Pensioners climbing the ladder of affordability

Don’t expect to hear any cheering or thanks, but aged pensioners continue to be the standout winners over nearly five years of Labor Federal government. And a Howard government initiative expensively locked into our social welfare system is steadily increasing their relative wealth.
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Aged pensioner wealth is very relative indeed. It’s hard to imagine the household grouping that has fared worst over the past four financial years (single income couple with children on 167 per cent of average earnings) offering to swap with them, but our demographic trajectory is setting future governments on a collision course with what pensioners no doubt regard as “hard won entitlements”.

Today’s Australian Bureau of Statistics’ breakdown of inflation increases for different sorts of households reports that the “analytical living cost index” for age pensioner households rose just 0.7 per cent in the year to June 30 with most of that rise occurring in the June quarter. That age pensioner ALCI compares with a 1.2 per cent rise in the Consumer Price Index.

Most importantly for age pensioners, their twice-a-year pension increase is based on the highest number of three measures: the CPI, the Pensioner and Beneficiary Living Cost Index and Male Total Average Weekly Earnings.

MTAWE is the big mover of the three. The latest update of that measure is due later this month, but it was up by a strong 5 per cent over the year to the end of March. Thus, if all the data gathering is right, age pensions are increasing by seven times the rise in the average pensioners’ cost of living.

That affordability lift continues to build upon the big one-off pension increase under the Rudd Government.

Tucked away in the Treasury’s budget papers is a neat chart documenting the change in real disposable income (after tax, after inflation, after social welfare) over the past four financial years for 17 different sorts of households. Most types were up by 6 or 7 per cent but there were two outliers: an increase of just 1.6 per cent for the single income family on 167 per cent of average earnings, taking them to $82,752; and single pensioners up 19.8 per cent to $18,820. Pensioner couples fared next best with a rise of 10.2 per cent to $28,373.

No-one’s drinking Hill of Grace and running a Maserati on such real disposable income, but pension growth well above cost of living increases must at some stage gain the attention of governments dealing with the impact of the Baby Boom bulge retiring.

Just as Ross Gittins’ fingers the challenge of funding the national disability insurance scheme, future governments will face major social welfare and health demands that will require either increased taxes or reduced service expectations.

There is a third alternative, but you end up as Greece.

But wait, there’s more – or perhaps less. On Q&A last week, there was the unusual sight of a politician declaring neither side of politics had the extra five or six billion a year to fund the Gonski report recommendations. Opposition education spokesman Christopher Pyne bluntly explained why the coalition wouldn’t commit to it:

“Planning education funding around that amount of money is like planning your household budget around winning Powerball. It is utterly unreasonable. It will not happen.”

As Gittins hints, for all the political grandstanding, all that is happening with the NDIS is a limited trial program. Actually implementing the suggested NDIS is a couple of elections and several budgets away.

Labor is highly unlikely to have the problem of finding the money after the next election while the coalition has already stitched itself into a series of fiscal contradictions.

Between ditching the carbon and minerals resources rent taxes, delivering budget surpluses, suggesting income tax cuts and getting our defense budget back up from its 1938 level, a whole raft of escalating health, education and social welfare costs in the mix don’t add up.

Or maybe some politicians tell lies. Who would have thought it.

Michael Pascoe is a BusinessDay contributing editor. 

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Planned free-range label misleading: animal groups

Consumers could be duped into paying extra to buy "factory farmed" poultry products if a proposed new definition of free-range is approved for the booming chicken meat industry, animal welfare groups warn.
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The country's biggest chicken meat producers, including Inghams and Baida who supply supermarkets and fast-food outlets such as KFC, have applied to the consumer watchdog to have a new free-range label certified for chicken meat.

The distinctive label would be used on the packaging of free-range chicken and turkey products from the major farms.

But animal welfare groups Voiceless and the Humane Society warn that the big chicken producers are trying to "hijack" the free-range label and allow it to be used for products from farms that keep as many as 140,000 birds a hectare.

Ruth Hatten, legal counsel for Voiceless, said consumers rightly assumed that free-range farms provided natural conditions for chickens but the proposed standard would not meet consumers' expectations.

