Pension Systems and Budget Sustainability

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As populations age and work forces decline i.e. few taxpayers contributing to budgets, pension systems have been subjected to conflicting needs.  This includes preserving the tax base into the long term while catering to ageing electorates, in some cases dominated by pensioners or retirees.

State budgets are coming under more pressure to support pensioners

Pension and Budget Sustainability (Image copyright Pexels)

Following is an overview of the top five most sustainable systems including Australia which is a hybrid of state asset tested pension and the still developing private pension of superannuation system.

Further, an essential part of supporting the tax base is to use temporary residents churn over of international students, backpackers, temporary workers etc. as net financial contributors.

From The Nation:

‘Global top five most sustainable pension systems

WITH pension contributions expected to rise globally, a number of nations have developed models to reward their workforce for life after retirement.

As the retirement age and life expectancy continues to rise around the world, having a sustainable pension scheme is more important than ever

Thanks to gradually rising life expectancy and a higher state pension age, pension contributions are set to soar around the world. World Finance explores the top five countries with sustainable pension systems, where retirees can live particularly well with their pension pot.

Thanks to rising life expectancy and a higher state pension age, pension contributions are set to soar

Australia

Australia’s three-tier ‘superannuation’ pension system is one of the most touted in the world. It includes a tax-financed age pension, providing basic benefits, a company pension pot and the individual contribution to a retirement savings account. Employers are required to contribute 9.5 per cent of worker’s gross earnings, which totalled AUD2.3trn ($1.8tn) at the end of 2017.

Canada

Canada provides its workforce – especially low-income citizens – with the Canada Pension Plan, which is a universal flat-rate pension plus a supplement based on income. Voluntary pension plans were also recently introduced, and from 2019 until 2025, workplace contributions will increase by one percent to 5.95 percent.

Denmark

The average Danish pension pot is well funded due to its ‘folkepension’ – a universal pension scheme ensuring that pensioners receive a basic retirement income. One notable result of Denmark’s successful system is that, according to an OECD 2017 report, its private pension assets represented 209 percent of Denmark’s GDP in 2016.

Germany

Germany’s pay-as-you-earn state pension makes up its main retirement system, which provides a safety net for low-income earners. Occupational pensions are not compulsory but approximately 60 percent of all German workers participate – a number that is expected to grow in the coming years.

Switzerland

Ranked sixth in the world in 2017 by Mercer’s Global Pension Index, Switzerland’s public pension primarily depends on workers’ earnings. Conversely, the compulsory organisational pension depends on a worker’s age – meaning that with age comes a larger contribution. Swiss insurers and various banking foundations have also put voluntary schemes in place.

 

For more related blogs and articles on demography, economics, populist politics and younger generations click through.

 

Australian Brexit?

Sam Roggeveen of the Lowy Institute has written about the potential of an ‘Australian Brexit’ due to a global political transformation (ideology and strategy) towards radical white nativist ideas, isolationism and putting pressure on mainstream parties to comply, while being presented as organic or the ‘people’s will’.

There has been gross over simplification of Brexit to supposedly avoid bureaucracy, the EU, Europe and increasing antipathy towards immigration by ageing electorates through populist politicians.

However, many would suggest Australia had a form of Brexit upon colonisation via the First Fleet 1888 by the British, then after Federation in 1901 the bi-partisan ‘White Australia Policy’ inspired by British eugenics movement (and finally ended after mostly through opposition by NGOs, churches etc.).

Fast forward to the supposed crisis of Tampa when then Australian Prime Ministers helped start the demonisation of refugees with able support from mainstream media including Murdoch’s NewsCorp, then carried further by society in creating antipathy towards non-Europeans; a new proxy white Australia policy.

Further, there are clear links between ideology, political and media tactics of white nativism or white nationalism inspired by eugenics, which has been mainstreamed in the US and UK; with further links onto the fringes of Europe.

White nationalism, white nativism or eugenics all share a clear architecture including astro turfing, manipulation of media, fake news etc., that can also be linked to radical right libertarians or elements of neo-liberalism by global corporates, via think tanks, to deflect attention away from tax avoidance, interference in domestic policies, cast doubt on climate change etc.

Brexit for Australia?

