11 Feb 2013

No Country For Young Voters

By Ian McAuley
These days superannuation works like a wealth transfer from young working people to baby boomers. If the major parties want the youth vote, they could start by ending super concessions, writes Ian McAuley

As Ben Eltham wrote last week, for a brief moment we managed to have a debate on superannuation policy, before the Prime Minister squashed the idea of applying a tax on withdrawals from funds with high balances.

The slightest hint of a clawback of the Howard government's generous concessions to "self-funded" retirees (in reality people whose retirement accounts have been significantly funded by tax concessions and windfalls such as inheritances) brought squeals of protest.

The most outrageous protest was from Pauline Vamos, Chief Executive of the Association of Superannuation Funds of Australia, who, on Wednesday morning's ABC Breakfast Program, said "for people to really have a comfortable standard of living throughout their retirement you're looking at least at two and a half million dollars" as the requisite balance.

That figure needs a reality check. Assuming one's retirement balance is to spin out over 30 years from age 65 to 95, and that it generates a real (after inflation) return of 5 per cent a year (a conservative estimate), then plugging those figures into the annuity formula we learned at high school gives the retiree an indexed tax-free pension of $163,000 a year. That's among a group who generally have no mortgage payments and who do not bear the costs associated with working. To put this figure in perspective, the median after-tax annual income of aged couple households in 2009-10 was around $34,000.

Yet Vamos, and others who defend the privileged position of those with high superannuation balances, are speaking for a significant constituency. It's a constituency with an inflated sense of entitlement, generally known as the "baby boomers" — that cohort of Australians born in the years after the Second World War, and who are now in or approaching retirement.

Baby boomers have enjoyed extraordinarily good economic fortunes. While their parents had endured the 1930s Depression and the war years, they grew up in an economy with full employment and rapidly rising living standards.

Thanks to Commonwealth scholarships for undergraduate and postgraduate studies there was free university tuition, with generous living allowances for those whose met means tests, paid for by people who had largely missed out on tertiary education. (Menzies, unlike later Liberal Party leaders Howard and Abbott, recognised the value of investing in higher education.)

On graduation baby boomers could pick and choose their employment; these were the days when an unemployment rate above one per cent was regarded as a policy failure.

If they bought a house in the rapidly growing suburbs they paid only for the house and bare land. The cost of local infrastructure (drainage, sewerage, street lighting, street and sidewalk pavements) was met by public expenditure. Now those expenses are paid for by developers, who pass them on to house buyers.

They took on heavy mortgages, but the inflation of the 1970s, which peaked at 18 per cent, rapidly reduced the real burden of their mortgages. That was another transfer from the previous generation who saw their savings largely wiped out.

Then over the last 20 years many borrowed heavily to buy houses and apartments to be rented out. These are highly geared investments, subsidised by tax concessions which allow double counting of expenses against income. The result was a large expansion of private debt, and a strong rise in house prices. For the next generation housing has become increasingly unaffordable and rents have risen in tandem with house prices.

Many baby boomers had jobs in the public service or in large corporations with generous defined-benefit superannuation. As they aged there came the Howard government superannuation tax concessions which allowed many to accumulate large balances.

Having done so well from the taxes and transfers of previous generations, we might have expected the baby boomer generation to display some sense of obligation and show the same generosity to the coming generation. After all, aren't these the same people who were so socially concerned in the 1960s student movements?

But those who took to the streets in the 1960s to campaign for university funding have raised hardly a whimper as successive governments have introduced student fees and starved universities of funding. As they have prospered themselves and approached retirement they have been happy to pass the tax burden to the younger generation.

They may see themselves as the liberal generation which broke down barriers of race and sex discrimination, and who, during the Vietnam War, mobilised the nation's largest protests. But that's a self-serving interpretation of the past.

As with most movements the true reformers were small, dedicated groups, often working quietly in the background, while most student politics were about establishing positions within the student Labor or Liberal clubs, as stepping stones to political careers.

The main issue in the Vietnam War was not the war itself (something happening to people far away), but the draft (something happening to baby boomers). Only after the Commonwealth introduced conscription in 1964 did the protests swell, as the repeated chant became "hell no, we won't go".

If the baby boomers could be gathered once again in large crowds, that chant may now be "hell no, we won't pay".

Governments (and opposition parties) would do well to ignore baby boomers and push on with reforms to superannuation and other tax breaks. Baby boomers make a lot of noise, but in reality they have dealt themselves out of political power, for they are unlikely to change their votes. Most older voters are close to "rusted on" supporters of the Coalition. Having benefited so much from public revenue, they now throw their support behind the party of low taxation.

In fact, taking a strong move on those with high superannuation balances may be a politically astute move for the Government, if it could present it in terms of rendering the public revenue system less biassed against young people and making the most privileged demographic group Australia repay some of their debt to the society. There is a large pool of young people not on the electoral roll whose disillusionment could turn to enthusiasm if they believe Labor really cares about them and their future.

There are opportunities for the Coalition as well, but its displayed hostility to easing electoral enrolment by young people sends a poor signal, and so far, as it develops its policies, it has shown no enthusiasm for funding education.

