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Macklin & the politics of fear

March 25, 2010

A few days ago, Jenny Macklin (Minister for Families) decided to have a go at me based on a report in the Courier Mail. Her press release breathlessly warns the public that “the financial security of older Australians is under a cloud” because I want a system where “older Australians are left without any government support”. Scary stuff.

For what I can tell, no media outlet reported on Macklin’s press release.

The cause of Macklin’s fear was a speech I gave at the inaugural Festival of Dangerous Ideas in October last year (before I had even joined the Liberals). I was asked to speak about abolishing the old-age pension and I thought it was a good challenge so I agreed. Clearly, this doesn’t represent Liberal Party policy, and is not part of a secret underground conspiracy as Macklin seems to suggest.

Macklin quotes the speech blurb: “old age pension is costly, and bad for the economy, and unsustainable and unfair to young people.” However, those who actually listened to my speech (which is available online) would know that the approach I suggested was not the scary “financial cloud” that Macklin warns of, but instead a system of competing community-based pension plans (plus superannuation), with universal coverage.

Precisely because I am an “evil neo-liberal” economist, I decided not to focus on the economic arguments in my speech, but instead explore the possibility of greater community involvement in the welfare system (including the old-age pension). My talk was mostly an exploration of the historical functioning of “friendly societies” and other community-based groups and how they could be re-energised to improve outcomes.

Of course, I did go on to mention the fact that our current aged care (and health) policies are unsustainable. This isn’t a controversial comment, and the facts come directly from the government’s own Intergenerational Report. Based on that report, I have calculated that if policies are unchanged the government will be bankrupt in about 50 years.

The real problem that this raises is that people entering the workforce now may be left without a government pension when they retire. The only long-term options are (1) cut pensions; or (2) reform the system with greater use of superannuation and/or community groups. This is a significant problem deserving a serious response, not politically inspired fear-mongering.

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