This morning I spoke to Marius Benson about what Treasurer Joe Hockey has signalled; a further increase in the pension age and more means testing of welfare.
INTERVIEW, ABC NEWSRADIO
FRIDAY, 11 APRIL 2014
SUBJECT/S: Tony Abbott’s broken promise on the Age Pension; Free trade agreements; Unemployment; WA Senate; Australian Labor Party.
MARIUS BENSON, PRESENTER: Andrew Leigh, good morning.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Morning Marius.
BENSON: The economic outlook, certainly the employment outlook, did brighten noticeably yesterday.
LEIGH: Marius, there's two ways of bringing down the unemployment rate. You can either have a whole lot of people find jobs or you can have a whole lot of people cease looking for jobs. Economists call the latter the ‘discouraged worker effect’ and given that the participation rate went down yesterday I think what we're seeing is mostly people giving up unfortunately, rather than people moving from unemployment into employment.
BENSON: The unemployment figures are more complex than they look on the surface, but it did seem to cheer, at least, the Australian dollar. But everything connects, the dollar rose yesterday that makes life harder for our exporters who were thinking life might get easier as the result of a couple of free trade agreements over the past week or so. How important do you think those free trade agreements are when you look at the dollar going up a couple of cents?
LEIGH: A multilateral free trade agreement always beats a bilateral free trade agreement, so we're in the world of the second-best once we're striking country-to-country deals. This one seems to have attracted an unusual amount of criticism from agricultural groups: the National Farmer's Federation saying that it falls short of the mark, cane growers saying that it's a kick in the guts, Cattle Council disappointed, the Australia Pork Limited describing it as ‘a missed opportunity’. So that's a surprising amount of critique from the agricultural sector about a deal which is principally on agriculture for Australian exporters.
BENSON: Well the Prime Minister has been leading that trade drive in Asia and across in Washington, Joe Hockey, has been meeting and economic leaders. He's going to be chairing the G20 finance ministers' meeting over the weekend. He's spent a bit of time talking about issues that are very relevant to the budget coming down next month; he described welfare as a safety net not a cargo net. He pointed specifically at the pension; he says the increase in the cost of pensions just over the next decade will be 70 per cent. The implication obviously is – tough times, time to take tough measures. Do you believe in general terms that's the right approach?
LEIGH: Well, Joe Hockey didn’t tell his audience that since he's come to office he's increased the budget deficit by $68 billion, effectively doubling the deficit. At the same time he's introducing a scheme he’s described as an entitlement scheme, that will give five times as much to an affluent parent to have a child as the lowest income parent. So in that environment it seems pretty rough to me to cut into a scheme in the pension that was set-up to deal with elderly poverty in a way that will make it have less impact on our elderly poverty.
BENSON: Even allowing for those criticisms you just made do you believe that tightening the focus so that the pension is directed at the most needy and that presumably means a 'means' test in particular, is appropriate? Or a greater a greater 'means' test?
LEIGH: I think the proposal that is most likely to come out, Marius, is raising the pension age. That worries me for two reasons: first of all, because people in manual jobs find it harder to work until older ages. It’s pretty tough to ask a cleaner to work from ages 67 to 70. The second is that we know lower income Australian's tend to die younger. If you're in the bottom fifth of the population you die six years younger than if you're in the top fifth. That's a really cruel blow on low-income Australians to raise the pension age. At the same time when the governments just gone back on Labor's modest proposals to have fairer superannuation for people with account balances over $2 million. It's an odd set of priorities.
BENSON: Although Labor was the party that raised the pension age to age 67, although that only kicks in, in what, 2023?
LEIGH: We did, but I think there comes a certain point at which you've got to ask, is this the best way to find savings? The government’s decision to reverse our superannuation changes meant that they’re allowing tax concessions which exceed the size of the full rate pension for people with account balances over $2 million. That doesn't strike me as fair to say to a cleaner that they have to work to 70, while you're telling somebody who is getting a tax concession of twenty thousand dollars - maybe half a million in some cases - that they’re not going to do anything to rein that in.
BENSON: Just quickly Andrew Leigh, Labor did abysmally in WA six days ago in the senate election getting only one vote in five. Now the one Labor Senator who was successful, Joe Bullock, one union who backed him has called for him to stand aside. Do you think something has to be done there?
LEIGH: Joe and I come from different traditions in the Labor Party. The tradition that he comes from is one which has historically been represented in the parliament and I think we are stronger for being a diverse party. I really very much hope that Louise Pratt gets back. The Western Australian Senate result has not changed my fundamental view, which I've expressed before, that Labor ought to choose our senators based on a membership vote. I think in general if you're on the progressive side of politics, you ought to take the view that a large numbers of people make better decisions than small numbers of people.
BENSON: Andrew Leigh, thank you very much.
LEIGH: Thank you, Marius.
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