The new conventional wisdom in Canberra doesn’t stack up

By Sam Roggeveen

November 5, 2019 — 12.00am

It is Canberra’s new conventional wisdom: the government’s unexpected election victory gives Prime Minister Scott Morrison stature and stability that his recent predecessors all lacked. The last decade of political dysfunction is behind us. The trouble is, this view is based solely on very recent events in one country alone. What if we took a global perspective over a longer period?

A political transformation has been under way in Western democracies for decades now, quietly and in the background for most of that time, though in recent years it has broken cover. In the US it produced Donald Trump, in the UK Brexit, and in Europe the rise of new right-wing populist movements.

Western democracy has hollowed out. It has happened in two stages. First, the public has drifted away from major political parties, the institutions that once connected them to the political process. In every Western nation, mainstream centre-right and centre-left parties are in decline. In the early to mid-20th century, party affiliation was a question of class, religion and family inheritance – you voted a certain way because your parents and peers did too. But for decades now membership of the big parties has fallen and the share of the vote they can rely on has decreased.

In response (and this is stage two), the big parties have found new ways to survive. They have evolved from amateur mass-membership organisations to small, professionalised outfits financially reliant on big donors and, increasingly, the state. Other than at election time, the big parties don’t really need the public.

So, voters withdrew from political parties, and the parties responded with a withdrawal of their own. The result is that the public square is left empty and politics is hollow.

In Europe, right-wing populist parties have done well because the minority of voters who are attracted to those ideas have slipped from the grip of the big parties. But as France’s Emmanuel Macron and Germany’s Greens show, the big parties are not bleeding votes only to the right, they are losing them in the centre and on the left too.

In America, the weakening of parties helped mavericks like Trump and Bernie Sanders, who tied themselves to the big parties out of self-interest rather than conviction.

In the UK and Australia, the decline of the big parties has produced a different kind of instability. In both countries the voting system makes it hard for small parties to win seats even though their vote share has increased. Yet as the big parties have become less popular, they have also become less stable and more vulnerable to shocks from outsiders and ambitious MPs. That’s what caused Brexit, essentially an internal Tory Party dispute stirred up by Eurosceptic backbenchers and Nigel Farage’s UKIP.

It is also what has produced the leadership churn in Australian politics over the last decade, a succession of tight election results, and two periods of minority government. Australians are abandoning the major parties at record rates. At the same time, these shrinking and insular parties are increasingly cut off from a bored and unengaged Australian public.

Lacking genuine connections to a deep social base, major-party MPs look to their peer groups in politics and the media for inspiration, which is where they got the idea that changes of leadership might fix their problems and why, for instance, Morrison borrows Trumpian language on “negative globalism”.

The 2019 election resolved none of these underlying problems. True, the Liberal and Labor parties have now changed their rules so that leadership coups are harder to mount, but this is much more than just a leadership issue.

Again, if we broaden our view beyond Australian shores, we can see why. Angela Merkel has been German chancellor for 14 years, yet in that period, German politics has been completely transformed – Alternative fur Deutschland, a populist party that didn’t even exist when Merkel took office, is now the official opposition in the Bundestag.

It would be foolish to assume that Australian politics, still dominated by two parties the public cares little for, is suddenly immune to upheaval on that scale.

Sam Roggeveen is director of the International Security Program at the Lowy Institute and author of Our Very Own Brexit: Australia’s Hollow Politics and Where It Could Lead Us.’

For more articles and blogs about white nationalism, immigration and Australian politics click through.

Population Growth or Decline?

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Since the 1970s, and earlier with Malthus and eugenics movement, we have been presented with the threat of catastrophic population growth due to fertility rates in the less developed world, then due to ‘immigration‘ from the less developed world when in fact we are facing population decline from mid century; contrary to UN Population Division data which inflates future headline growth?

This ‘misunderstanding’ has been highlighted by science journalist Fred Pearce in ‘The Coming Population Crash: and Our Planet’s Surprising Future’; Hans Rosling in ‘Don’t panic the truth about population’; Prof. Wolfgang Lutz of Vienna’s IIASA and Sanjeev Sanyal demographer at Deutsche Bank.

Most belive the world is experiencing high population growth but research debunks this and finds we will be facing population decline.