Perhaps neither of the main parties really cares about the young. If they cannot get a voice in the main parties it may be time for younger Australians to form new political groupings.

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fightmumma
Posted Monday, February 11, 2013 - 14:15

Love this article Ian!

My father is a baby boomer, always voted Labor and now will vote for rAbbott...he hates all the lazy young bludgers and wants rAbbott to make life harder for them...I think he forgets that one of his own daughters relied on Parenting and now Newstart, but then he generally hates me for divorcing my husband and bucking traditional females roles!!

It never ceases to amaze me how hard the BBs are on the younger generations! The standards of behaviour, education, work ethic, commitment etc they expect from Gen X/Y is so harsh and unrealistic for our contemporary societal conditions - economic/labour/political.

The condition of our society now is so different and generally unsupportive, unhelpful, controlling, stagnated compared to the times when THEY were leaving school, leaving university and entering the workforce...especially in buying a house, first jobs and full-time work.

Just think - so many of them start sentences with "Well I left school when I was 14 and worked hard all my life..." not realising that now you virtually need a Degree to sort recycling! (I think teachers DO have to do some course on getting sports balls off the roof at schools now don't they?!!). Not to mention that THEY were the ones who decided to make ME pay close to $10000 for my Degree!! And abandoning full employment - they never lived in a society where the politicians don't even care about unemployment rates (and when we become unemployed just gets stuck into us all like we're the filth of the earth - never mind the BBs have been the authors of a few recessions have they not? - but you know - we have to have them, it's good for us) - this just gets shrugged off with "well, you know...inflation...we can't have inflation out of control..." when we recently had a GFC even with their "brilliant" ideas of economics!!!

BBs are also the first to look down on and condemn people needing welfare, but as Ian points out here - they don't seem to see their own super gov't contribution as a form of "welfare" do they? Hey - it all comes from the same place don't you know, duh!

YaThinkN
Posted Monday, February 11, 2013 - 14:27

So true! The reason they are wealthy is that they had the benefit of Free University, hell even Free State Schools (believe me, not so free nowadays), Bank Mortgages that only took into account ONE wage, not 2 and more... Geez even if they did work (like my mother after we went to High School) they had their parents or relatives to help babysit, something rare for a young person now, instead they have to pay for daycare too.

I know baby boomers like to trash the youth of today about being shallow, but from where I am in the middle, the average young person today seems to have a lot more empathy for the community as a whole than the Baby Boomer who is very much, 'what hurts me & my money matters most, the rest of you can bugger off' :(

fightmumma
Posted Monday, February 11, 2013 - 16:46

oh, I forgot to mention - no matter what else we might think of BBs, forcing any of them to go to Vietnam and kill men, women and children (not to mention forcing the deaths, disablities and PTSD on them upon returning home) was another disgusting page in our history...if gov'ts choose certain policies and international behaviours, they should cover their decisions with their own institutions, NOT force civilians to do their dirty work (and America's dirty work) for them...how do these things happen in a free country? If you do not have the manpower to pull-off an act - don't do it!!

Brian Richard Allen
Posted Tuesday, February 12, 2013 - 13:10

Lost me at the fascistic: " ... retirement accounts have been significantly funded by tax concessions ... "

An account containing only a man's earned and owned wealth may be said to have been "funded" by limits on the state's stealing?

God Almighty save us from the statists!

alanblack
Posted Tuesday, February 12, 2013 - 14:38

I found this to be a poor article. It lumps all baby boomers into the one category ie well funded superannuants. Not exactly true for all of us baby boomers. While I would agree that work needs to be done on middle class welfare, and superannuation is one of these areas where fair taxation initiatives need to be implemented, not all of us baby boomers have large superannuation. Certainly, this is true for those who were government employees and remained with the one employer and for some in the corporate sector but not true for all.
Using generalisation like this weakens the argument and creates an us vs them mindset which is not useful in making the important point about middle class welfare and its cost on the rest of society.
While it tlaks of those baby boomers who have invested in property or had free education it again sets up an us and them mindset ignoring those baby boomers who continue to provide housing for their gen x and for some gen y children or who have funded university attendance and accommodation or, at least, offset the cost to some degree.
I'm also not certain that the implication of baby boomers investing in housing and property is the fault of this group of people. Perhaps some fault also needs to be laid at the feet of government and developers for not investing in affordable housing to the degree that it is needed and governments of all persuasions eroding the welfare state to such an extent that a safety net no longer really exists in this country.

fightmumma
Posted Tuesday, February 12, 2013 - 15:05

alan - yes I see your point, true, not an homogenous group and definitely an us v them attitude does not help anything.

One point though - BBs who have the funds to finance a child's or grandchild's tertiary education are more likely to fit the scenario described in this article aren't they? My parents certainly didn't give a shit about me or my efforts to improve myself at uni...and they still don't the second time around as a 40-something!! You wouldn't see a working class or family on welfare being able to pay anything - just kept with enough funds to stay trapped...not get out of it (or the next generation!!).

