Friday, February 13, 2004
Australian MPs' superannuation
There is no doubt that the Commonwealth MPs superannuation scheme is ridiculously generous - is (and will be) I emphasize; not "was".
By quarantining ("grandfathering") all current MPs from any adverse change, PM John Howard has introduced a drastic distortion into the employment market for incoming (= GenX, of course) MPs. Let's be clear about the magnitude of the change: it's about a 90% reduction.
This bodes ill for the future, but not because it is particularly going to put off talented individuals from going into politics in the future (I don't believe it will; MPs are still very well-paid in comparison to the rest of the public sector). Rather, it is the crassest sort of law-making and fiscal allocation that concerns me - this is stealing from the future in order to fund the (unaffordable and un-earned) high-life being lived by those very same persons who have just supposedly made a responsible decision. Guess what? If it doesn't hurt you, then it's not "responsible", a priori.
People can bleat about retrospectivity when it comes to making changes here, but GenX has already been "retrospectively" shafted on at least two major accounts. HECS fees were introduced in early 1989, after only a few months' notice - students mid-way through courses were explicitly NOT grandfathered, despite their having commenced free uni studies in good faith. Similarly, but this time also affecting the last baby boomers (though to a lesser degree, naturally), the age for accessing super was arbitrarily raised a few years ago for those born between July 1960 and June 1964, in a stepped age-taper from 56 to 59 (and 60 for all those born after June 1964).
If access to super at 55 is anomalous in the present day (and I firmly believe it is), to put-off the operational tightening of this for thirty-odd years is gutless and myopic politics. It also inflames inter-generational tensions. People's retirement plans should not be subject to major, last minute upsets - which is the reason why today no one should be accessing their super prior to the age of 60; six years (not 30!) is, and was, a fair and reasonable time for a five-stepped age-taper to be brought in. Ditto for our MPs - if the changes don't taper in soon, and steeply, they are an abegnation of sound policy, and a shouted-out-loud message of "fuck you" to later generations.
Update 14 February 2004
The inter-generational inequity of this just gets worse. If MPs' salaries indeed rise to compensate for the superannuation haircut - and this rise is across the board - then current MPs will be exponentially better-off (remembering that their existing super scheme ties retirement benefits to a percentage of their wage at retirement date).
Justifying my opinion/hunch that the rules should have been changed by PM Howard (i) early in his reign, and (ii) to cover sitting MPs as well, is some info in today's Oz*: the Australian Government Actuary noted the trend towards younger-at-election and younger-at-"retiring" MPs in a March 1997 report.
In other words (allowing a decade or so for a demographic trend to percolate into something "official"), the rot here set-in in the 80s - when, possibly barring a tiny handful of early 20s MPs, it was exclusively baby boomers who then composed the "young" charging towards an easy life on the public teat.
Typically, "The 7:30 Report" - a boomer mouthpiece par excellence - wilfully miscalculates the demographics:
HEATHER EWART (Host): There's quite a team of 30 and 40 somethings in the Parliament right now who'd been eligible for hefty payouts if they lose the next election.
NICK ECONOMU (sic) (Expert/talking head): The superannuation scheme was originally formulated at a time when people went into politics quite late in their life, usually having worked in some other profession or doing some other job, and went into Parliament at a much older age. These days politicians are much younger they seem to be going into politics as a career
Talking of "30 and 40 somethings" as if they were, in 2004, remotely cognate should be a dead giveaway, of course. But still, something jars about Nick E's "these days" pontification. Guess what, Nick? The 80s are over, and it's now actually okay to say you're doing something for a career (during the 80s, of course, "careers" were strictly for merchant bankers). Oh, and careers back then were also for the 99% of baby boomers who, during that decade, pretended that they were just pfaffing about, even as they started to seriously hoard houses, jobs, and their tax-lite super.
