Warnings that Australia is at risk of losing its AAA credit rating if it doesn’t reduce the size of the federal budget deficit need to be taken seriously, but not solely for the reasons being canvassed.
There is a real and very costly sleeper hidden for many years in the federal budget accounts.
The totally unfunded commitments to pay age pension and former federal employee superannuation benefits in the budget accounts are far from transparent.
What’s more, these commitments are either impossible to break or extremely difficult to change.
The extent of these future liabilities in circumstances of increased longevity adding to already high cost commitments is unfortunately not set out clearly to be seen and understood by all.
In the early 1970s, as part of the staff’s bargaining team, I realised a costly flaw in the IMF’s employee pension plan.
The people making the decisions were also members of the fund. As a consequence, the joke was that the only thing that would break the IMF was the employee pension plan.
While times have changed even with the IMF as an employer, our federal government has been much slower to address the conflicts of interest involved with issues affecting their own affairs.
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