The finger pointing at the gov't is also true, I wonder why they didn't make better decisions with affordable housing, getting into the market etc?? I know the only way my parents were able to buy a house was through some program where you could buy the housing commission house you were renting (with rent being the deposit (I think??)). But it has to be said - it is the BBs who are also the developers and gov't is it not - and who voted for those gov'ts?! Those generations made the decisions that we live with now - so big FAIL I reckon - there's no way I'll ever be able to buy a house and I can't find cheaper housing in area I live where I can maintain my kids' continuity with their schooling.

Neoliberal policies, abandoning full employment, etc - now apparently with some gymnastic-type maneuvres we can all claim to have a wealthier society - but if the only way you get to fit that demoggraphic is to work ridiculous amounts/times of hours and that the only way you can buy a house is to be a couple both working...not much time for the kids...needing two cars...why do we want life and society to be this way?? The BBs still made this...and its heading down the toilet - big F from me

This user is a New Matilda supporter. Marga
Posted Tuesday, February 12, 2013 - 16:41

I was waiting for Ian's contribution on this topic.
Here it is: good on you Ian.

The debate has been going on now, epecially in the financial pages, for a few weeks. Never-ending letters in the AFR (mine too); debates in the Business Spectator with lonely me being the contrarian.

Australia's approach to superannuation looks so piece-meal. We need a thorough reform, a new approach; keep some aspects of the current superannuation system, replace others.

The present system is a tax-effective investment system for the better off, to well off, to rich. It does next to nothing for the lower income earners. No surprise, that the well-off protest; they fear their privileges drifting away.

We need not only super reform, but also from the ground up tax reform.

John Passant
Posted Tuesday, February 12, 2013 - 17:19

John Passant
En Passant with John Passant
http://enpassant.com.au

Brian Richard Allen, if you find it difficult to follow how not taxing or lightly taxing something is a cost, can I suggest you read the Treasury Tax Expenditures Statement 2012, or even my article in today's Canberra Times, hopefully explaining the point in simple terms.

'Super tax breaks yield more to the already rich'

http://www.canberratimes.com.au/opinion/super-tax-breaks-yield-more-to-t...

jackal01
Posted Tuesday, February 12, 2013 - 18:24

alanblack, fightmumma
Ian is teasing "comments" out of people.

If he had not put it as he did I doubt if alanblack would have got off his butt to add input and a more diverse opinion.

We have started a discussion, lets build it.

Ian is mostly right however, a big Tease, but pretty well out there on on path.

Great Article Ian, I agree, with most.

jackal01
Posted Tuesday, February 12, 2013 - 18:37

John Passant
Pure Brilliance, nice post, brilliant Article.

alanblack
Posted Tuesday, February 12, 2013 - 18:59

Jackal01- I've always enjoyed the thought provoking articles in New Matilda and have ensured that others are aware of the refreshing left leaning perspective- sadly missing from economic and political discourse in this country. Just because I rarely comment doesn't mean much however, poor analysis has no excuse and this is poor analysis.
While I agree that many of my generation are sitting on a gold mine, which is not equitable and should be taxed appropriately, it is not helpful to base an argument on a generational whinge fest. If this was the case I would be blaming my parents generation on leaving our world in a mess and unleashing the most destructive weapons known to mankind. They also left us with an incredible conservative society. But that is a counter productive argument.
There is strong argument to tax superannuation above a certain level or to tax withdrawals. Let's face it many sitting on this pile of money have worked in the public sector and a large part of their funds are contributions from their employer ie the public purse- our money.
fightmumma- some good points. However, not all developers are BB. I would imagine there are some gen X in there as well. Whatever generation they belong to they are the owners of wealth and rarely the ones who made the wealth in this country. Those who do the work and create the wealth are rarely rewarded for making the rich even richer.

fightmumma
Posted Tuesday, February 12, 2013 - 20:55

alan - yes, good point...I'll think on that. As you said, relating such issues to generational origins is perhaps an error in logic (it is fun for dumping the fault on someone else though!!). If I were more of a scientist I would be looking at causation/correlation and how to separate one generation from the next is as impossible as whether to blame the state or commonwealth for failed policy!! And certainly, blaming parents is no way to move forward with one's life to put yourself into the best one you can have - this requires looking forward, vision, analysis.

Australia is definitely not a classless society, taxing super would allow the nation to make more wealth, but if it ALSO disadvantages the average battler...what is the point to it? If the money ends up back in the economy...won't the same class of people still get it some other way? Or find a loophole/escape route? And those disadvantaged by it will be forced to rely on welfare or charity, or not get to enjoy the little wealth they HAVE built up over a lifetime of hard work???

Gwen
Posted Tuesday, February 12, 2013 - 21:15

I can't even begin to describe my anger at this piece of tripe.

To quote:
To put this figure in perspective, the median after-tax annual income of aged couple households in 2009-10 was around $34,000.

As a baby boomer retired couple (retrenched/ ill health) , we don't get this much. Government assistance close to zero.

I'm sick and tired of privileged academics blaming baby boomers for everything under the sun. Just Like the last generation did.
Like we are the only ones with the vote to change things.

Not a whimper from baby boomers as consecutive governments cut back free education? Not a whimper from the subsequent generations that were affected either! What happened to student demonstrations....

