The economic potential of older people is being ignored

Date

Susan Ryan

Was I the only person in Australia who congratulated Treasurer Joe Hockey on his observation that the first person to live to 150 might already be born?

Not only have medical scientists confirmed the comment, the shock value of contemplating our 150th birthdays should have had all economists, employers, business chiefs and mid-age individuals focusing seriously on how to extend the working life of most Australians. Moving towards a stage where 70 rather than 60 becomes the average retirement age is what our economy needs, and what older people themselves are often seeking.

Health experts constantly remind us that the working older person is healthier than the non-working older person, and happier. These realities should provide a constructive context for the appearance of the Intergenerational Report. The IGRs, and we are up to our fourth, set out the long-term budget implications of ever-rising numbers of individuals living for more years on the age pension and public health, over a period where the proportion of the working population younger than 65 is declining.

The expenditures as predicted are unsustainable, but they are not inevitable. Obvious and realistic policy change would pull the figures into better balance, into “sustainability”. The objective of changing the ratios by increasing the numbers of older workers should be in this conversation from the beginning.

With past IGRs, positive policy opportunities have been drowned by waves of negativity about the unadorned outlook figures. The last Intergenerational Report spoke only of the “risks” and “challenges” of our ageing population, and the dramatic reduction of the proportion of those of working age to support those older than 65. It highlighted the pressures on health spending in relation to the ageing population.

It implied and was widely interpreted as insisting that all those older than 65 are in need of substantial and growing public support. It set up a dichotomy between younger/older as good/bad. It implied that ageing only meant illness, decline and burdening the public purse. The economic potential of older people was ignored. This approach perpetuates unhelpful stereotypes of older people and obstructs the development of a policy approach where younger and older generations can work co-operatively.

Why are individuals leaving paid work at 60, or often earlier, rather than 70? Even if they are more likely to live to 100 instead of 150, four decades without earned income and the satisfaction of work is too many. Age discrimination in employment is a huge barrier preventing older Australians from continuing in the workforce. One in five unemployed people older than 45 report that their main difficulty in finding work is that they are considered too old by employers. We know that one in 10 business respondents have an age above which they will not recruit – the average age is 50 years.

We also know that helping older people participate would boost our economy. Deloitte Access Economics research shows that increasing the number of Australians older than 55 in paid employment by 5% would result in a $48 billion impact on the national economy.

This can happen. The percentage of the people aged 55-64 in the workforce in Australia is 61.5 per cent, and has remained stable since 2012. Compare this to New Zealand, where the percentage is 74.4 per cent. Since 2012 Australia has dropped from 11th to 13th place for workforce participation of older workers among Organisation for Economic Co-operation and Development countries.

The longer people work, the more superannuation they will have. The IGR is an opportunity to review the longer-term effects of the current application of tax benefits for super.

Like other “too hard basket” changes, this policy should be brought out of the basket and included in the discussion. Tax-favoured superannuation was originally introduced so that more people could achieve independence in retirement. What is the public policy purpose of continuing the provision of substantial tax benefits well beyond the point where individuals have achieved the means to support a high standard of living in retirement? Might not those tax benefits be better redirected to those whose retirement savings fall well below an adequate standard and who have only the age pension in prospect?

Providing age pension benefits to increasing numbers of individuals who possess well in excess of the means for a very comfortable retirement might not be best practice in targeting welfare dollars. Requiring high-net-worth individuals to make a larger contribution to the costs of their aged care could be in the interests of improved fairness and efficiency and improved quality of care.

I hope the Treasurer’s release of the IGR data will bring into focus some realistic and purposeful discussion around these policy directions.

I see this Intergenerational Report as an important opportunity to present what could happen if we stopped age discrimination and increased the participation of older workers. Rather than emphasising doom, gloom and negative stereotypes, I urge the Treasurer to show what would happen if we mitigated the worst-case scenario by leading the world in employment practices that embrace fairness and improved opportunity for older workers through flexibility, retraining, and intergenerational initiatives.

We all understand the population is ageing. Surely now we are ready to have a conversation about how to realise the economic and social potential this longevity represents.

Susan Ryan is Age Discrimination Commissioner.

Source: SMH

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