Carers deserve more credit in the retirement incomes debate 58



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Australia could not function without the enormous and mostly hidden contribution of carers. We are talking not only of parents of small children, but also of the large number of Australians who provide care for people with disability, a long-term illness or frailty due to old age. Yet because of their commitment to meeting the needs of others they are much more likely to live in poverty in their old age.

Carers’ workforce participation is liable to be intermittent, interrupted and precarious. They are much less likely to have made superannuation contributions. More than that, recent work shows that when carers do work they concentrate in low-wage industries and are more likely to take positions below their skill levels so that they can more easily meet their caring responsibilities.

Career progress is harder. And for young carers, who assume the role as children, their education suffers.

Doubly penalised by pensions and super policies

Recent policy proposals to link age pension increases to the inflation rate, purportedly as an “interim” measure, will hit carers disproportionately hard. This is because as a group they are much more likely to rely on the full age pension, which will fall further behind the living standards of the rest of community.

But it gets worse. Carers are heavily penalised by their inability to take advantage of generous tax concessions for superannuation contributions. Many carers are unable to make contributions and have few opportunities to save for their old age.

So, carers are doubly penalised in the current policy debate over reforms to retirement incomes policy. The real value of pensions is being targeted, while our political leaders are reluctant to talk about the unfairness built into the superannuation system.

Value of care needs to be recognised

The policy debate about caring is focused on how to get parents and carers into the labour market so that they can become “productive”. Apart from the implicit denigration of their unpaid work, often performed in difficult circumstances many of us would struggle to cope with, their economic contribution is immense.

A 2010 Access Economics study estimated the value of informal care provided by Australia’s nearly three million unpaid carers at more than A$40 billion per year – and that excludes caring for young children. If governments had to fund this care the budget impact would be severe.

Australia’s army of carers work for the nation and as much as anyone else they deserve a comfortable old age rather than one living in poverty. So it is time we had a thoroughgoing national debate about how to restore some fairness to the system.

It’s widely recognised that the current superannuation system is structurally unfair because high-income earners gain far greater tax concessions than low-income earners. We have already begun a conversation about how to boost superannuation for one kind of carer – working parents. One proposal is to add super contributions to parental leave payments.

But we need a much broader conversation because the retirement income needs of other kinds of carers, like those of non-working parents and carers of people with disability, are being ignored.

The provision of super contributions to working parents in receipt of the government’s Parental Leave Pay is a good start. But it is people who provide ongoing care for a person with disability, a long-term illness, or frailty due to old age – which often precludes them from working for long periods – who are most in need of support for saving.

For some years, a number of European countries have accepted that a fair retirement income system must include provision for all kinds of carers, not just working parents. Countries that once provided “credits” to the retirement accounts of parents are scrambling to extend their credits to all carers.

Here’s a way to give carers a fairer deal

So how can we make Australia’s retirement income system fairer for carers? Fiscally, savings from reduced tax concessions for high-income earners (those least in need of government incentives to support saving) could be used to increase the super accounts of carers.

But what would be an effective and fair way of doing so? A government-funded system of “crediting” the super accounts of people who provide care – working parents and other parents and carers – could be more effective if it built on a foundation of reform to the taxation of superannuation. A reformed system of taxing super could in itself make the super system fairer for carers (and many other groups), before a credits system is even added.

In addition, if done in the right way, a reformed system of taxing super could provide the infrastructure for building in a system of credits. A number of schemes have been introduced abroad. More work needs to be done on how to reform Australia’s system, but the Henry Tax Review put forward one attractive proposal: recommendation 18, which was developed further in a report by the Australian Human Rights Commission.

Put simply, rather than taxing super at the point of contribution (at a flat 15%), super contributions would be taxed at the marginal tax rate on income (currently 45% at the top end). Then, at the end of the financial year, everyone would receive a tax offset at a flat rate of 20%, so that super savings are still encouraged. So those at the top of the scale would pay a tax of 25% on their super contributions, freeing up revenue to fund super contributions for carers.

Carers who are out of the workforce would receive an annual government payment into their super accounts of 9.5% rising to 12% of the minimum wage. If they entered the workforce the “carer credit” would fall to zero as their own super contributions increased to 9.5% (rising to 12%) of the minimum wage, so they would not be worse off if they return to work.

A system of carer credits would go a long way to recognising the invaluable contribution carers make to Australia’s economy and to ensuring they are not penalised in retirement for their selfless service. This kind of scheme would not only provide fairness to carers, ending the poverty trap for care, but make the retirement income system fairer for all Australians.

