Saxon Davidson On Pension Reform And Housing Shortages Perth Live 6PR – 24 August 2023

All media appearances posted onto the IPA website are directly related to the promotion and dissemination of IPA research

Below is a transcript of the interview.

Oliver Peterson:

Treasurer Jim Chalmers was speaking at the National Press Club earlier today, as he’s released the Intergenerational Report. Australia faces, we’re told, four decades of deficits out to 2063, fueled by an aging population that’s set to double, lower economic growth, ballooning government spending on the NDIS health and aged care defense and debt repayments. A doubling in the number of the over 65’s means fewer workers to underwrite essential services and fund the five top spending pressures, which will expand from one third of all government expenses to one half by 2063. There’s also, within this projection of the Intergenerational Report, Australia’s population to reach 40 million by 2060. Do you think this is achievable? 133882. There are competing ideas, though, about what the federal government should do next. Have a listen to Treasurer Jim Chalmers speaking at the Press Club about your superannuation.

Jim Chalmers:

One of the really stunning, I think, conclusions of this report is the intergenerational genius of superannuation. Most countries have got some version of an aging population, but not many have got the spending on pensions as a proportion of the economy going down, and that’s because of superannuation. And so the story that this tells about superannuation is a very positive one. Super is one of the big national advantages that we have, but it’s not perfect. We need to keep working to try and perfect it. And one of the things that we will turn our mind to now, Steven and I and the team, will be in that retirement phase.

Oliver Peterson:

So that is Jim Charmer speaking at the Press Club earlier today. As I said, forecasts of a big Australia, and by big, again, we’re talking about 40 million people living in this country by 2060. So what do we do? How do we go about it? Saxon Davidson is a research fellow at the Institute of Public Affairs, and he joins me live on 6PR this afternoon. Saxon, welcome back to the program.

Saxon Davidson:

Thank you for having me, Ollie.

Oliver Peterson:

It’s my pleasure Saxon. We’re going to double the number of people over the age of 65, by the time we get to 2060. That is a huge indication that our population’s going to grow, particularly for the over 65’s cohort.

Saxon Davidson:

Absolutely it is. You’re completely right. And it actually stresses the need for simple and effective tax reforms that can allow older Australians to re-enter the workforce.

Oliver Peterson:

So what do you want to see, Saxon, what are you proposing?

Saxon Davidson:

Well, currently, an age pensioner, and veteran actually, who works just over one-and-a-half days a week loses up to 69 cents on the dollar through reduction in entitlements and income tax. Now this is why just 3% of pensioners in Australia work, compared with our neighbors New Zealand, where pensioners are not punished for working. Now this is despite leading surveys show that 20% of pensioners would rejoin the workforce if these unfair barriers were removed. Now, with over 65’s doubling, this creates a long-term imperative to increase older Australian participation in the workforce.

Oliver Peterson:

So hold on. In New Zealand, they completely and utterly removed any punishment for anybody over the age of 65 receiving a pension who wants to go back to work?

Saxon Davidson:

Absolutely. And this is why one in four of them work. And this will actually go a long way to help alleviate a crippling dependency ratio which Australia faces over the coming years, on a disproportionately smaller, compared to now, working base.

Oliver Peterson:

Because we’re told, Saxon, we’re pretty much at full employment in Australia right now, that what are we, 4% unemployment, give or take, but there’s still plenty of jobs available?

Saxon Davidson:

Absolutely. There are still over 431,000 job vacancies across the nation, and almost a quarter of Australian businesses cannot find the workers they need. And Western Australia actually stands to benefit the most from the easing of red tape imposed on Australians. Previous IPA analysis has established that WA is the hardest-hit state from the worker shortage crisis. Now, how does the government propose to fix this crisis? They’ve taken a shortsighted and lazy approach of increasing migration by over 1.7 million people from now to 2028. This is despite recent IPA research finding that this would result in a housing shortage of over 252,000 homes. There’s simply nowhere to put 1.7 million people. Now, Perth is particularly struck by this, because 63% equivalent of all new housing supply in Perth was taken up by international students alone in the last financial year. This is leaving just 37% for all new people trying to enter the housing market and other recently-arrived migrants as well.

Oliver Peterson:

We’ve got to have a look at immigration. That’s a good point you make, Saxon. If we’re going to be 252,000 homes short in 2028, I mean, we’re already so short and it’s so difficult to find a place in Perth at the moment, just today, Domain coming out with the asking rents across Australian capitals going up 26% here in Perth. It’s a little lower at 20% for a unit, but for a home 16% over the last year. We’re leading the country. So our listeners know here, Saxon, how hard it is to get a rental property at the moment, how hard it is to buy a property at the moment. This is going to put so much extra pressure on an already hot property market.

Saxon Davidson:

Absolutely, and this can all be avoided, this can all be avoided. The federal government, last week at National Cabinet, only talked about the supply, but you can control supply by controlling demand. This can all be avoided and we can address our worker shortage crisis by just removing red tape and tax barriers to Australian pensioners, veterans and also students.

Oliver Peterson:

133882 is our talk back number. I’d love to hear from you today if you receive a pension. Would you like to be able to work more out of it, without it affecting how much you receive? I’m talking to Saxon Davidson here, the research fellow at the Institute of Public Affairs. Because on the other side of the wager, Saxon, I’m interested in your take on what ACOSS is calling for today, the Australian Council of Social Services, in regards to this Intergenerational Report. They want to see the introduction of a 15% levy on post-retirement super, they want to reform negative gearing and the capital gains tax discount to invest in housing, and they want to abolish the stage three tax cuts to fund poverty reduction measures. That’d be a triple whammy, wouldn’t it?

Saxon Davidson:

Absolutely. We do not need to change the wheel completely. There are simple, effective reforms that we can take to Australians most at need. Touching super, I believe right now, would be a mistake. The people who are affected by super now, who are receiving their super now, only basically joined the superannuation system as it was first introduced. We are only seeing the recipients of super from the people who are first introduced, and changing the rules now, when they’ve been following the rules for now almost 30 years, is a little unfair.

Oliver Peterson:

Yeah. It’s hard, isn’t it, Saxon, to look 40 years ahead at the moment, when we’ve had interest rate hikes for 18 months. It’s probably a little difficult, Saxon, for many people to just see 40 months ahead at the moment, let alone 40 years.

Saxon Davidson:

Absolutely. And this is only two years since the last Intergenerational Report was released, and how much could have changed between, besides some COVID obviously, but it’s telling that they’re able to create an entire new 40-year projection when the previous projection was just two years ago.

Oliver Peterson:

Yeah, that is a very, very good point you make. Thanks for your time today. Good on you, Saxon.

Saxon Davidson:

Thank you for having me.

Oliver Peterson:

Research Fellow at the Institute of Public Affairs, Saxon Davidson.

This transcript with Saxon Davidson talking on 6PR Perth from 24 August 2023 has been edited for clarity.