Global Population Growth or Decline? (Image copyright Pexels.com)

‘Book review: ‘Empty Planet‘ explores the world’s next biggest population threat

Humanity is facing an imminent catastrophe, Darrell Bricker and John Ibbitson assert in their new book

The central assertion Darrell Bricker and John Ibbitson make in Empty Planet is one that readers of the daily news or regular government reports will find deeply counter intuitive. According to all that received wisdom, there is a worldwide population crisis, with humans reproducing at ever-increasing rates, rapidly eating up all the world’s resources and driving the engines of runaway climate change.

Stripped of modern trappings such as greenhouse gases and industrial meat farming, this is fairly close to the old vision of 18th-century scholar and theorist Thomas Malthus. He declared back in 1798 that in conditions of economic and cultural stability, the human population would continue to increase, even to the point where it chokes resources and overburdens the Earth itself.

Such a view has been the standard for centuries, and some of its proponents have made quite tidy sums writing books about the doom it foretells, most notably Paul Ehrlich. His 1968 bestseller The Population Bomb warned of imminent, widespread famines as the result of human overpopulation.

Bricker and Ibbitson say such books and the thinking behind them are “completely and utterly wrong”. They agree with Malthus, Ehrlich and company that humanity is indeed facing an imminent population catastrophe – but the problem won’t be overpopulation. “The great defining event of the 21st century – one of the great defining events in human history – will occur in three decades, give or take, when the global population begins to decline,” they write. “Once that decline begins, it will never end.”

The authors know they’re working against not only popular perception, but also raw numbers. They point out that the United Nations predicts the human population to hit 11 billion in the 21st century, up from the nearly eight billion on Earth today, an increase from five billion since 1950.

But Bricker and Ibbitson say that population growth rates have declined slightly in the 21st century, particularly in what they refer to as the richest places on the planet. Japan, Korea, Spain, Italy, much of Europe – all such places are facing long-term reproduction rates that won’t come close to sustaining their current population levels. And they claim this same levelling and then downward trend will be seen in places such as China, Brazil, Indonesia and even such fertility hot zones as India and Sub-Saharan Africa.

The main reason Bricker and Ibbitson cite for their certainty about all this is that the floor of the world’s basic prosperity is steadily rising. Two things happen as a result: an increasing number of women in developing countries are gaining more education and more control over reproduction, and an increasing number of couples are therefore either postponing having children of their own or having far fewer children than their ancestors did.

Empty Planet makes the case that this change is not only inevitable but already well under way, and that it will be permanent: humanity will simply go into terminal decline, no asteroid or other global catastrophe required. As mentioned, readers have heard such alarming claims before – Ehrlich, for instance, was certain the human population would reach its breaking point in the 1970s.’

 

For more articles and blogs on population decline, population growth and immigration click through.

 

Immigration Population Growth Decline NOM Net Overseas Migration

For the past 10+ years Australia, the Anglo and western worlds have been obsessing in the mainstream about ‘immigration’ and ‘population growth’ as negative factors for the environment, economy, quality of life, infrastructure, traffic congestion, ‘carrying capacity’ etc. based upon misrepresentation and/or misunderstanding of data, analysis and facts.

However, in Australia as opposed to most nations, pension reform, introduction of superannuation, skilled permanent immigration and net financial contributions from temporary resident ‘churn over’ should maintain a balance between social responsibilities of the government and financial management.

In much of this public discourse, political lobbying and news based PR many facts and much data are distorted and/or ignored.  This includes conflation of permanent and temporary immigration, the ‘NOM net overseas migration’ (border movements) equated with directly with ‘(permanent) immigration’, definition change of the NOM (used only by UK, Australia and NZ) by the UN in 2006 inflating/spiking headline numbers, individuals whether international students, backpackers and other temporaries, along with Australians, caught up in the NOM are described as ‘immigrants’ (even when the majority have neither access to permanent residency nor an interest).

Further, false correlations are made with international data suggesting infinite population growth when peak fertility has long passed (ex sub Saharan Africa), comparisons made between different data sets, population is expected to peak (sooner rather then later according to some e.g. Deutsche Bank) and dismissing the impact of ageing work forces now retiring, increasing pension and related service responsibilities, with less tax payers in the permanent population; back grounded by a significant baby boomer ‘die off’ approaching.

