Paul Bongiorno: Labor and Liberals swallowing hard to stop mollycoddling Baby Boomers
Aged care is the first area to challenge political parties amid demographic changes, Paul Bongiorno writes. Photo: Getty
The crunch is coming for a generation of older Australians who for the most part of their adult lives have been given preferential treatment by governments hungry for their votes.
Now, in what demographer Dr Liz Allen describes as “a watershed moment”, a long-predicted shift is actually occurring with both the major parties facing the fact that placing most of the burden on younger Australians for the escalating $27 billion cost of aged care is a greater political risk than mollycoddling the Baby Boomer generation.
We have been talking about it for decades, ever since the Howard government treasurer Peter Costello warned in his intergenerational reports that an ageing population would present Australia with some very hard choices.
Costello’s prophetic words have degenerated – pardon the pun – into what is now being called “intergenerational warfare”.
Boomers’ boom
It is not new that governments found it much easier to hit younger taxpayers, the Millennials, rather than the much larger cohort of Australians born in the late 1940s immediately after World War II.
This cohort benefitted hugely from the Howard government’s very generous concessional tax treatment of the savings they were encouraged to put aside for their retirement nest egg.
That government’s expansion of negative gearing and trimming of capital gains tax also contributed to spiralling house prices that hugely increased the wealth of home owners and investors, which at the same time locked millions of renters and first-home buyers out of the market.
Already the Hawke and Keating governments had introduced compulsory superannuation, which meant many of the Boomer generation were beginning to accumulate wealth that previous generations didn’t have the opportunity or the ability to do.
Costello was fond of saying “demography is destiny”. What he really meant in pollie speak was the destiny of future political parties would depend on how well they were able to appeal to the age cohorts that made up the greatest number of voters.
Shift under way
Dr Allen on the ABC’s Saturday Extra observed that voters are increasingly less tribal than they used to be, and the demographic shift means the power of the grey vote is being overtaken.
She notes that younger generations are less tribal than their grandparents, which in itself is a warning for the major parties.
Aged Care Minister Anika Wells is hoping this political reality will be enough to convince the Opposition that it is in their interests as well to be seen backing measures to relieve the burden on younger taxpayers while at the same time provide desperately needed additional funding.
A task force headed by Wells ruled out new taxes, a government levy or changes to the treatment of the family home. Instead, wealthier older Australians would be asked to contribute more to their residential or home care.
How much more is to be determined by cross-party negotiations, but it is to be hoped that this user-pays principle is endorsed.
Comfortable retirement
After all, the purpose of superannuation is precisely to enable older Australians to afford a more comfortable and self-sufficient retirement.
To achieve this, successive governments have forgone billions of dollars in revenue through generous tax concessions for the accumulation of these savings.
As a result, any contribution a wealthier older Australian makes to their daily living expenses in care, such as cooking and cleaning, have already been generously subsidised.
Wells is aware that unless the Coalition comes on side, any reforms may not survive a change of government and the looming crisis is too serious to play petty partisan games.
Ominous signals
But the latest Quarterly Essay doesn’t inspire much confidence that Opposition Leader Peter Dutton would be too worried.
Blaine writes that so far the main solution Dutton has offered to the housing crisis “is to allow first-home buyers to gut their superannuation accounts for mortgage deposits”.
And he has signalled reimbursing the extra $2 billion a year the Labor government is collecting from higher taxes on superannuation accounts over $3 million.
Blaine rightly points out “the franking credits of wealthy retirees are off limits. But the nest eggs of Millennials are fair game to keep the property market booming in perpetuity”.
Anika Wells has not said when her consultations with the Opposition and other stakeholders will be concluded. The speculation is ahead of the May budget.
We wait to see how brave in the national interest our politicians prove to be.
Paul Bongiorno AM is a veteran of the Canberra Press Gallery, with more than 40 years’ experience covering Australian politics