* George Megalogenis "O'Chee legacy for Latham" The Australian 14 February 2004 (no URL)
There is no doubt that the Commonwealth MPs superannuation scheme is ridiculously generous - is (and will be) I emphasize; not "was".
By quarantining ("grandfathering") all current MPs from any adverse change, PM John Howard has introduced a drastic distortion into the employment market for incoming (= GenX, of course) MPs. Let's be clear about the magnitude of the change: it's about a 90% reduction.
This bodes ill for the future, but not because it is particularly going to put off talented individuals from going into politics in the future (I don't believe it will; MPs are still very well-paid in comparison to the rest of the public sector). Rather, it is the crassest sort of law-making and fiscal allocation that concerns me - this is stealing from the future in order to fund the (unaffordable and un-earned) high-life being lived by those very same persons who have just supposedly made a responsible decision. Guess what? If it doesn't hurt you, then it's not "responsible", a priori.
People can bleat about retrospectivity when it comes to making changes here, but GenX has already been "retrospectively" shafted on at least two major accounts. HECS fees were introduced in early 1989, after only a few months' notice - students mid-way through courses were explicitly NOT grandfathered, despite their having commenced free uni studies in good faith. Similarly, but this time also affecting the last baby boomers (though to a lesser degree, naturally), the age for accessing super was arbitrarily raised a few years ago for those born between July 1960 and June 1964, in a stepped age-taper from 56 to 59 (and 60 for all those born after June 1964).
If access to super at 55 is anomalous in the present day (and I firmly believe it is), to put-off the operational tightening of this for thirty-odd years is gutless and myopic politics. It also inflames inter-generational tensions. People's retirement plans should not be subject to major, last minute upsets - which is the reason why today no one should be accessing their super prior to the age of 60; six years (not 30!) is, and was, a fair and reasonable time for a five-stepped age-taper to be brought in. Ditto for our MPs - if the changes don't taper in soon, and steeply, they are an abegnation of sound policy, and a shouted-out-loud message of "fuck you" to later generations.
Update 14 February 2004
The inter-generational inequity of this just gets worse. If MPs' salaries indeed rise to compensate for the superannuation haircut - and this rise is across the board - then current MPs will be exponentially better-off (remembering that their existing super scheme ties retirement benefits to a percentage of their wage at retirement date).
Justifying my opinion/hunch that the rules should have been changed by PM Howard (i) early in his reign, and (ii) to cover sitting MPs as well, is some info in today's Oz*: the Australian Government Actuary noted the trend towards younger-at-election and younger-at-"retiring" MPs in a March 1997 report.
In other words (allowing a decade or so for a demographic trend to percolate into something "official"), the rot here set-in in the 80s - when, possibly barring a tiny handful of early 20s MPs, it was exclusively baby boomers who then composed the "young" charging towards an easy life on the public teat.
Typically, "The 7:30 Report" - a boomer mouthpiece par excellence - wilfully miscalculates the demographics:
HEATHER EWART (Host): There's quite a team of 30 and 40 somethings in the Parliament right now who'd been eligible for hefty payouts if they lose the next election.
NICK ECONOMU (sic) (Expert/talking head): The superannuation scheme was originally formulated at a time when people went into politics quite late in their life, usually having worked in some other profession or doing some other job, and went into Parliament at a much older age. These days politicians are much younger they seem to be going into politics as a career
Talking of "30 and 40 somethings" as if they were, in 2004, remotely cognate should be a dead giveaway, of course. But still, something jars about Nick E's "these days" pontification. Guess what, Nick? The 80s are over, and it's now actually okay to say you're doing something for a career (during the 80s, of course, "careers" were strictly for merchant bankers). Oh, and careers back then were also for the 99% of baby boomers who, during that decade, pretended that they were just pfaffing about, even as they started to seriously hoard houses, jobs, and their tax-lite super.
* George Megalogenis "O'Chee legacy for Latham" The Australian 14 February 2004 (no URL)