This has been back grounded or reinforced by Nativist policies, creating fear, antipathy towards non-Europeans and encouraging isolationism e.g. strong borders, closed economies with tariff walls, low or no growth, and aspirations for ‘sustainable population’ (whatever that means).

The University of Melbourne’s Peter McDonald analyses further in an article for The Conversation:

Why cutting Australia’s migrant intake would do more harm than good, at least for the next decade

December 13, 2018 4.20pm AEDT

Australia’s population is among the fastest growing in the OECD with an increase of 1.7 per cent in 2016-17.

In Sydney and Melbourne traffic congestion has become so intolerable many believe a cut to migration would provide time for infrastructure such as roads and trains to catch up.

Net Overseas Migration was 262,000 in 2016-17, one of the highest levels on record.

They are all compelling reasons to cut the size of the migration program, right?

No, not right. Not at all.

Our migration program is no bigger than it was

Including the humanitarian movement, the government migration program has been set at a near-constant level of a little over 200,000 since 2011-12.

In 2017-18, although the level set in the budget remained above 200,000, the actual intake was 179,000, including an unusually large intake of refugees mainly from Syria and Iraq.

The combined Skilled and Family Streams fell short of the levels set in the budget by 28,000. The reasons for this shortfall are unclear.

‘Net overseas migration’ is different to migration

Net Overseas Migration includes the government program but also other movements in to and out of Australia which both add to and subtract from it.

The net effect of all of these movements can change the recorded “net overseas migration” in ways that are inconsistent with what’s been happening to the migration program.

If, for instance, the Australian economy picked up and fewer Australians decided to leave for better prospects overseas, recorded “net overseas migration” would increase even if the migration program hadn’t.

The two have been moving increasingly independently since mid 2006 when the Australian Bureau of Statistics changed its definition of “resident”, making temporary residents more likely to be counted in the population and their movements counted in net overseas migration.

Over the past five years, the number of international students arriving has increased every year but there have been few international student departures.

Inevitably, the departures of students will increase in future years and recorded net overseas migration will fall sharply again.

So, forget the near-record official net overseas migration figure of 262,000 – the underlying level of net overseas migration is more likely to be around 200,000. The underlying level of population growth is about 1.4%, and falling.

We’ll need strong migration for at least a decade

A new study by Shah and Dixon finds there will be 4.1 million new job openings in Australia over the eight years between 2017 and 2024.

Over two million of these new openings will be due to “replacement demand”, effectively replacing the retirements from the labour force of baby boomers.

There will not be enough younger workers arriving to fill the gap….

It means that without migration Australia would face a labour supply crunch unlike anything it has ever faced before.

Slowing or redirecting it won’t slow congestion…

…Net overseas migration of 200,000 per annum would give us 6.8 million more people of traditional working age by 2051 than would no net migration, but only 400,000 more people aged 65 years and over.

It would place Australia in a better position to support its aged population than any other country in the OECD.’

For more articles about Australian immigration news, demography, Nativism, NOM net overseas migration, population growth and international students.

 

 

 

NOM Net Overseas Migration – Immigration – Population Growth

Population, Immigration and Net Overseas Migration NOM

Interesting article on immigration and NOM net overseas migration by former Australian Department of Immigration Deputy Secretary Abul Rizvi endeavouring to insert some understanding and clarity round the ‘immigration’ debate when most misunderstand, misinterpret or misrepresent immigration and population data.

 

 

This is manifested in media, political and public narratives that focus upon the NOM and the false notion that it is both unusually high and can be micromanaged; underpinned by lack of detail or ‘solution’ to lowering the NOM (without assessment of broader societal impacts).

 

NATIONAL AFFAIRS: Putting the numbers back into the immigration debate

ABUL RIZVI 20 FEBRUARY 2018

Drastically reducing net migration would be neither easy nor wise, says a former senior official.

How governments manage migration is a big deal. A perception of too many arrivals drove the Brexit result in Britain, helped define the Trump presidency, and fuelled the rising populist vote in Europe. Japan’s ageing population is driving its government to increase immigration — but ever so cautiously, recognising the likely backlash from its largely homogeneous population. And the same demographic forces have driven China to try to attract back part of its huge diaspora.

