburb, was anything but an asset.
“It is not an asset to me; it is a home. Real estate agents have seen me inundated with requests to sell but I don’t want to,” she said.
“They said they’d find me a unit without a garden so I wouldn’t have to bother with it but I told them, ‘The garden keeps me alive!’ I know a lot of old people go and do tai chi classes for $5 but I do that with the pruning anyway.”
Her home, worth more than $2 million in the current market, is safe but the government is being urged to think about the asset trap for future generations."
In summary, ageing of the population will have an increasingly important bearing on various aspects of the economic outlook. Among other things, it will tend to weigh on growth of economic activity, labour force participation and the public purse. It may weigh on productivity growth to the extent that it leads to less risk-taking and innovation. It will also lead to a rise in the demand for a range of services, including aged care.
The economy will be best placed to handle these significant changes in factor and product markets if we are responsive to the resulting changes in relative prices and returns to factors of production. We'll be even better placed if we can act with a degree of foresight.
What sort of responses might we expect? It will make sense for a combination of extra savings to be built up and for us to do what we can to raise participation rates, including by having people work later into their lives. Extra capital from the rise in savings can be channelled into both goods and services, though it is likely that productive resources (labour and capital) will be required to shift towards the services sectors.
While the challenges are relatively obvious, one aspect of ageing presents us with valuable opportunities. Rising longevity will provide us with the ability and willingness to work later into life, without necessarily implying a change in the share of our lifetimes we spend in retirement. This will allow us to bolster participation, savings and reduce the burden on the public purse. Recognising that on average we'll enjoy longer lives, may also encourage a rise in education and training. We may also become more willing to pursue risky, innovative business opportunities at any given age compared with what had been the norm for earlier generations. Public policies have an obvious role to play, facilitating these adjustments where possible.
The Reserve Bank can best contribute to the necessary adjustments to population ageing by maintaining low and stable inflation. This does two things. First, it encourages investors and businesses to focus on generating real returns rather than trying to avoid the effects of high inflation. Second, it enables changes in relative prices and relative returns to factors of production to be observed more clearly than in a world where inflation is high and variable. And it is these price signals that will facilitate the necessary adjustments in behaviour.
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