Well the baby boomers are retiring or have retired. It's your turn. See if you can bring around change yourself instead of blaming everyone else for the ills of the world.

This user is a New Matilda supporter. whitro
Posted Tuesday, February 12, 2013 - 21:32

The article is one of the most divisive pieces of generalised B/S that I have read of recent times; and from a supposed academic as well.
It does nothing to further intelligent, balanced debate on the topic. To imply that all self-funded baby boomers are wealthy, greedy, self-interested parasites on the teat of government tax revenues is outrageous. To further suggest that the the younger generations are being penalised because government largesse to BB's is simplistic beyond belief.
And to discuss the supposed unfair advantage of those who obtained free tertiary education without also mentioning the dire need in the community at the time with the dearth of highly skilled people dragging on the advancement in our economy and productivity, together with the great multiplier effect of a better educated workforce, is iniquitous. This omission alone brings into question the degree of objectivity in the article and the ability of its writer.
I am a self funded retiree. I am not wealthy and the money that I accumulated was done late in life, at some considerable sacrifice, when my wife and I realised in the late 70's that the aging population would put a burden on future generations and that we should do something to lessen this burden. Fortunately, it was achievable for us as we had learnt from our early years of struggle to be frugal and avoid the rampant consumerism that we saw in the generation that we spawned. We did not need two cars or a bathroom for every bedroom, nor the latest designer label clothes. Also fortunately my wife had had the opportunity as an adult, to gain the tertiary education denied to her as a child and could earn a good salary. By going without for almost twenty years (something beyond the comprehension of many young people these days) we were able to accumulate sufficient funds to provide for ourselves a modest income in retirement and avoid the need to rely on a government pension. Without the tax treatment of our super savings, and the subsequent pensions that they provided, this would not have been possible and we would have had to rely largely on a government pension, paid for by someone else's taxes. Again Mr McCauley makes no mention of this saving to the community purse.
I also must aim a blast at Pauline Vamos for the totally outrageous claim that the we need 2.5 million dollars to have a comfortable income in retirement. However, I also take McCauley to task for not realising, or worse still, deliberately failing to point out the Ms Vamos has a vested interest in frightening people to contribute more into their super accounts; the more money that goes into the super industry means so much more money for the people that cream so much off the top of peoples hard earned savings (which is why we have a self managed fund!).
By all means let's have an intelligent debate on the tax system as a whole and the need for greater equity (a la Henry review) but without the biased, generalised rantings of the like of Mr. McCauley.

fightmumma
Posted Wednesday, February 13, 2013 - 07:11

gwen and whitro - actually I suspect a lot of people from generations past the BBs have given up - simply because what we have inherited is highly resistant to change (mostly to protect very wealthy BBs continuing to get), and processes involve gov't which will also involve the legal system too...so if a person who does want to bring change and address the problems, it is nigh impossible to do so unless they also are wealthy/educated/have the "right" status (making them much less likely to be motivated to change the system anyway). Yes there are other age groups in society voting too, but BBs are such a large group that there is realistic concern about their impact from pensions and lost workforce/expertise, on the economy...so they are a very powerful voter group (one reason why politicians increased the aged pension but are happy to ignore everyone elses' poverty - to keep a large voting group happy).

It is very bad policy to end up with such high youth unemployment and suicide rates - what decisions have been made since WW2 that have created this present society? Has any other generation experienced this in the modern age? Probably only the 2 depressions (late 1890s?? and 1930s)?

BBs have made a society where the youth of today experince a GreatDepression all the time both for work and psychologically! And the BBs just turn on their own blood with comments like yours about your children wanting so much rather than hard work to get it over 20 years!! YOU raised your children, they are influenced by YOUR attitudes and parenting - so blame yourself for your children's values, goals etc., why didn't you teach them better to save and be less materialistic?

The thought struck me that with N Korea's nuclear bombs - well we might all just get the war we had to have, another round of death, destruction and the rebuilding as wih WW2, so won't the few genetically radioactive resistants be lucky to have a Brave New World to rebuild!! Nature finds a way somehow of keeping populations of species to managable levels for its abilities to provide and support. It gave humans this destructive gene as we continually like to over consume, and wipe out our most productive, strong and healthy breeding specimens in wars!!

Humanity is often a disgusting species, what a pity that even though we have the potential to think, analyse, assess, create, design and build for the good of all, we see no problem in the current way things are, we have definitely turned away from the age of equality and fairness, turning a blind eye to the suffering of others, turning on your own children, there are logically only a few outcomes of such behaviour and attitudes...

Gwen
Posted Wednesday, February 13, 2013 - 09:10

I don't know where some of you are living, perhaps Canberra but you must liv in some kind of Coccoon. Try the Outer Eastern Suburbs of Melbourne. I don't know of many fabulously wealthy baby boomers out here!
Lets deconstruct this:
"simply because what we have inherited is highly resistant to change (mostly to protect very wealthy BBs continuing to get)"
Erroneous cause and effect. Most of it is due to economic rationalism, a philosophy that has failed, that was bought to us from the previous generation but still somehow remains entrenched as the dominant economic philosophy.