Yet, despite our long immigration tradition, Australia’s immigration debate is tortured and surprisingly poorly informed. Until very recently, this was not helped by the Turnbull government’s eerie silence on immigration levels and population policy. Immigration minister Peter Dutton’s tentative foray late last week should therefore be welcomed.

Given the complexities, immigration ministers have an obligation to be accurate with the data and honest about the range of issues to be considered in significantly reducing the intake. Dutton was neither.

 

Issues and Critique of Net Overseas Migration Statistics and Data

 

The NOM is a measure of movements, not designed as an ‘immigration’ target but merely measures numbers of people (irrespective of nationality, visa status and includes Australians) who enter Australia with the intention of remaining longer than 12/16+ months (ABS, 2017).

Rizvi cites several variables or inputs that would be required to control or lower the NOM.  This would include restricting rights of Australians marrying foreigners, restricting numbers of international students, preclude second year visas for working holiday makers doing agricultural work, close the refugee program, limit New Zealanders and seek out overstayers.

Other issues or features neither understood nor highlighted:

  1. Few nations use the same NOM as a measure to estimate resident population apart from Australia, UK and NZ then e.g. in the EU Schengen Zone it’s impossible due to free movement and that most nations appear to estimate from e.g. residency registration or census data (UN, 2015).
  2. Rizvi also fails to mention the cumulative statistical impact of an ageing population of citizens and permanent residents (includes significant numbers of British subjects) who were already in country 2006 when line was drawn in the sand on population; many have neither departed nor returned to Australia long term and have two impacts upon the data (and census). First is longevity due to better health hence staying in the data longer (though invisible) being attributed to ‘immigration’.  However, this will change when the baby boomer demographic starts departing this earth in the medium long term in about five years onwards i.e. deaths will outnumber births for long term thus impacting the estimated resident population significantly.  This is also set against already declining fertility rates and global population ex. Sub Saharan Africa, expected to peak by mid-century as explained by development, medical and statistics expert Professor Hans Rosling (Gapminder, 2013).
  3. A significant financial reason for encouraging temporary residents with no likelihood of permanent residency outcomes, whether students, backpackers etc., is as net financial contributors paying taxes without future access to state services. In other words, they support or subsidise increasing numbers of retirees needing pensions, health care etc. dependent upon healthy state budgets (with decreasing dependency ratio of workforce tax payer numbers to retirees).
  4. Further, statistical analysis has found that not only is the NOM very confusing, it may over estimate Australia’s population significantly, through double counting those not in country but not outside for more than 12/16+ months:

Except on migration. On this single metric, it’s as if the entire world converges into a deafeningly silent consensus. Population! At last a hard number. Something tangible, physical, consistent. The cacophony of economic debate subsides as everyone gather’s around to pay homage at the altar of the purest, simplest driver of demand, production, and everything else. The one undisputed back-stop to debate…Trying to find a simple and defensible explanation of a complex issue isn’t easy. But for migration, I think there is one. I’ll describe it here in prose, and in a later post gather some of the graphs and data that support it. There has been a level shift. But it hasn’t been in ‘migration’, as everyone actually intends and understands the word. The shift that we should be talking about has been in mobility.’ (Quixotic Quant, 2017a).

 

The alternative story is that sometime in the mid-2000s the Australian Bureau of Statistics changed the definition of an official statistic called “Net Overseas Migration”. The arbitrary definition they had at the time was malfunctioning, and the next arbitrary one they changed to has been malfunctioning even worse. A blithely ignorant press didn’t even notice the change, let alone query the disfunction that inspired it, so the entire country has been putting their faith soaring population figure that has the integrity of custard. The harder alternative figure shows that our migration rate is actually flat’ (Quixotic Quant, 2017b).