“Labelling such crammed conditions as free range is a highly deceptive use of the term that would shock consumers who expect better,” Ms Hatten said.

But Andres Dubs, the executive director of the Australian Poultry Industries Association, which devised the new standard, said it was in line with the definition already used by Free Range Egg and Poultry Australia (FREPA).

FREPA accredits about 100 free-range chicken-meat farms across the country, as well as several turkey farms.

"This proposed standard will be more explicit and more informative than the FREPA one but it is not more lenient and we are not suggesting that the stocking density of chickens be increased," Mr Dubs said.

Mr Dubs said the standard would deliver improved welfare conditions for chickens.

"This is will be more robust and transparent for consumers," Mr Dubs said.

Ingrid Just, a spokeswoman for the consumer group, Choice, said there needed to be one standard definition of free-range for chicken meat otherwise consumers were left confused about which one to trust.

"When you have a whole lot of definitions it is very hard for consumers to make an informed decision," Ms Just said.

The Australian Competition and Consumer Commission (ACCC) is taking submissions on the standard and is also considering a definition of free-range for the egg industry, which consumer and animal welfare groups also oppose.

Under the proposed standard for the egg industry, a producer could label their eggs free range if they kept as many as 20,000 birds per hectare. The current model code allows 1500.

The ACCC has accused several chicken suppliers of misleading labelling over its use of the term "free to roam" on its chicken products and KFC changed its advertising on its website, which also used the term free to roam.

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Pictures from London 2012

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Hedvig Karakas, of Hungary (white), competes with Corina Caprioriu, of Romania, during the Women's -57 kg Judo on day three. Picture: Julian Finney/Getty Images

Tom Daley (R) and Peter Waterfield, of Great Britain, compete in the Men's Synchronised 10m Platform Diving on day three. Picture: Al Bello/Getty Images

Sumit Sangwan, of India, (R) in action with Yamaguchi Falcao Florentino, of Brazil, during their Men's Heavy (81kg) Boxing on day three. Picture: Scott Heavey/Getty Images

Stevie Morrison and Ben Rhodes, of Great Britain, compete in the Men's 49er Sailing on day three. Picture: Clive Mason/Getty Images

Elise Nicholas, of Switzerland, competes in the Women's Kayak (K1) Canoe Slalom heats on day three. Picture: Phil Walter/Getty Images

Un Guk Kim, of DPR Korea, celebrates making a world record while competing in the Men's 62kg Weightlifting on day three. Picture: Laurence Griffiths/Getty Images

Ana Paula Rodrigues, of Brazil, attacks in the Women's Handball preliminaries. Picture: Chris McGrath/Getty Images

Ryan Lochte, of the United States, swims butterfly as he competes in heat five of the Men's 400m Individual Medley on day one. Picture: Al Bello/Getty Images

Valentina Vezzali celebrates winning her Women's Foil Individual Fencing Quaterfinal match against Ines Boubakri, of Tunisia, on day one. Picture: Hannah Johnston/Getty Images

Carli Lloyd (R), of USA, celebrates with team-mates Megan Rapinoe (C) and Alex Morgan after scoring their third goal during the Women's Football first round Group G match between United States and Colombia on day one. Picture: Stanley Chou /Getty Images

Joao Monteiro, of Portugal, serves in his Men's Singles second round match against William Henzell, of Australia, on day two. Picture: Chris McGrath/Getty Images

Anderson Varejao #11, of Brazil, gets fouled by David Andersen #13, of Australia, as Matt Nielsen #14 goes for the rebound during their Men's Basketball Game on day two. Picture: Rob Carr/Getty Images

Judo: Rosalba Forciniti, of Italy, celebrates winning the bronze medal against Marie Muller, of Luxembourg, on day two. Picture: Ian Walton/Getty Images

Marianne Vos, of Netherlands, celebrates as she crosses the finish line to win the Women's Road Race Road Cycling on day two. Picture: Mike Hewitt/Getty Images

Gabrielle Douglas, of the United States, competes in the beam in the Artistic Gymnastics Women's Team qualification on day two. Picture: Ronald Martinez/Getty Images

