This rant is brought to you courtesy of Tammi Jonas, President of CAPA (the Aus student postgrad representative organisation), who tweeted this morning:
Meanwhile, baby boomers retire tax free. RT “@macquarieVC: Charge the maximum, demonstrate a public benefit #highered http://bit.ly/dhPkEK"
The link from the Vice Chancellor of Macquarie Uni relates to greatly increased Uni fees being foreshadowed in the UK. Now, as a student and someone who is writing a PhD about being a student, I happen to think this is a really stupid idea. What I don’t understand is how it relates to the superannuation that I am presently paying into, and that I will be living off from about 2016 until I die. So I thought I’d collect together some of things I’ve heard said and seen written about baby boomers, and look at them more critically. Hardly any of them apply to me at all, although of course there's a grain of truth in all of them, because that's the way myth works.
Myth No 1: Baby boomers are staying in their jobs too long and preventing younger people from advancing in their careers.
Here's another way of looking at that: Baby boomers are working until they turn 65 so that they can maximise their superannuation and thus not be a drain on the public purse - more than they need to be - for the rest of their lives. Most people over 60 that I know are in fact resentful that they will have to do this: they'd love nothing better than to give up work, or to work part-time, but they are too fearful of doing this and thus sacrificing some of the capital that will support them for the next 20 to 40 years.
Myth No 3: Baby boomers have been accumulating super and their houses have all increased in value ten times since the eighties.
Just think: they worked for 40 years; they may live (and have to support themselves) for another 35. Nobody knows at what point they will die - you have to assume you sill need your super into your nineties. Most people have only had super since it became compulsory in 1992 - no more than 20 years before they retire. People who are twenty years younger (ie those born from the mid sixties onwards) will have been paying super almost all their working lives by the time they are 65. As for baby boomers' houses, the prices of the kinds of houses they might want to 'downsize' to have been increasing too, and aren't necessarily all that much cheaper than the family home, being more modern and convenient. (And we don’t all own two-million dollar houses in Mosman or Toorak.) Allowing for moving costs, stamp duty and replacement of the old furniture that the kids wrecked and that won't fit into their smaller house anyway, they may not exactly be creating big nest eggs. Plus, even if there is money left over, this will probably be needed to pad out the super (see below) - and who says that the family has left home and that they are free to downsize anyway? How many people in their twenties and thirties do you know who still live with their parents and don't pay for that privilege?
And, why do people talk as if everyone in the baby boomer age group has been in Australia earning super since 1992? I've only been here since 1998; there are baby boomers who have immigrated to Australia and haven't been paying super for even 20 years. And, casual workers weren't entitled to employer contributions to super when it was first introduced, so their contribution will be reduced, and has probably only ever been paid at the minimum rate.
Myth No 3: Baby boomers are all sitting on huge superannuation accounts and they won't pay taxes for the rest of their lives.
Following on from the news that baby boomers have only paid into super accounts for a maximum of twenty years at this point, there are some other factors to take into account:
- Most employers have paid only the minimum, initially 3% of salary rising by 2002 to 9%, into super. That's not much for part-time workers - many of whom are women, or for men on a low wage in physically demanding jobs that take a toll on their bodies and may lead to a need to retire earlier (and thus accumulate less super).
- Super has already been taxed - in fact in the 2006/7 budget the government estimated that it receives $6b every year from the tax on superannuation contributions. And, according to the ATO website, some super benefits and payouts are taxed. I'm far from an expert and super seems to me to be a financial minefield, but to claim that super payouts are untaxed is wilfully misleading.
- Finally on this point, that thing called the GFC seemed to barely brush Australia, so many people may not have noticed how much it affected superannuation finds - especially those of people who were in high-return funds. This won't matter so much to younger people, as the funds will eventually return to their higher yields, but people who are retiring soon may have a lot less money that they thought they'd have to plan with.
Myth No 4: Retired baby boomers are rolling in money and spending most of it on world travel and fast cars.
If you believe the glossy ads for superannuation you might believe this. In truth, most retired people are still working, either at a paid job or doing voluntary work. Many don't have a car at all, as they don't want to spend money keeping it on the road for purely local usage, so have set up their lives so they have good access to public transport, which may include having to use taxis as they get older. Sure, many people have a World Trip when they first retire, and many plan to be regularly visiting family in other countries for as long as they're well enough to do so. (My children are settled in three different countries and this isn't unusual these days.) But remember that the glamorous pictures invariably depict people under 70 - there may be another 30 years of declining ability to keep up with a hectic lifestyle after that, which people are planning to fund themselves as much as possible.
Myth No 5: Baby boomers got all their education for free.
Only if they were good girls and boys and went to Uni straight from school. I dropped out, and returned to Uni to complete my undergrad degree and do two postgrad degrees in NZ in the 90s. And when I finished I had a student debt, which I had to pay off. Lots of baby boomers, even if they got their first degree 'free', have completed postgrad and professional qualifications in the last twenty years, as the demand for 'pieces of paper' became more strident in the workplace, and they have either paid fees or have accumulated and paid HECS debts. And many baby boomers have helped their children avoid HECS debts too, by supporting them through Uni.
For my part, any comfort that I will be able to count on when I've retired will be because the woman I came to Australia to live with died unexpectedly and I was her beneficiary. I had nothing, she had something which meant I then had enough to buy a small house (with a mortgage). I later had the excellent fortune to form a relationship with one of the few people I know who has the mythically fabulous super, and I have a job at a University that pays well above the minimum into my super account. Of course, because we're not legally married (nor can we be), we have to name each other in our policies, or the Trust that runs the fund may decide not to give it to which ever one of us is bereaved.
Pitting one section of society against another section (in this case students against baby boomers) is an old political trick. It used to be called ‘divide and conquer’, and it was the stock-in-trade of Robert (Piggy) Muldoon and John Howard. I really hate to see it used by younger activists.