Is it just me or do we have a policy review on some topic or another announced every five minutes?
In addition, every other review announced seems to be retirement income related. One of the first things Josh Frydenberg did after the Coalition’s shock election win last week was to express his support for the Productivity Commission’s recommendation of (yet another) review into our retirement incomes system.
Whilst the industry’s collective sigh and eye roll could be heard in all four corners of our great southern land, it is clear to me that many things could be improved.
Unfortunately, however, a review into retirement incomes in isolation is at risk of missing the point.
The societal challenge of an ageing population is well known and has been widely discussed. However, I think it’s also fair to say that despite all of this, few countries around the world have effectively nailed a portfolio of adequate policy responses.
The increase in longevity creates three separate but linked high level needs:
- Health care
- Aged care (including accommodation)
- Retirement income provision
In most developed countries these three needs are partly funded by the state and partly funded by the individual. Often, the proportion of public versus private funding depends on an individual’s means. At any rate, all three needs are increasingly expensive and complex areas for state and citizen alike that require strong co-ordinated policy responses. Sadly, this co-ordination is currently lacking in Australia.
Of all the countries impacted by the 21st century aging phenomenon, Japan is at the leading edge of the problem.
Here are some of the headlines:
- Over 28% of Japan’s population is older than 65
- There are 1.6 jobs for every job seeker
- Debt to GDP ratio is approaching 250% of GDP (and we think we have problems)
- By 2050, there will be as many non-working people in Japan as working people
Given all that, it is insightful to look at some of their policy responses.
Potentially, one of the most important of Japan’s responses is the creation of a strong Ministry for Ageing with wide powers, including retirement incomes. In Australia, we have a Minister for Aged Care and Senior Australians but this minister is not in cabinet and works within the auspices of the Health Ministry so has very proscribed powers that are focussed on care and health.
At least the Productivity Commission’s recommendation was to look at retirement incomes holistically rather than just superannuation but given the nature of the problem, we need to be even broader than that and look at the problems presented by aging overall. If we are going to go through the time, expense and pain of another review, wouldn’t it be great if we engaged with the problem at the right altitude and in a coordinated fashion?