MOVE aside, climate change warriors. Time’s up, feminists. You are so last decade, gay lobby. You’ve all had a good go, now let someone else have a turn. I am talking about Australia’s newest and the decade’s most fashionable popular cause. I am talking about a cause celebre that’s got legs. I am talking about the issue of age discrimination.

We are about to be swamped by an inconvenient demographic truth: baby boomers are flooding into retirement and they intend hanging around there for years to come. The inconvenient truth is that our society generally, and our tax base more specifically, is ill-prepared for an avalanche of older Australians.

Many baby boomers born in the late 1940s were in the workforce by the mid-60s and for the next 30 years they paid taxes to the governments of the day. And the governments of the day — federal, state and of all persuasions — spent those taxes on health and education and defence, but not on the development of a national retirement scheme.

Compulsory superannuation came into effect only from 1993 so first-wave boomers today are less well provisioned for retirement than later generations will be.

And so it is not unreasonable for a baby boomer born in, say, 1946 and retiring at 65 in 2011 to expect workers of the day and their governments to support them in retirement.

After all, this has been the basis to a sacred social contract between governments and workers for a century: work and pay tax now and you will be supported in old age. Well, the time for that support has arrived. However, there was a fine-print caveat to this contract. And that caveat says that workers and governments of the day are more than happy to support others in old age … just so long as there are not too many of them, that they’re not too ­demanding of services such as health and welfare, and that they promise to drop dead within a reasonable timeframe from the point of retirement.

The problem is that on each of these counts baby boomers have no intention of keeping their side of the bargain. Boomers are changing the rules when it comes to the ageing process.

Let’s say that the baby boom generation covers Australians born between 1946 and 1965 and who will be aged 49-68 this year. This lot numbers 5.3 million.

The preceding generation, let’s call them the frugals, were born during the 20 years between 1926 and 1945 and who today are aged 69-88. There are only 1.5 million frugals left, although 20 years ago when this lot was at the same stage of the life cycle as today’s baby boomers they numbered 3.2 million.

Whatever pensions, con­cessions, benefits, retirement housing and physical and/or ­social infrastructure that was required to accommodate 3.2 million prospective retirees from the mid-90s onwards will have to be upped by 66 per cent during the next 20 years to ­accommodate the arrival of the baby boomers into retirement.

And this assumes there is a pro-rata comparison between what the frugals expected in ­retirement and what the boomers will expect in retirement. If, for example, boomers were to expect better levels of care and support than preceding retirees then budgetary allocations would have to be even greater than the base numbers suggest.

Boomers will do two things to what we now call the retirement phase of the life cycle during the next decade.

First, they will make age discrimination a popular cause. “You extol the benefits of diversity of gender, of ethnicity, of sexual orientation in the workplace but you don’t have anyone in your management team over the age of 60?” Older workers are more stable, have greater life experience and can, among other things, offer coaching and mentoring for younger workers.

It’s like a board devoid of women: how can you ignore the perspective of half the pop­ulation? Similarly, how can you ignore the perspective of 3.3 million Australians aged 65 and older? The last bastion of discrimination — ageism — must be addressed. To the barricades, boomers, and demand a fair go for older workers.

I suspect there will be a market in the next federal election for a micro-party that harnesses votes from simmering boomer disquiet. Such a group will “fight for the rights of older workers”, or “fight for the rights of workers to retire on pensions”, or perhaps just fight. There is something marvellously collegial about banding ­together to repel a common enemy, and I suspect that boomers are mightily drawn to this ­concept. And, besides, boomers will be the first generation of retirees who are tertiary educated, opinionated, articulate and with time on their hands. This is a dangerous combination, especially for government. Here is a cause that ticks all the boxes.

Every election for a generation will have sweeteners — other generations will call them bribes — for the retirement set. Forget the paid parental leave scheme because a better schmoozing of the electorate would have been a “retirement with dignity” fillip to the age pension.

