Superannuation can’t be considered in isolation

14/06/2012

Discussions on the affordability of superannuation focus on the aging population and likely costs.

That is only a small part of a complex issue.

Prime Minister John Key pointed out in Question Time :

Of course superannuation is an issue, but one thing that is worth noting is that increasing the age of eligibility has much less of an impact than commentators might imagine. For instance, moving the age to 67 makes a difference of about 0.7 percent of GDP, and that is not until 2030. So it is an issue, but growing the economy and fixing some of the other issues we inherited from Labour are more significant. 

Pete George has started a BADASS (Bloggers Advancing Debate About Super Solutions) campaign.

I agree with him on the importance of having the debate but no solutions will be found if we concentrate on superannuation alone.

It is a major, and growing, part of government expenditure but discussion must look at all other expenditure and revenue.

The country can afford superannuation as it is if it spends less or makes more elsewhere.

One question to ask is, whether we want superannuation as it is.

Regardless of the answer to that discussion then must consider at what we need, what else we might want and whether the government is the best provider of  it all.

It must also look at government income. Tax increases and more user-pays charges are the left’s usual answer to increasing that but more taxes and higher tax rates can and do reduce the tax take

The PM’s answer provided the only sustainable solution – that’s growing the economy.


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