"but BBs are such a large group that there is realistic concern about their impact from pensions and lost workforce/expertise, on the economy"
Try getting work if you over 60. Unemployment or underemployment is just as bad in the older age category if not worse. If you don't want to lose the expertise don't make us redundant!

"It is very bad policy to end up with such high youth unemployment and suicide rates"
Of course it is. I was unaware this was a deliberate policy. Perhaps it is due more to the incompetence of all governments since Bob Hawke (and even before Bob Hawke) that threw manufacturing industry (where the jobs used to come from) to the wolves. I remember them saying. "Well the service industry will save the jobs." Well, they are now in India. Now it's the mining sector, but it doesn't soak up all the manufacturing jobs lost. Now there is widespread unemployment. No surprises there.

I note both you and the author berate us for being educated. Well I paid for mine as did my sister. Sorry if it's some kind of mortal sin to get yourself educated.
Gough introduced free university education only for Paul Keating to remove it a few years later. Only a small sector of the population benefited. Certainly not myself or many others I know.
The rest of this is just an ageist rant as is the original article.
You've given up? Try quoting that to the next generation!

Not all baby boomers are wealthy. Certainly the gap between rich and poor has widened and baby boomers will be overrepresented in the rich simply because it takes a lifetime to accumulate great wealth. But most retired baby boomers live off a very moderate income.

But superannution? Paul Keating introduced compulsory employer super contributions so that people would be less dependent on the aged pension.
Now people are complaining that people self fund their retirement? Really?
Well the younger generations will have much better superannuation outcomes than todays average 60 y.o. simply because there has been more contributed into it. So go on. Tax it to hell. Destroy your own economic future

alanblack
Posted Wednesday, February 13, 2013 - 09:23

fightmumma- you have fallen into the trap of blaming the previous generation for all that is wrong in the world. Likewise the BB could blame the frugals for creating a world where nuclear weapons existed, had been used and could destroy the planet or the frugals could blame the previous generation for creating the stage for the devestating WW1 and laying the foundations for the Great Depression of the 1930's. The blame game can go on for generation after generation. It achieves nothing and adds nothing to a debate about the current situation and what needs to be done to create a more equitable and just society.
The issues you raise are complex and require more than a simplistic answer rather than blame a previous generation. In essence Gwen and Whitro are correct. It is really difficult to build a "nest egg" or savings if you don't build a career and work for your future. But this is a choice the individual must make.
Issues like Youth unemployment are incredibly complex. Simplistic blame game doesn't change the situation. You need to examine the power of the corporation and its influence over government decisions; the neo liberal policies of government; the lack of opposition to policies that weaken the welfare safety net etc. Not simply balming the previous generation.

jennyn
Posted Wednesday, February 13, 2013 - 09:49

JennyN
I am a comfortably off BB, my partner and I receiving good benefits from our previous large organisation employers as Ian McCauley describes, plus having savings. I don't think our benefits should be tax-free just because we are older. If you are well-off you should pay tax. If you are a BB with little retirement income/savings then this will not apply to you.

fightmumma
Posted Wednesday, February 13, 2013 - 10:12

yeah, but my point, as I see it, where do the economic rationalism and neoliberalism come from? I know laissez faire has been around a long time, but WHO decided that the freemarket was the cure-all for our nations in modernity? This has happened late 70's early 80s hasn't it? This is an issue that gen x/y didn't get a say in as we were in primary school or a twinkle in some daddy's eye...??? Who exactly decided to give those corporations (and oftentimes international/multinational ones at that) so much power - to the point of handing over a great deal of virtually sovereign power??? Wasn't kids in primary school or nappies! Somewhere SOME people made certain decisions - who were these people?? Did they or did they not make decisions that lead to current circumstances? AND if a person DID want to change the system - the new power structures are entrenched and resistant to change because our past governments removed power from citizens and gave it away to who...I don't even know!

This isn't a "blame game" is it? This is tracing decision-making and its consequences...maybe the generation thing is actually irrelevant, but the cause effects are there nonetheless - and the younger generations get to cope/manage with the negative ones - all while the BBs (often our own parents) sticking the boot in criticising and condemning younger generations for not finding work, staying living with your parents longer etc - which are exactly the conditions we inherited from someone else's voting, policies and implementation.

kanzen
Posted Wednesday, February 13, 2013 - 10:21

With a little reworking of history and some sweeping generalisations it is obviously possible to create much inter-generational angst, but to what end?

If you are simply trying to argue that current superannuation taxation arrangements are wrong, why not do so? There would seem to be good arguments to be run. Along with the super tax benefits we should be attacking all of the middle class welfare introduced by governments that lacked a clear focus on anything other than buying votes.

I am one of these dreaded BBs and, for the record, I neither need nor want any help from the government or any one else to support my retirement. I made choices during my life that cost me at the time but now put me in a reasonable position. Sure, I benefited from inflationary growth in house prices. I also paid 17% interest on that mortgage for a time. And no one but me paid for my university education.

alanblack
Posted Wednesday, February 13, 2013 - 11:04

Fightmumma- a little research please on Neoliberalism. A concept developed in the late 1930s. It really hit its strides in Australia during the 1980's. If you want to play the generation blame game- at the time when Gen X would have started to vote. So it is not just BB. Time to stop the blame game.
Kanzen is right. The blame game has taken the focus off the real problems ie reforming the system. Instead of projecting your anger at the BB try projecting it creatively into campaigning for change and there is so much that needs change e.g. middle class welfare; a decent social welfare net; asylum seeker policy; removing the racially motivated intervention in the NT and now elsewhere; working to return the ALP to social democratic policy etc etc.