Aron Szilagyi (R), of Hungary, against Diego Occhiuzzi of Italy, in the gold medal match of the Men's Sabre Individual on day two. Picture: Ian Walton/Getty Images

Robert Stanjek and Frithjof Kleen in action during the first Star Class race of the London 2012 Olympic Games. Picture: Clive Mason/Getty Images

Cameron van der Burgh, of South Africa, celebrates after winning the gold in the Men's 100m Breastsroke final on day two. Picture: Mike Hewitt/Getty Images

Kristina Franic, of Croatia, is tackled by Nair Almeida, of Angola, during the Women's Handball Preliminaries Group A - Match 7 between Angola and Croatia on day three. Picture: Jeff Gross/Getty Images

Michael Phelps, of the United States, competes in heat 5 of the Men's 200m Butterfly on day three. Picture: Adam Pretty/Getty Images

Maria Garcia Godoy, of Spain, celebrates as she scores a goal during the Women's Water Polo Preliminary match between Spain and China on day three. Picture: Stu Forster/Getty Images

Nicholas McCrory, from the United States, during warm-ups on day three. Picture: Clive Rose/Getty Images

Im Dong-Hyun, of Korea, retreives arrows from the board during practice ahead of the Men's Individual Archery on day three. Picture: Paul Gilham/Getty Images

Tamsin Hinchley, of Australia, dives for a shot during the Women's Beach Volleyball Preliminary match between Australia and Austria on day three Picture: Ryan Pierse/Getty Images

Michael Phelps, of the United States, competes in preliminary heat 5 of the Men's 200m Butterfly on day three. Picture: Al Bello/Getty Images

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US bid for multi-billion dollar nuclear aircraft carrier strike group in Perth

US military report recommends basing carrier strike group in Perth.A US military report, to be formally released tomorrow, contains a recommendation to massively expand America's defence presence in Australia by building a base in Perth for a US aircraft carrier and supporting fleet.
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The plan is included as part of one of four options set out in a report by the Centre for Strategic and International Studies (CSIS), commissioned by the Department of Defence.

The CSIS was directed to consider how the US military could undertake the “pivot” to the Asia-Pacific region announced by President Obama last year in response to China's increasing influence.

The third option in the report - formally titled US Force Posture Strategy in the Asia Pacific Region: An Independent Assessment - details moving a US carrier strike group to the HMAS Stirling base in Perth.

The strike group would include a nuclear powered aircraft carrier, a carrier air wing of up to nine squadrons, one or two guided missile cruisers, two or three guided missile destroyers, one or two nuclear powered submarines and a supply ship.

“Australia's geography, political stability, and existing defence capabilities and infrastructure offer strategic depth and other significant military advantages to the United States in light of the growing range of Chinese weapons systems, US efforts to achieve a more distributed force posture, and the increasing strategic importance of Southeast Asia and the Indian Ocean,” says the report.

“Enhanced US Navy access to Her Majesty's Australian Ship (HMAS) Stirling (submarines and surface vessels) is a possible next phase of enhanced access arrangements with Australia,” it says.

“HMAS Stirling offers advantages including direct blue water access to the Indian Ocean and to the extensive offshore West Australian Exercise Area and Underwater Tracking Range, submarine facilities including a heavyweight torpedo maintenance centre and the only submarine escape training facility in the southern hemisphere, and space for expanded surface ship facilities, including potentially a dock capable of supporting aircraft carriers.”

The report suggests the US could also consider building airport facilities to support “bombers and other aircraft”.

It suggests other initiatives could include “increased US support for Australia's ailing Collins class submarine replacement project” and “full Australian participation in US theatre missile defence”.

The report says such a fleet in Perth would be a “force multiplier” and estimated it would provide the equivalent military benefit of having three similar groups based outside the region.

“HMAS Stirling is not nuclear carrier-capable,” the report says. “This forward-basing option would require significant construction costs. Comparable cost estimates in the past have ranged from $1 billion to create a nuclear-capable homeport for a carrier at Mayport in Florida to $6.5 billion for similar capability in Guam.”

Option three also proposes basing intelligence, surveillance and reconnaissance drones and aircraft in either Australia or Guam.