The second thing that boomers will do is make retirement fashionable. Yes, fashionable. Not so much the act of retirement, because people won’t retire in the future. Rather, they will scale back and part-work, part-retire. It is the retirement phase in the life cycle and especially the years between the late 50s and early 70s that will be packaged and presented as desirable.

“Why would you want to be 20-something or 40-something? All the stresses and strains of partnering and kids and mortgages and of climbing the corporate ladder. No thanks. Sixty-something is by far the best time of life. Kids off your hands. Mortgage paid out. Health OK. Relationships settled. Now’s time for me to finally do as I please.”

The challenges associated with the ageing process are not limited to the demographic shift that is slowly constricting budgets. Society is changed by having more people, and more people with attitude, over the age of 65 in the community.

“You know, old people used to know their place in society. Invisible!” But boomers don’t do invisible. They do visible. They do audible. Stand by for an imminent and lively spot of inter-generational bickering, the likes of which we haven’t seen since the late 60s, when teenage baby boomers railed against the middle-aged, whom they called “the establishment”. Incensed Xers will rail against the boomers in the coming years as governments ask workers to pay more tax per capita to support older Australians: “You lot should have provisioned better for retirement in your time, not mine.”

Boomers will respond: “Yeah … yeah … well, we paid taxes all our working lives. The fact governments of the day blew it all on currying favour with the electorate is not our problem.”

Xers: “You lot got fee-free tertiary education.”

Boomers: “We had conscription.”

Xers: “You lot got access to cheap housing.”

Boomers: “That’d be because we were prepared to take out a mortgage in our early 20s. We didn’t go gallivanting around the globe all ‘discovering ourselves’.”

Xers: “John Lennon was over-rated.”

Boomers: “Right, that’s it. You and me. Outside. Now.”

Ys: “Is there anything to eat in the fridge?”

To some extent, there should be sympathy for baby boomers and especially those now approaching retirement. It’s hardly their fault that governments didn’t introduce compulsory superannuation a decade or two earlier. Then again, boomers did benefit from the largesse that flowed from thinking such as fee-free tertiary education.

This leads to a discussion about other options to provide for a proportionate uplift in the number of older Australians. Rather than asking Xers and others to work longer (to age 70) we could ask all workers to pay more tax per capita. Or we could ask the baby boomer generation to accept less in retirement by way of pensions and benefits. Or we could configure our immigration scheme to attract fit young skilled workers in their 20s who would go directly into the workplace and export tax to other cohorts.

Critics of this later Big Australia strategy argue that this resembles a Ponzi scheme because when today’s 20-somethings retire there will be a requirement for even more young workers.

However, today’s young workers will be in a better position to manage their retirement in the 2040s because they will have been paying into superannuation their whole working lives. I suspect that what will transpire is a combination of three strategies: more tax per capita; more constricted access to pensions and benefits; and a trend towards historically high levels of migration.

I also think that during the next decade we will see yet another schism open up within Australia. Forget the city-bush divide. Also gone is the division between labour and capital. Social division has opened between the Greens-voting inner-city educated elite and the suburban masses, which a decade ago included a group tagged Howard’s battlers.

The new social division that is on the rise is between the haves and the have-nots in retirement. The have-nots comprise everyday Australians working in non-glamorous, low-skilled jobs in the private sector and who were born in the 40s and 50s. They were not exposed to a full working-life’s leverage from the introduction of compulsory superannuation.

On the other hand, I think we will see the emergence of a new privileged class of tertiary-edu­cated corporate elites, entrepreneurs and others who have earned sufficient funds to deliver a self-funded retiree lifestyle. But to this privileged group must be added long-serving public-sector workers and others on that extinct but most desirable of arrangements, the defined benefits scheme.

The final group within this category of “haves” is the political class whose early superannuation schemes, not to mention post-term perks, now look like outrageous rorts rather than innocent aberrations.

I suspect that during the coming decade the nature of disadvantage will broaden from those on welfare, the indigenous, the unskilled, the unemployed and the disabled to include those on a government pension.

Author : Bernard Salt

Bernard Salt founded and heads KPMG Demographics and is an adjunct professor at Curtin University Business School.

bsalt@kpmg.com.au

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