This user is a New Matilda supporter. dazza
Posted Wednesday, February 13, 2013 - 13:34

Good article, Ian, and some good comment on it.
I think that the Baby Boomers, so called, are getting a very bum rap, in general. I am a bit too old to be a BB, but I have seen during my lifetime a generation of people take from future generations just about everything that they could, and leave desolation. The GFC was born of these people.
Are they to blame for being human? After all, humans are NOT very intelligent. They are breeding like flies, and using the resources of our ONE Planet as if it were one of thousands available. Not really, but they swallowed neo-liberalism, economic rationalism, neo-conism, the glee of making and keeping great heaps of mazooma, growing more and more socially conservative, voting for those who they think are going to look after their 'quality of life' even if it is to the detriment of millions of other human beings who do not have the power to gouge, rob, obtain, be given, their 'share' of the Earth's resources.
Unfortunately, it is these people, often now in government the World over, who are doing their best to deny the Global Warming caused by the exploitation of natural resources mainly by the rich, who are going to cause the end of humanity as we know it. Soon, so very soon, there will be the Riding of the Four Horsemen of the Apocalypse, as a wounded Earth goes into death throes, and those who have a very good life, with plenty of mazooma, and good health will be the ones fighting to retain that lifestyle, as indeed they are already, by voting for people like the rAbbott, and Labor, Global Warming denialists, who know how they think, and will cater to their demands. Probably knowing full well that their finger in the dyke is being bypassed, that they can NOT stop the floods. But a lot of money is to be made in the meantime, and a lot of these people have never really considered those who may follow them, even their own children. There seems to be a total lack of compassion, of thought, for others, that is utterly chilling. The major God of these people is MONEY!
A serve. Yes, probably. But I see this greed and lack of thought for the future in every aspect of Government these days, when CSG rapers are given a total free hand to destroy water and food supplies, where Ports are allowed to be massively enlarged to cater to massive coal carriers through our Great Barrier Reef, where enormous coal mines are given the green light, where the lungs of the world, our rain-forests, are levelled to provide toilet paper (and more mines), knowing quite well that this is aiding the death of our one and only Habitation. They just do not care! Make money now, bugger the future, bugger the kids and the grandkids.
Can anyone here really deny what I say? I ask you!
As for people like Alan Black, yes I agree, we need change. But change can only come through massive destruction or de-stabilization, and not through our Mindless Millions voting for the same old same old. Nothing less than a Revolution is going to change our politicians and those that work with them or control them, to give a fairer world, because all those people quite like the status quo. They made it to suit themselves, and they intend to retain it as long as they possibly can. Massive Inertia.
Viva La Revolution!
fightmmma, economic rationalism and neo-liberalism by whatever name, trickle down economics, voodoo economics, supply-side economics, started from books written way back from the 1930's on, there is a list of about three most used names, picked up by people like Ronald Reagan and Margaret Thatcher and John Howard and Paul Keating, by the Chicago School of Economics, by Harvard, by every American University and rammed into the heads of a generation of so-called economists, who hated the idea of Governments interfering in Markets, which to a neo-liberal etc. was total anathema. Which is why Conservatives HATE what they call BIG Government, Welfare, Taxes, anything which may interfere in their single-minded pursuit of money, and the keeping of their ill-gotten gains to themselves.
The Tories in Britain, the Republicans in the USA, and the Coalition in Australia all live by the edicts of these writers of a few books. Karl Marx had an influence, but it is nothing in comparison with Free Market Economics.
We were promised by some that it had died with the GFC, but it did NOT, the adherents fought back using massive funds (ours) and have quite obviously won. They still hold unfettered power the western world over. Just look at Davos! Just look at what they have done to the EU countries such as Greece, Ireland etc. etc.
Where money is needed to build or re-build infrastructure, rebuild jobs and incomes and taxes, the people of those countries have been whacked by the dictates of neo-liberalism, and the bankers and the filthy rich are getting richer everyday from their pain.
Poor Fellow, My World!

This user is a New Matilda supporter. dazza
Posted Wednesday, February 13, 2013 - 15:20

I think I was somewhat guilty of lumping all Baby Boomers, or rather people of a certain age and generation, into the one lump. Sorry. I know there are those that are NOT totally non-compassionate, morally and ethically bankrupt, as are the majority.
It is very unfortunate that these people have handed their values down to another generation, and the same economic and social tenets are still taught in our Universities, who have not even looked for an alternative. Keynesian policies, that of Governments being there to assist and help their citizens through bad patches, are still sneered at by the Chicago School of Economics followers.
For those interested in just how badly these Economic irRationalists, neo-libs, etc. have treated the rest of humanity please let me recommend an article by one Ha-Joon Chang, titled "Europe is haunted by the myth of the lazy mob," in The Guardian Weekly, 8-14Feb. 2013. It is on line.
Cheers.

jackal01
Posted Wednesday, February 13, 2013 - 18:58

whitro
You said:
"By all means let’s have an intelligent debate on the tax system as a whole and the need for greater equity"

We are!, you posted here and so do others, but without Ian Mc presenting this Article there would have been no discussion so far.

