Young Aussies see the pension as welfare, not an entitlement

The Australian has commissioned a poll on how voters of all aged regarded the Age Pension, and it indicates that Aussies are moving away from the idea that the pension is repayment for a lifetime of paying tax.

Indeed, just a third of all voters told Newspoll, a reputable polling firm, that they believed the pension was a return of tax payments, according to The Australian‘s report of the findings. And that idea was far less popular with 18-34-year-olds with only 28 per cent seeing the pension as an entitlement, versus 41 per cent of over-65s.

Of course, the flipside is that 55 per cent of younger voters think the pension is a “welfare safety net” that should be only for those unable to fund their own retirement, compared to 48 per cent of older voters who believe the same. The results are similar across supporters of all parties, with only One Nation supporters believing more strongly that the pension is an entitlement.

The Australian points out that Australia is the only country to have an income means-tested pension. Most countries have a safety net for retirees on very low or no income, but largely rely on contributions made by workers specifically toward building a retirement income. And Australia’s system is becoming increasingly difficult to afford – it’s currently the single largest government expenditure, and the number of retirees as a proportion of the population is growing rapidly. 

Both major parties are aware of the need to address the risk of a ‘pension bill blowout’ but at the same time are wary of angering retirees, who make up an increasingly large group of voters that is unafraid to protest. That could be seen just in recent weeks, when Labor leader Bill Shorten was forced to back down on a proposal to remove the cash refund on franking tax credits from pensioners.

The belief that the Age Pension is an entitlement ‘paid for’ through taxation is a long-held one in Australia, stemming from a tax increase introduced in 1943 by then-treasurer Ben Chifley, who sold it as a social security payment that would fund workers’ retirements. In truth, the tax increase was required because the government was spending a lot of money on World War II but didn’t want to break its ‘no tax increases’ promise, so had to disguise the increase as a ‘welfare levy’. 

The fund that held the levy was later folded into the government’s general revenue stream but the levy itself, as part of wider tax policy, was never revoked – and that’s something many older Australians haven’t forgotten. The Newspoll findings, however, indicate that Baby Boomers may be the last generation to remember it, with younger voters apparently unaware of the history of the Age Pension and thus more likely to see it as a welfare payment.

Do you believe the Age Pension is an entitlement earned through tax-payment or a welfare safety net for the poorest in society?