Urgent, substantive reform is needed in many areas of Australian social and economic policy - but there is no appetite or leadership...
We are concerned that, because of the quality of the political process in Australia at present, significant reform of any nature - such as in respect of taxation, superannuation, aged care and the NDIS - has become almost completely impossible. Politics has become the process of trying to "become a small target" and avoiding reform because it risks losing votes - leadership, in terms of the longer term, seems to have disappeared.
You might wonder why a website focused on independent retirees is concerned about the lack reform? Retirees are often painted as conservative and risk averse - perhaps the least likely proponents of change. That picture may generally be correct, and there are very good reasons why retirees may adopt such an approach, but our concern is that the only situation in which reform is now possible would appear to be against the background of a crisis, particularly a financial crisis. The absence of ongoing reform or change also means that any delayed structural changes will often be larger, and more difficult to manage for all Australians - and particularly for retirees give their constraints.
So, where do we think that the major parties have "kicked the can" too far down the road over the last decade and urgent reform is needed?
Tax
The areas where there needs to be substantial review and improvement are almost too numerous to count - and have been included in a series of tax reviews commissioned by the Government whose recommendations have then not implemented simply because they weren't consider consistent with re-election. In general terms, we take the view that the current tax system, incorporating both income and capital gains tax, is neither efficient or fair from a generational perspective - younger Australians pay too much income tax compared to their older compatriots and capital gains are taxed too lightly.
This should be addressed urgently, for reasons of equity and because tax reform is complex and takes time to implement properly.
Super
Consistent with our comments above, and with past commentary, we consider the tax burden on super in retirement is too low. It was a strategic financial error to initiate a situation where retirement income was tax-free; this is now been mitigated to some degree but it needs to be further reviewed for fairness and durability - in much the same objective manner as a recent paper by the Actuaries Institute.
Superannuation funds also need to be legislatively required to introduce lifetime income products - it is unacceptable that most superannuation funds, including some that rank as some of the largest financial institutions in Australia, have simply failed to deliver for their retirees. They seem to remain focused on the comfortable and well remunerated life they led as investment managers. They either need to reform quickly, or have it imposed upon them.
Aged Care
We remain unconvinced that the recent changes in relation to the financing of aged care accommodation are anything other than a negotiated compromise reached between the Labor and Liberal party. It simply means more "user pays" - which we don't have a problem with in principle, but we think that it remains a complicated approach which is open, like the tax system, to avoidance. Politicians often like complexity because it obscures reality - and aged care, like much of the system around the age pension and social services, has become impenetrable.
Much of this complexity in social services has been built around the concept of grandfathering - trying to ensure that no existing participant is adversely affected by changes. This hinders both reform and transparency and there needs to be acceptance by politicians and the community at large that there will be winners and losers in any reform process.
NDIS
This program, however well-intentioned, was unbelievably badly structured from the very first - with the costs involved currently unsupportable in either the short or longer term, and yet the current government experienced difficulties legislating provisions which would have limited only some of the more egregious examples of waste and malfeasance. Why not protect the core individuals with significant disabilities, grandfathering for a year, and then totally recast the NDIS within financial bounds. However distasteful it may sound to some proponents, the long term security of the program, which should be paramount to participants, is always going to depend on its affordability.
Medicare and Health System
Medicare has been an unqualified success over a very long time, but there are pressures building because of an ageing population and with medical inflation running ahead of general inflation; as well as operating in a continually more commercial environment. We need to ask structural questions such as whether, from a regulatory perspective, "for profits" operators should operate within the system - including a private hospital network owned by a Canadian private equity group. In particular whether their profit and margin expectations represent an appropriate fit.
Electoral Reform
Much has lately be made of the fact that Australia's electoral system, particularly compulsory voting, has insulated us from the divisive personality politics we've seen overseas and seen us take a largely centrist approach on most issues. That doesn't mean however that we don't have issues in terms of how our political system is currently working and whether improvements are possible.
For example, how is substantive reform in any issue possible if both major parties seem to be held hostage to the reaction of a handful of seats - whether it be in WA when it comes to environmental policy, or whether it is certain urban seats in Sydney and Melbourne in terms of migration and sometimes foreign policy. Too often we see the "tail wagging the dog" and how do we introduce processes that allow us to focus on what approach provides the best outcome, rather than protecting existing vested positions?
Migration
Rather unbelievably, the government seems to have lost control – if it ever had any – of migration. The system, like all Australian policy areas it seems, is unbelievably complex and therefore difficult to manage.
More worryingly, it has been in the vested interests of both major parties to have supported significant migration targets, both permanent and temporary. This is because continued migration and associated growth makes it less likely that any Treasurer will ever have to admit that the country is in recession. The fact that the country may have been in "per capita recession", as it has been for some while now, doesn't attract the same sort of adverse headlines.
Much can be said to support the fact that we need ongoing migration, particularly with an ageing population, but it needs to be selective and carefully managed, particularly with respect to temporary visa holders who remain illegally or spin out very long appeal processes. There is also a very significant concern that our universities have "sold their soul" to attract international students, that this has led to commercial interests outweighing academic interests and that the large contingent of students has exacerbated accommodation issues which the universities have done little to manage.
Competition Policy
We have been pursuing this issue for years, but only lately has the general community begun to express its concern for the lack of competition we see in an enormous range of sectors - including banking, retailing, airlines, insurance - the list just goes on and on. As a consequence, we have seen a more active approach being taken by competition authorities, but it is so late in the piece that thought needs to be given to corporate break ups, where necessary.
And no, despite the Prime Minister's protestations, you don't need to be a Soviet to want to break up major corporations if they are not playing by the rules. Also, given the community's concern about the lack of banking competition, why allow the ANZ takeover of Suncorp - all the wrong sort of messaging.
Certain companies just to have too much power, both in terms of their dealings with clients and suppliers - why, for example, should someone have to join Woolworth's Rewards in order to access competitive prices? In a truly competitive environment, would this be necessary? Unions and professional organisations such as the medical colleges, can also be anti-competitive, and we can pay the price for their behaviour in terms of things like the costs of goods, housing and access to professional service; they need to be subject to the same anti-competitive rules.
We believe that there is enormous scope for productive economic reform in Australia at present - and while it certainly raises the prospect of their being winners and losers if we don't grasp the opportunity we may be forced to make less enviable choices in a later crisis. When it comes to economics you always need to "pay the piper", as most retirees, who have seen many economic cycles, will know all too well.