The major political parties insist that the age pension is welfare and must be reduced in its amount and availability. This is because governments have spent so much money and run up such huge Budget deficits and borrowings that Australia cannot afford the existing pension scheme any more.

They have even tried their best to create inter-generational anger and conflict by claiming that younger workers are paying tax to support those on pensions while prattling about ending the Age of Entitlement.

It’s all lies.  Part of what the parties and the media like to call their narrative…a fancy word for story.

The real story: Older people spent their lifetimes paying for their pensions with an early version of the compulsory superannuation scheme.

In 1945, the Commonwealth split personal income tax into two components.  One of them, the social services contribution was to be used exclusively to finance social security cash payments.  Revenue from the contribution was paid into the National Welfare Fund, from which all such cash payments were to be made, but unlike the UK and the US there was no link between personal contributions and entitlements.

When Labor leader and Prime Minister Ben Chifley wanted to increase taxes in 1945 his government announced a ‘National Welfare Fund’ to fund pensions, unemployment relief, child endowments, even health care.

Chifley said the revenue from the 7.5% tax increase was specially earmarked for the National Welfare Fund.  Thus Labor wasn’t breaking its promise not to increase the burden on low income earners – they would be getting social security for their money.

Even then there was a trick.  Most of the great new social services would not start until after the war.  So this Chifley ‘light on the hill’ was just a smokescreen for unpopular wartime tax rises on lower income earners.

The then Opposition Leader Robert Menzies had insisted that the Compulsory Contribution (levy) should be kept completely separate.  That it should be shown separately on the Taxation Assessment and paid straight into a trust account and not mixed with the General Revenue.

Menzies said:  “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.”

The levy and the National Welfare fund began on January 1st 1946 and contributions were shown separately on the personal Tax Assessments for 1946, 1947, 1948, 1949 and 1950 with the money paid straight into the special ‘Trust’ fund and claims were paid out of the fund.

In 1950 the balance in the fund in was almost 100 million pounds or $200 million…in today’s money several trillion dollars.

But the pot was too big for the politicians to leave alone.  Bob Menzies supported by the Labor Party amended the Acts governing the special Fund and the Compulsory Contributions (levy) was then grouped with the Taxation Assessment and appeared as one amount on taxation assessments and paid straight into Consolidated Revenue.

But the compulsory 7.5% levy was still collected and spent.  In 1977 Prime Minister Malcolm Fraser transferred the balance in the Welfare Fund Account (by then almost half-a-billion dollars) to Consolidated Revenue.  That money equates to another several trillion dollars.  And still the 7.5% was taken out of everyone’s pay packet every week.

The Fund continued until 1985 when the Labor Government repealed Acts No. 39, 40 and 41 of 1945 (The National Welfare Fund Acts) and introduced the Income and Asset Tests, thus excluding millions of levy and tax-paying Australians from receiving Social Services Pensions.  But still the 7.5% levy continued to be collected (while hidden in the general Income Tax revenue).

And to this day it still is collected.  There have been estimates that the trillions of dollars stolen from the fund (and the money paid in and similarly stolen since 1985) would be enough to pay a non-means tested pension to every retiree of more than $500 a week.

And taxpayers, including self-funded retirees, are still paying that levy but politicians of all stripes and a complacent media still push the myth that the pension is welfare.  They’ve got to.  If they accept its contributory funding basis they have to admit it is not part-funded let alone fully-funded because they have spent the money.

They also would have to accept that the pension should not be asset and income-tested; that there could be no possible basis for including the family home in any tests; and that the pension is not being paid from the taxes of younger generations (whose own 7.5% also is being misappropriated).

Brian Edmonds
Mature Australia Party – National Secretary
[email protected]

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  1. Frances McMahon says

    After all the attacks on seniors we need a party that will defend them. Your article “The Age Pension is not welfare’ is wonderful.
    However I feel it is thoroughly spoiled by the refugee ‘bashing’. It is quite awful for seniors to start off by attacking people who are even more vulnerable.
    Without this you would get the support of all retirees in Australia who are desperately looking for an alternative to the present parties, with it you will lose the support of all but a few. It sounds like the Mature Age One Nation Party. Refugees that are allowed to settle here come already educated and trained to fill jobs that Australians often do not want to fill. They look after the old, the sick and the elderly and when they start to work contribute to the taxes that provide social support.

