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“THE stigma of charity should be removed from the age pension. It should be an entitlement earned by the person’s personal contribution to the fund,” said a very famous Australian long ago.

Who? Former Prime Minister Sir Robert Menzies. When? At the time the current pension scheme was introduced. Fund? What fund and what personal contribution?

You wouldn’t know about it listening to the major parties’ politicians or Senate crossbencher David Leyonhjelm who, echoing former Treasurer Joe Hockey, told the ABC he wants Australians to drop their sense of entitlement to the aged pension, which should only be paid to poor people, and receiving it should be “nothing to be proud of”.


Menzies (above in a 1951 file shot) insisted that the Compulsory Contribution (levy) should be kept completely separate; that it should be paid straight into a trust account and not mixed with the general revenue.

Well, no David, most pensioners worked and spent a lifetime paying for their pensions. It’s not welfare and, when it was introduced, it was actually meant to be an entitlement. A 7.5 per cent tithe was taken from wages to put into a fund to pay their pensions. Just as workers now have superannuation collected.

What a good idea! Unfortunately (for pensioners) the Labor Party insisted the contributions shouldn’t be kept in individual accounts as in the UK and the US where retirees get the entitlement earned by their contributions. Instead, it all went into one big pot, the National Welfare Fund. And when the pot got really big, the politicians took it.

They won’t talk about the historical facts because these days politicians have developed a new “ending the age of entitlement” narrative while pushing the disingenuous line that younger workers are paying tax to support pensioners.

Menzies was opposition leader when then prime minister Ben Chifley announced a National Welfare Fund to pay for pensions, unemployment relief, child endowments, even health care with a 7.5 per cent tax increase.

Menzies insisted that the Compulsory Contribution (levy) should be kept completely separate; that it should be paid straight into a trust account and not mixed with the general revenue.

The levy and the National Welfare Fund began on January 1, 1946, and contributions were shown separately on workers’ personal tax assessments for 1946, 1947, 1948, 1949 and 1950, with the money paid straight into the special fund from which claims were paid out.

In 1950 the balance in the fund was almost £100 million or $200 million – in today’s money the equivalent of several trillion dollars.

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