So I hope you read other peoples post so as to have a intelligent debate, a one sided argument is not a Debate, only reading what we want to read is also not Inteligent.

So, welcome. I liked you post. Your right, but we still have a problem, lets fix it.

When the Banks started throwing people out, the Governmemt had to create Office Jobs, hence the Super Industry. Thats why it was such an Ill thought out process.

Ian Mc's article was a great stir, but lets have a look at how much Super money has actualy Disappeared into thin air.
We can talk about 200 Aust. Killed due to Terrorism and go to war, talk about something like 13000 people killed due to Medical Negligence and, "NOTHING." Bundaberg Base Hospital Scandal, instead of war.

We talk about what people apparently have, but lets look at what was lost and who by and where did it go. Was it POOF into thin air.

Ring up CenterLink once a month and listen to the Electronic Box.
You know the one. Press 1 if ??, press 2 if ?? when you get to four and five its always if your ringing about the collapse of Banksia or ????? press 4, if ringing about the Collapse of ?????? Finacial Investment Fund press 5. Its shocking.

So it does not suprise me that we are talking as humans about what others have, but what about what others have lost and why.

Was it realy about retirement or funding Pen Pushing Jobs.
So where has all the lost money gone, into wages, salaries, or Superprofits by ?????????.

fightmumma
Posted Wednesday, February 13, 2013 - 19:26

alan - I don't claim to be an expert on economics. But I WILL tell you MY understanding of a few things and I AM aware sometimes I mix up several complex ideas and don't explain myself very well (explains why it takes me 3-4 drafts to write my uni essays!!).

With respect it is YOU who needs to do some research/study or deeper analysis...you are shortsighted!

Where do these principles come from and WHY??? Are we or are we not faced with exactly the same questions and dilemmas? We have failed to learn from the mistakes of our parents or grandparents...it IS up to newer generations to address this, however we are usually held back by the self interest and comfort of those benefitting from the contemporary circumstances, resistant to change, oppositional to change (Abbott being a great eg).

You take a society, a mother country, deeply divided and controlled by aristocracy, an historic English backdrop for Dicken's later stories singing a soulful testimony to people with few life chances ... generations springing up like roses destined to die in drought, from Poor Laws, aristocratic superiority and attitudes of social Darwinism...you mix in philosophers, revolutionaries..."How does society best survive?" "How do we solve poverty and famine?"

We get John Locke advocating private ownership, separating church and state, claiming we have a right to challenge oppressive governments ... reactions and responses to the then modern conditions that intelligent thinking men found themselves in - oppressive decacdent aristocratic rule...private wealth seems very attractive when you're living in a gutter and want an opportunity to better yourself, to become an entrepreneur...everyone likes this idea!

Laissez faire becomes a popular ideal - it is attractive to protecting individual property rights, to inspiring a spirit of self-interest and gain...no intereference, it hums like a recently sung bell, of promise to fix all the silent woes of society - the iron fist of control from people a world away in the closest castle...with a moat of luxuries...

We have wars and wars, famines, disease..always people in the gutter..."filthy no-hoper," the lord thinks, looking on a women squatting on the pavement, as he raises his snuff to his nose, crinkling it up in disgust. The attitude surivives...not bound by genetics or virus.

Globalisation is still embryonic...nestled securely in the womb of imperialism and national alliances. Technology is blooming slowly, the first wave of societal change bringing new wealth, new power, different work, more poverty, cities, smog...still, ideas spread slowly...over the waves, in the carriages...

more to come...

jackal01
Posted Wednesday, February 13, 2013 - 20:12

fightmumma
Your like a Rose not yet in full Bloom.
But Bloom you will.

Now, I hope all this writting does not take up too much of your valuable time, Cause you, eye strain, which translates to poor health both mentaly and Physicaly. Too much thinking and not enough rest not a happy person maketh.

Look after your health mentaly and physicaly 1st and foremost.

Still, love your work.

alanblack
Posted Wednesday, February 13, 2013 - 20:26

fightmumma- some good points. A little on the dark side. There is also another perspective. Certainly, it is always the case that those with power will do what they can to keep that power and the "behind closed door" machinations of the power brokers will frustrate even the most progressive government but all is never lost.
For example, the labour movement gained so many benefits for workers albeit through a massive amount of struggle. (Unfortunately, we have short memories and surrender these wins too easily often for little gain); protests of liberation have removed oppressive regimes (Ghandi in India; ANC in SA).
The problem is that once people are in a position of power or gain some comfort it can corrupt even those with noblest of ideals , but there is always hope.

