The Australian government is spending far too much
on the aged pension.
Government spending on the age pension is much lower than that in Europe. Australia spends 3.5% of its GDP on age pension. This is half of what is spent by UK (6%), whilst France and Italy spend 14% and 15% respectively. Even with our aging population, the government’s own estimates state that spending on the aged pension will increase only slightly to 3.9% by 2050. In most part this is due to Australia’s superannuation scheme that allows government to shift the burden of welfare on workers.
Despite the obvious flaws to the belief Australia spends too much on the Aged Pension, the Coalition government plans to making significant cuts to the age pension. Not only has the Abbott government announced that the pension age will increase to 70 by 2035, it is also planning to significantly cut the indexation rate of the aged pension.
The graph is poorly drawn. The changes are steps so the lines should be vertical and horizontal, not sloped.