The report from the Coalition majority in the Senate Committee looking into the impact of changes to the age pension (and other measures) announced in the May Budget has recommended pressing on with the changes, despite overwhelming evidence to the Committee that they are unfair and unnecessary.
Ian Yates, Chief Executive of the peak advocacy body for older Australians, COTA Australia, said that on the evidence presented to the Committee the proposed changes – freezing eligibility thresholds, changing deeming rates thresholds, increasing the qualifying age to 70, and most of all, changing indexation rates – should have been rejected in favor of a comprehensive, independent Retirement Incomes Review.
Mr Yates welcomed the dissenting reports from the Green and Labor Senators.
“Pensioners across Australia are extremely fearful of how they will manage if the Government’s measures are passed by the Senate and their standard of living is reduced year by year after 2017” Mr Yates said.
“Many people, including the Coalition parties in 2009, fought long and hard to get a pension on which older people can usually make ends meet – but now it will go backwards should these changes go through.
“Targeting pensioners to this extent to make up many billions of dollars in budget savings is unfair, especially when there are other obvious ways to share the load more equitably if you look at the huge superannuation tax concessions given to higher income earners and more wealthy retirees, which cost the Budget more than the pension does.
“Before the Budget Treasurer Hockey suggested there was a glut of older people sitting on millions of dollars in savings and property yet still claiming a part pension. This was exaggerated but even if this were true, the measures he has proposed do almost nothing to counteract this.
“Instead the indexation changes hit all pensioners but most of all those who can least afford it, people with little or no other assets or income.”
Mr Yates reiterated COTA’s call for an independent Retirement Incomes Review, which has been supported by many others including ACOSS, the Blueprint for an Ageing Australia, and the Interim Report of the Financial Systems Inquiry.
“The proposed changes to the Age Pension must be taken off the table while a thorough review is conducted that considers who wins and who loses in the current system; what a fairer, more adequate and more sustainable retirement income system would look like; and how to get there.
“Only then should the government consider policy changes to the pension and other retirement income policies.
“This piecemeal approach is bad policy making and entrenching disadvantage for millions of older Australians.”
Media contact: Ian Yates 0418 835 439, Olivia Greentree 0439 411 774.
HANDS OFF THE PENSION FACT SHEET
WHAT ARE THE FEDERAL BUDGET MEASURES AFFECTING THE PENSION?
In this year’s Federal Budget the Government proposed to:
Index the Age Pension only by the Consumer Price Index (CPI) from 1 September 2017
Freeze eligibility thresholds for the Pension and pension related payments for 3 years from 2017 (i.e. don’t index them as usual)
Reset deeming thresholds for Pension income testing from September 2017 – thresholds for singles will be reduced from $46,600 to $30,000 and for couples from $77,400 to $50,000
Increase the age pension qualifying age to gradually reach 70 years by 2035
Although these measures don’t start until 2017 they have already been passed by the House of Representatives and are in the Senate for its consideration.
WHAT DO THESE BUDGET MEASURES MEAN FOR PENSIONERS AND OLDER AUSTRALIANS?
These measures will dramatically reduce the standard of living of Pensioners, due to the cut in indexation. If the CPI had been used since 2009 the Pension would already be $30 per week or $1560 per year less
These measures will affect Full Pensioners worst, people with the least assets and other income will be hardest hit
These measures are blunt instruments that reduce the income of all part pensioners, rather than tackling community concerns about people with high assets receiving a part pension
These measures mean that older people unemployed due to age discrimination and lack of jobs will stay on Newstart for years longer rather than moving to the Age Pension.
These measures reduce the living standards of pensioners while leaving intact huge tax concessions to well off superannuants. Many tens of thousands of superannuants get tax concessions bigger than the value of the single pension.
WHAT SHOULD HAVE HAPPENED?
These measures were introduced in the May 2014 Federal Budget without any public inquiry or consultation, and despite election commitments that there would be no change to pensions.
What should happen is a Retirement Incomes Review be set up with an independent expert chair with a public engagement process involving all key stakeholders. The Review should cover pensions, superannuation and the taxation treatment of retirement assets and income. It should report by the end of 2015
The Bills to cut the Pension should be withdrawn while the Review is happening. The Bills have already passed the House of Representatives and are being considered by the Senate.
For more detail on all the above you can access COTA’s submission to the Senate Community Affairs Committeehere for a full discussion of the proposed changes and the need for a Retirement Incomes Review