EarthFan
Posted Thursday, February 14, 2013 - 03:23

The aim of the tax breaks given for superannuation was to encourage people to invest their earnings until they retired. Then they could live off the labour of the younger generation via corporate profits and rent on investment properties, instead of old age pensions paid for by tax. This is called "self-funded" retirement. It isn't self funded of course, it is funded by workers.

But what if the cost of the tax breaks is greater than the cost of all the old age pensions? Then the tax breaks are self-defeating.

marylou
Posted Thursday, February 14, 2013 - 14:30

Please don't write as if all baby boomers are going to get a fantastic super payout and live high on the hog at the expense of young people. There are many of us who didn't even get super till late in our working lives; there are many of us who do low paid jobs and certainly qwon't be able to support ourselves with our super payouts.

Sure, the rich should be taxed - all the rich, not just old ones.

But do us a favour and stop being ageist - all you are doing is adding to whatever grudges your generation has against ours.

Don't forget - our taxes supported the older generation when we were young and we did not whinge about it - it was taken for granted that each generation would support their parents etc. Wait till you're old, see how your like being lumped in with rich buggers who just have to have whatever standard of living they think they deserve and which they got because they were the few who were lucky enough to work in high paying jobs - let them eat cake i say.

imcauley
Posted Thursday, February 14, 2013 - 15:05

Thanks to everyone for a spirited set of comments.

I confess to guilt by association. I was born in 1945, just three weeks after the Japanese surrender. And I did well out of the Howard Government's unjustified generosity.

Of course not all BBs are accumulating seven digit super balances. Some of those windows of opportunity, such as fixed interest mortgages in a period of high inflation, and Howard's contribution allowances, did not stay open for long.

The specific point of the article is that those BBs who have done well should not grizzle if the government wants to redress the inequities that have arisen -- so long as they do not disadvantage those with more modest balances.

And there are two general points have to do with intergenerational equity and wealth.

On the first point, one of the functions of the tax and transfer system is to help smooth out lifetime cash flow, and a well-designed superannuation system should do this. I fear that the move to 12 percent superannuation may result in people's peak cash flow coming too late -- past the time of their lives when they need it most. See:

http://www.ianmcauley.com/academic/confs/superusyd2010.pdf

On the second point, those concerned with equity pay a great deal of attention to disparities in income. But we also need to pay some attention to disparities in wealth -- a more complex topic, but one for which superannuation and savings policies are highly relevant. The examples in these comments provided by BBs who have not had the opportunities when those windows were open are cases in point.

alanblack
Posted Thursday, February 14, 2013 - 16:49

fightmumma- An interesting article. Chomsky ie well worth a good read. Always challenging and inspiring. There are numerous collections of his essays available in paperback and ebook. Well worth tracking these down. As well as chomsky.info you might find this link for Chomsky articles and updates of value: http://www.zcommunications.org/zspace/noamchomsky
From much of what you've written in response to this article it seems that you have an interst in the concept of power. There is a lot of discussion about this in Chomsky. I've also found to be quite good a book by Raj Patel called "The value of Nothing". This work focuses on the world financial systems.
If you are interested in community development and change a good book is Jim Ife's "Human Rights from Below".

fightmumma
Posted Friday, February 15, 2013 - 10:09

hi Allan - I had to laugh, I have read part of Patel's book and own one of Ife's (Human Rights and Social Work). Some great ideas. I like how Patel mentions the enclosure of the commons and links it to contemporary processes of a similar ilk...the part I read linked ideas still to land possession, though it could be connected to privatisation...not sure if Patel goes on to those ideas, but to me they seem interrelated...as is the common theme of using legislation which then forces all citizens to use only certain forms/contexts of debate, language and institutions...advantaging some over others...maybe I should read the whole book. Though...you should see the list of books I have to read for my "extra" reading for the "holidays"!!!

I'm trying to work up my lining of thinking to finish my above rant too, just got to find my flow again!!

jackal01
Posted Friday, February 15, 2013 - 17:40

Your doing very well fightmumma.

If your not careful you'll be the smartest person in Australias, don't ruin your eyes. More then 2 hours at a stretch infront of the Box kills eye balls.

Pedestrian
Posted Tuesday, February 19, 2013 - 14:29

The article does not deal with intrinsic design problems in Super.

a) for virtually all wage earners investment in a approved super fund is compulsory-and this means these wage earners must pay the costs of some sort fund management of their savings investment. <i>This has created fund managements that are to a large degree protected from normal competition re investment choices , managements that also have plenty of money to lobby for their own interests as managers</i>. You can change your fund but you can not take the money out and invest it in something that does not have much the same management costs. Bad design.

b) For people earning about 30 to 50 thou , who are in and out of jobs - a very average situation these days , Super will never deliver a adequate retirement especially after inflation(say 35% per decade) and fund costs are deducted. Bad design.

c)For high earners ( about 10% of the population)<i>Super as a special, government created, class of quasi collective investment makes little sense without the tax breaks </i>. DIY super costs quite a bit to run, without the tax dedution inducement high earners would simply invest in whatever is the best option for them without going to the trouble and expense involved in a DIY super fund.
Bad design.

Why are we even trying to direct (or control) the personal retirement investment choices of the top 10% in the first place?

MamnDioksmask
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