 

  1. By using ‘Migration’ in NOM to describe the definition may simply be a linguistic coincidence, however, it is highly suggestive of a direct correlation with permanent immigration and long-term population growth, which does not exist (except by some indirect correlation set amongst other factors).
  2. The local and global NGOs, think tanks, institutes, commentators, ‘ecologists’, media and politicians who constantly highlight supposed negative aspects of immigration and ‘sustainable’ population growth have been influenced or manipulated by the US white nativist movement, with the latter being influential amongst Republican Party and Trump (SPLC, 2001) in turn influenced by Darwin’s cousin Galton’s ‘science of eugenics and racial hygiene’ (Das, 2015).
  3. Post WWII prior to the formation of the UN Population Council the Rockefeller Foundation (Standard Oil/Exxon Mobil) co-opted the American Eugenics Society (AES) which had become discredited by the Nazis and their ‘research’ at The Kaiser Wilhelm Institutes in Germany, to then form the UN Population Council (Kurbegovic, 2005 & Novielli, 2017).
  4. Also, to emerge with support of same and similar oligarchs’ (fossil fuels and auto) foundations were Zero Population Growth (ZPG) (Bentley Historical Library – University of Michigan, 2018), Zero Economic Growth (ZEG) (Daly, 1980) and the Club of Rome ‘limits to growth’, etc. constructs (Green Agenda, 2018) to popularise negative perceptions of population growth and immigration as ‘liberal and environmental’ concerns (Stern, 2005).
  5. Demographically it is now coming to a head for many whether middle Europe or the ‘Anglosphere’ with the refrain, ‘brown people, Moslems etc. are going to outnumber white people or WASPs leading to demographic suicide….’.

 

Reference List:

 

ABS – Australian Bureau of Statistics (2017) 3412.0 – Migration, Australia, 2015-16 Available at: http://www.abs.gov.au/ausstats/abs@.nsf/exnote/3412.0 (Accessed on: 25 February 2018).

Bentley Historical Library – University of Michigan (2018) John Tanton Papers: 1960-2007. Available at: https://quod.lib.umich.edu/b/bhlead/umich-bhl-861056?byte=53770321;focusrgn=bioghist;subview=standard;view=reslist (Accessed on: 27 February 2018).

Daly, H. (1980) Why the Industrial World Needs Zero Economic Growth (Recording). Available at: https://trove.nla.gov.au/work/34007423?selectedversion=NBD22971101 (Accessed on 27 February 2018).

Das, S. (2015) Francis Galton and the History of Eugenics at UCL.  Available at: https://blogs.ucl.ac.uk/museums/2015/10/22/francis-galton-and-the-history-of-eugenics-at-ucl/

Gapminder (2013) Don’t Panic – The Facts About Population. Available at: https://www.gapminder.org/videos/dont-panic-the-facts-about-population/ (Accessed on: 25 February 2018).

Green Agenda (2018) The First Global Revolution. Available at: http://www.green-agenda.com/globalrevolution.html (Accessed on: 27 February 2018).

Kurbegovic, C. (2013). Kaiser Wilhelm Institute of Anthropology, Human Heredity, and Eugenics (KWI-A). Available at: http://eugenicsarchive.ca/discover/connections/5233cdc25c2ec500000 Accessed on 25 February 2018).

Novielli, C. (2017) The Population Council has a shocking 65-year history, and it’s nothing to celebrate. Available at: https://www.liveaction.org/news/population-council-founded-eugenicists-promoting-abortion-turns-65/ (Accessed on: 25 February 2018).

Quixotic Quant (2017a) The state of debate: A bird’s-eye on migration. Available at: https://www.quixoticquant.com/post/the-state-of-debate-a-bird-s-eye-on-migration/  (Accessed on: 27 January 2018).

Quixotic Quant (2017b) The Missing Million: Is Australia’s migration rate actually high? Available at: https://www.quixoticquant.com/post/the-missing-million/ (Accessed on: 27 January 2018).

SPLC Southern Poverty Law Center (2010) Anti-Immigration Groups. Available at: https://www.splcenter.org/fighting-hate/intelligence-report/2001/anti-immigration-groups (Accessed on 25 February 2018).

Stern, M. (2005) Eugenic Nation: Faults and Frontiers of Better Breeding in Modern America. California: University of California Press.

UN – United Nations – Department of Economic and Social Affairs Population Division (2015) International Migration Flows to and From Selected Countries: The 2015 Revision. Available at: http://www.un.org/en/development/desa/population/migration/data/empirical2/docs/migflows2015documentation.pdf (Accessed on: 25 February 2018).