The biannual indexing of Centrelink benefits take effect from today, with the Age Pension, Disability Support Pension (DSP) and Carer Payments all increasing by $37.50 a fortnight for singles and $56.40 a fortnight for couples.
That takes the maximum fortnightly pension payment, including the pension and energy supplements, to $1064 for singles and $1604 or couples.
It’s a 3.7 per cent increase and follows a 4 per cent rise last September. While no-one is saying an extra $18.75 per week is not welcome, inflation is running at 7.8 per cent – higher than in September last year and despite 10 successive cash rate increases by the Reserve Bank.
The cost of many grocery basics over the past year has soared. Prices at Woolworths and Coles climbed higher in the December quarter, to an average of 9.2 per cent, compared with an average of 8.2 per cent in the September quarter, according to research by UBS.
And unfortunately, price tracking found that inflation was steepest in the fresh food category, led by dairy and meat. Fresh food inflation was running at 9.6 per cent in the December quarter and dry grocery items at 9 per cent.
Which means an extra $18.75 a week has to be carefully spent – especially when skyrocketing energy prices and increases to private health funds are added into the budget.
That catchphrase, dignity in retirement, is a dream for too many.
What would help – apart from a significant boost to the base rate of the Age Pension, and other payments? Four indexing reviews per year instead of two.
Advocates lobby for change
The problem is that twice-yearly reviews never allow pensioners to catch up, pensioner advocates say.
Paul Versteege, policy manager for the Combined Pensioners and Superannuants Association (CPSA), says indexation responds retroactively to the economic climate. Today’s increases compensate pensioners for cost-of-living increases between July and December last year. They provide no buffer for the increases that have already occurred this year.
He says: “People on just the pension have had to deal with a significant loss in their pension’s purchasing power, which we estimate at between $300 and $375 from 1 July 2022 to March 2023.”
National Seniors chief advocate Ian Henschke says the twice-yearly indexation is a game of catch-up.
He says it’s critical during times of high inflation that the pension be adjusted four times a year instead of two.
“For pensioners struggling to cover necessities such as food, fuel and electricity, how often is as important as how much.”
Both the CPSA and National Seniors are lobbying the government to not just increase indexation amounts, but to also increase indexation frequency.
Rent Allowance ‘out of sync’
The CPSA is also calling on the government to review the Rent Allowance, which Mr Versteege says is “out of sync in a big way with actual rents”.
Rental assistance will go up by $5.60 to $157.20 per fortnight for a single person with no children and up $5.20 to $148 for a couple with no children.
Median rent prices in capital cities across Australia in December 2022 ranged from $460 in Melbourne to $670 in Canberra, according to Mozo. The average was $520 and represented an 8.3 per cent increase compared with December 2021.
Council on the Ageing (COTA) Australia chief executive Patricia Sparrow says small increases to the pension simply aren’t enough for many people.
“Every little bit helps, but we need to be looking at how we can support older Australians better,” she says.
Disqualifying limits
Asset and income disqualifying limits also change from today. The Age Pension will cut out when assets reach $634,750 for a single homeowner, $859,250 for a non-homeowner (increase $12,500); couple combined homeowner $954,000, non-homeowner $1,178,000 (increase $19,000).
Income disqualifying limits increase by $75 per fortnight for a single person to $2318, and by $112.80 per fortnight to $3544 for a couple combined.
Big lift in Jobseeker sought
The Australian Council of Social Service (ACOSS) says the indexation increases don’t address the inadequacy of income support, especially for anyone on JobSeeker.
The JobSeeker rate is increasing by $1.77 a day for people under 60, from about $47.75 to $49.50 a day.
This is 57 per cent below the minimum wage and 34 per cent below the Age Pension.
ACOSS acting chief executive Edwina MacDonald told the ABC she wants the government to raise JobSeeker payments to the same level as the Age Pension amid rising inflation.
In case you were wondering, the hotly debated superannuation tax concessions cost the Federal Budget $52 billion a year and the Age Pension costs $55 billion annually.
Can you see the federal government ever agreeing to four pension reviews per year – at least during times of high inflation? Do you have to budget carefully? Why not share your thoughts in the comments section below?
Also read: Age Pension payment rates: 20 March 2023 to 19 September 2023