According to the report the carrier base would “present some operational constraints” because of Perth's southern “further from trouble spots in the Western Pacific than Guam, and further from the Middle East than Diego Garcia.”

But it says the distant location could also be a benefit by putting it beyond the increasing range of China's defences.

It said the option was “subject to important variables” including how well the new US Marine presence in Darwin was welcomed by the local community and whether bi-partisan support for the increasing military ties between Australia and the US could be maintained.

The study notes that Australia's strategic history “is one of a close alignment with a 'great and powerful friend'”.

It says public support for the US alliance is at an eight-year high, with “87 per cent of Australians regarding it as important for Australia's security and 74 per cent considering the United States as Australia's most important security partner over the next ten years.

“While not mainstream, anti-Americanism is prevalent among some elite circles, particularly in academia, parts of the media, and the fringes of the trade union movement and politics,” it says.

“Australia is unique among America's allies in having fought alongside the United States in every major conflict since the start of the 20th century,” the report notes.

A spokesman for the CSIS said the think tank was unable to comment on the report until after some of the report's authors testified before the Senate Committee on Armed Services tomorrow, Wednesday US time.

The paper criticised the US Department of Defence for failing to adequately articulate the new Asia Pacific strategy, nor detailing how it would manage the change in the face of budget constraints.

In a statement the Armed Services Committee's chairman, Senator Carl Levin said he agreed with comments made by the US Secretary of Defence, Leon Panetta, that “efforts to strengthen alliances and partnerships in the Asia-Pacific to advance a common security vision for the future is essential to the US strategy to rebalance toward the region.”

In a cover letter to the report written by the CSIS president John Hamre to the Defence Secretary, Leon Panetta, Mr Hamre writes: "We found a strong consensus on this overall objective within the Department, in the policy community generally, and especially with allies and partner countries.”

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Flanagan keeps Hockeyroos’ flame alive

Anna Flanagan shoots to score.The only thing capable of trumping Anna Flanagan's spectacular first Olympic Games goal was the moment she almost cried when she met tennis ace Roger Federer in London.
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The Hockeyroos defender is making the most of her debut Olympics on and off the field.

She scored a superb goal in the Hockeyroos' 3-1 victory over Germany this morning, as the team got its campaign back on track.

But equaling the excitement was the chance to pose for a photo with Federer and basketball star Kobe Bryant in the athletes' village.

The 20-year-old Canberran has immersed herself in the Olympic life.

It took its toll before the Hockeyroos tournament opener against New Zealand when Flanagan couldn't overcome her nerves.

But with photos of some of her idols and her first goal under her belt, Flanagan is ready to rocket from Olympic rookie to Hockeyroos linchpin.

"It felt amazing to get that goal, the nerves before our first game were pretty insane so it's good to get that out of the way," Flanagan said.

"If you see my celebration [after the goal], it just all came out with screaming ... I just hug whoever is closest to me.

"That other stuff is just a sideshow, I've got the focus and we showed it today and we put all of our hard work out there.

"But I almost started crying when I saw Federer, he's the one person I wanted to meet, I never thought it would happen."

They Hockeyroos suffered a massive upset when they were stunned by New Zealand in the opening round.

It was largely to do with their nerves as they failed to take chances and relax on the Olympic stage.

When they fell behind against Germany, the tournament could have started on a downward spiral.

But Flanagan helped steady the ship and her goal in second half stole the lead back for the Hockeyroos.

Her flick from the penalty corner rocketed into the top of the net and Flanagan couldn't control her excitement, jumping up and down and screaming.

Her parents Fred and Judy were in the crowd and just as excited.

Flanagan hopes her first goal will open the floodgates with the Hockeyroos in a competitive group.

The young side still hopes it can push for a medal and coach Adam Commens said Flanagan was a crucial cog in his team.

"I'm very happy for Anna, she's an outstanding prospect," Commens said.

"She has improved immensely over the last 18 months. Nerves are normal in your first Olympic match ... if you're playing in a key defensive position even more so.

"That goal [against Germany] will go a long way to calming her and allowing her to show what she's really capable of."

The Hockeyroos will play the United States Thursday night Australian time, in their third match of the tournament.

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