    What does this piece on taxation mean? ‘NO more fiddling with a failed and unworkable taxation system for Government ‘porkbarrelling’ to grab more votes. Give us REAL taxation reform…..a new tax structure equitable for all Australians. ??’ People will wonder if you are advocating higher taxes for them.

    I understand that it is sometimes disappointing that groups such as Get UP canvass hard for issues to do with asylum seekers while ignoring the plight of Australia’s poor but
    ‘NO more courting overseas glory by indulgent welfare handouts, and to doubtful immigrants, refugees, and asylum claimants.’ is not the way to express it.
    It is enough to say that we need
    “More help for our own home-growth poor, the disadvantaged, and struggling families now left to their own devices for their own salvation.”
    It is also inappropriate to say. NO more free housing to overseas welfare recipients or immigrants (many of doubtful or questionable repute) –Some refugees may be assisted with settling in but they do not get enough to live on. Overseas immigrants do not get free housing. They have to be here a very long time before they can get any welfare payments. Who do you have in mind? Some NZ Maoris? Their entitlements are restricted too but come under our neighbourly agreement with NZ.
    Instead concentrate on making a case for the “thousands of our own home-grown Aussies, young and old, sleep rough in our streets (or in cars) every night.”
    Our Government takes a very hard line with refugees and does not show much compassion to them any more than it does to seniors. We live in a world that is in turmoil and attacking vulnerable, displaced people who have nothing to do with the way seniors have been robbed, victimized and ignored by our government is inappropriate and irrelevant.

    Any money taken off refugees or anyone else will not be spent on seniors. Seniors need to stand up for what they need and deserve in their own right without appearing to victimize others. You do this wonderfully in your article that says the pension is not welfare.
    It is alright to have a good go at politicians’ entitlements.

    • Liz Edmonds says

      Hello Frances.
      Mature Australia Party national president Terry Snell has referred your website comments (on the party’s age pension position) to me, to respond to you.

      My name is Col Walker and I’m involved in policy development (among other things) for the Party, as a member of MAP’s National Executive.
      Unlike the major parties today (with whom I worked for more than 20 years, professionally and politically), MAP does actually listen to the comments, concerns, and other offerings of its members (and other contributors) on policy issues…….whether positive or negative.
      Thank you for your very well-presented comments, which most certainly will be taken into consideration in our current and future policies, and in future website presentations. But also, unlike the major parties today, we don’t pretend to have all the answers on all issues, and we do make an effort to reflect what the PUBLIC tell us they want or support…..or don’t want and/or support. We are attempting to give real meaning to the old political objective of government by/of/for the people, by representing public needs, wishes, and aspirations….not just our own.
      We appreciate your input (as per your comments) and would invite you to join MAP (as a member……or a candidate, even) and continue that input, more directly and actively.
      One or two points should be made in regard to your comments, however. Firstly, the suggestion of ‘refugee bashing’ is strongly rejected.
      From Day 1, MAP has made it clear that it supports immigration (on which Australia was founded and has relied on for its growth and prosperity), and the compassionate entry of genuine refugees (irrespective of ethnic and racial origins, or religion).
      MAP has consistently said, however, that we should ensure – in the national interest – that entry was/is centred on genuine refugees (and asylum seekers) seeking entry for legitimate/genuine reasons. I don’t know where you live , but In this respect I refer you to today’s Sunday Mail (Queensland) which presents very interesting perspectives on these issues by two prominent national journalists (pages 70/71, David Penberthy and Caroline Marcus )……another stream of public opinion.
      On the taxation issue, MAP is in the throes of producing a tax reform package by which Australians, individually, would pay substantially LESS tax, not more ……. but would also ensure that the massive tax evasion which now takes place ($40BILLION a year!) is eliminated. That policy will be released very soon (once our research is finalised).
      In the other areas you mention, MAP makes no apology for honing in on seeking better deals for Australia’s pensioners and retirees, our poor, disadvantaged, and the homeless. We will continue with this approach. It is firmly in our Charter……or as the political academics like to say today, “It’s in our DNA!”.
      Thanks again for your comments and input, Frances, and for making the effort to check out MAP’s website. Please continue to give us your views…..in support, or otherwise ….. as and when you can.
      We’re a party that DOES listen, and take notice…. and we’d like you to consider becoming a member, on that basis. That can be achieved, via the website.

  2. Mort says

    You are so right. I am a pensioner along with my wife and have worked since leaving school back in 1964.Never been on unemployment benefits and a member of MAP
    Cheers Mort Faddy

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