The Conversation

This article was originally published on The Conversation.
Read the original article.

Myra Hamilton wrote this article.

Rebecca Wilson

Rebecca Wilson is the founder and publisher of Starts at Sixty. The daughter of two baby boomers, she has built the online community for over 60s by listening carefully to the issues and seeking out answers, insights and information for over 60s throughout Australia. Rebecca is an experienced marketer, a trained journalist and has a degree in politics. A mother of 3, she passionately facilitates and leads our over 60s community, bringing the community opinions, needs and interests to the fore and making Starts at Sixty a fun place to be.

  1. Carers need more recognition and so definitely more money than the meagre amount they get.

  2. My mother has cared for my father for 7 years following his stroke she is now 89 and dad is 95 she does not get anything extra feels its her duty as a wife

    1 REPLY
    • God bless her. I pray she is strong enough; but I fear it will kill her. I hope she has a good doctor who will help her through, and she will need lots of support from the family.
      My heart and prayers go. out to them and you.

  3. I have had similar discussions with Centrelink when they paid me almost nothing for two of the three years I’ve been caring for my mother, just because my husband worked in a low paid job! We are STILL going backwards, and if nothing changes we will lose the home we’ve built with our own bare hands!!! NOT FAIR!!

    6 REPLY
    • I have cared for my husband for the last 10 years and have to be here almost full time to make sure he takes his medication and doesn’t have a fall and the Liberal government have taken $200 a week from my carers pension so now we live on the minimum work cover payment my husband gets.

    • They just don’t care. And their sliding scale of benefits is crap. I’d like to see Tony Abbott survive on it.

    • Lynn I know it,s unfair….and they do not care…my husband gets 70.00 a fortnight to help me….he works and comes home does chores and is exhausted….I do what I can but it,s not much…and l know he resents me at times…can anyone blame him….I will be 65 this year…worked and paid taxes from the age of sixteen…had a couple of kids, no one helped me with them and I never expected it…today many young ones cannot cope…even with all the benefits they get….and we are both worried about how we will manage….when he retires in a couple of years…we did not have enough years to accumulate a lot of super…I million they say we will need…retirement will mean skimping for the rest of our lives…is this what the generations of our family fought for..died for…so we would live well. I think not.

    • Exactly. I wish the media would take all these comments and publicise them. There are so many genuine people out there doing it so tough. We’ve used all but all our super to keep our heads above water. We will have no option but to sell soon. My mother refuses to sell her home (dementia), but she worked damned hard for it. Why should she be in the situation now of losing money from her pension because we have been stretched between two places 600kms apart? Trying to keep the wolves from the door at both ends — I’m almost ready for the nut house, or worse, my doctor is worried about me having a heart attack or stroke. And it’s not as if we are in mansions. Those bastards in their ivory towers need to walk a mile in the shoes of some of us down here in the real world.

  4. Carers and volunteers are the glue that holds this country together. Without these people this country would fall apart.
    They definitely do not get nearly enough recognition for the amount of work they do, the long hours they work, the exhaustion they suffer, the hard toil involved, and the pain they feel when their loved ones succumb to their illness.
    And most of all the money the save the community by never asking for a cent to help them with their duties.
    But all we ever hear is “I’m sick of having my tax dollars going out to help pensioners”.
    One day it might be today’s tax payers who will need the undying love and care of an unpaid carer or volunteer.

  5. I was a carer for 12 years for mum and yes i dont think there is enough recognition from the goverment at all!!

  6. “Australia’s Carers WORK for the Nation….” These words have actually brought tears to my eyes. I’m sure there are many of us in this position who never felt one word of validation. I think this is a very good idea.

  7. Carers do it because they care about their loved ones. They don’t look for recognition from the govt.

  8. Our Son is now 35 years old with severe intellectual disabilities and autism , he now wishes to move into supported accommodation , roughly we have saved government about 8 million dollars over those years.
    But can we now get funding for him to live out of home . NO

  9. I am the carer for my brother who is 69 the government pays me $50.00 per week. Unfortunately my health isn’t good now. We have inquired about getting a Case Carer in, my brother has worked all his life after finishing trade school. Because he has salary sacrificed and saved his income to put into his superannuation for his senior years he is now being punished by the government. By applying for a case worker and having to pay approximately $180.00 per week for this service is ludicrous all because he has the extra money in his savings. If he had no savings he would receive this service free!! Where is the justice in salary sacrifice?? the government has no idea about the role of carers and to think $50.00 is justice compared to $180.00

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