Ageing Population & Unfunded Liabilities

Media Release

8 March 2007

The State Government is on its usual pre-election spending spree, throwing money - or at least promises - at the electorate in the lead up to the State election.  The Liberal party is promising heavy spending and business tax cuts if it seizes power.  Concern about the prospect of a coming recession is studiously ignored by both.  Isn't it about time both sides took a cold shower, watched a few episodes of Ripley's "believe it or not" and had a closer look at the figures.

In June 2006 the NSW Treasurer, Michael Costa, confirmed that the State Government does not have the financial capacity to cope with the demands of an ageing population: "We are facing a crisis in how we fund services for our ageing population.  The State cannot do it...We are consciously saying that the system is unsustainable."  Yet the State Government will have to fund public sector retirement benefits as well as services for the ageing population as a whole.

The Retirement Intentions Survey confirms that 27% of all NSW Government public servants intend to retire within the next 5 years and a further 30% over the coming decade (ie. 98,600 over the next 10 years).  68% have been with the public sector for over 20 years and have superannuation entitlements that represent an alarming drain on the State coffers.

The problem starts at the top.  The Parliamentary Contributory Superannuation Fund confirmed unfunded liabilities for the year ended 30 June 2006 of $32.2 million.  The NSW Treasury suspended government (ie. taxpayer) contributions for the period from 1 July 2006 to 30 June 2008.  But that's only a drop in the bucket!

For the State Authorities Superannuation Scheme (SASS), the State Authorities Non-Contributory Superannuation Scheme (SANCS), the State Superannuation Scheme (SSS) and the Police Superannuation Scheme (PSS), Triennial Actuarial Valuation as at 30 June 2003 shows an unfunded liability of $15 billion as at 30 June 2003, even after a contribution or set-off from the General Liability Management Fund (GGLMF).  Who knows what that figure is now, four years down the track?

But why should the citizens of Maitland be concerned about that?  The NSW Government State Plan promises the Hunter Region that the Government will "consider" increased employment, community participation and multi-agency support for aged people, will "consider" support for vocational education and training through building better links between schools, TAFE and industry, and will "consider" implementing a Positive Ageing Strategy in the Hunter aimed at increasing the health and social well being of older people.

It's taken our State Government a long time to promise to consider these things.  It was warned years ago that bad workforce projections and lack of incentives or help to increase workforce participation rates, particularly of skilled underemployed women, would lead to the chronic shortage of skilled workers like nurses, doctors and teachers that we now have, but it did nothing.  Look at where we are now.  It knows we have a rapidly increasing ageing population and huge levels of debt for which the State Government is yet to find money, but with the election looming all we hear about are spending increases and cuts.  The spiral seems to be continuing in ever increasing circles. 

I have strong and positive views on this issue and will endeavour to discuss this issue with the citizens of Maitland at the Hunter Business Chamber Community Forum at Maitland Town Hall on 15 March 2007.