Government spending on pension and social service payments is expected to blow out by tens of billions over the next four years, the Treasurer warns.
In the lead-up to tonight’s Federal Budget, Treasurer Jim Chalmers has revealed to the ABC that welfare spending will increase by $33 billion – including around $11 billion for the Age Pension – over the next four years to counter inflation and the rising cost of living.
The government is assuming that the negative economic outlook will continue for the foreseeable future and expects more Australians to require financial assistance.
Read: Is Age Pension indexation about to go monthly?
He says the increase in spending is unavoidable because welfare payments such as the Age and Disability Pensions are indexed to the Consumer Price Index (CPI), which continues to rise.
“One of the most important elements of our Budget is the $33 billion in extra funding for pensions and payments,” Dr Chalmers said in his interview.
“That is partly a consequence of the indexation, which is there to try to keep up with inflation, particularly when it’s high, as it is right now. Of that $33 billion in extra funding for pensions and payments, about a third of that is the Age Pension.
Read: Time to overhaul Age Pension gifting rules
“And we know that people are still doing it tough.
“But one of the pressures on the Budget is making sure we can find room for that indexation so that people who are on pensions and payments get a little bit of help twice a year to try to keep up with these skyrocketing costs of living.”
Most pensions are indexed twice each year, on 20 March and 20 September. The most recent increase in September showed the biggest jump in pension rates in more than a decade.
Read: How do retirees feel about the Age Pension increase?
The latest CPI figures announced in July showed consumer costs grew by 6.1 per cent in the June quarter.
A lot has happened in the Australian and global economies since then and the CPI figure is expected to be much higher when announced tomorrow.
Should the government be spending more on pension payments? Or should we be reining in welfare spending? Let us know in the comments section below.
The pension should be indexed quarterly because six monthly indexation leaves pensioners too far behind rising prices in these times of high inflation.
totally agree David ….. but will there be an increase or is it just one of Labor’s increasing empty promises?? 🤔
Why don’t they just let us work , tax us and stop taking 50cents in the dollar from us? That way the people that want to work will do so and we don’t mind paying tax.
No, no increase. The $11B over four years is what it will take to cover the number of new people becoming eligible for the OAP with a nominal increase that will continue to be less than inflation. This is all about winding up the OAP while claiming it is important and they are doing something about it.
As a pensioner who has done the right things, but only had a few years of compulsory super, I retired with a moderate savings. We downsized when there were no special treatment and were penalized for having cash in the bank. We have maintenance costs on our property just like everyone else but can’t earn extra to top it up without getting penalized. Even if we do find work, the BS extra earning only looks at income and not the expense to earn it, so it can cost more to earn the extra that then ends up penalizing us!
I’ve tracked our moderate spending on basics (insurance, home maintenance, vehicle maintenance and insurance, fuel, very basic food, electricity, gas, basic clothing, dental, health and medicine, and government fees such as water and rates, and the increase has been over 75% per year for the last two years.
The pundits who show how other discretionary costs may be manageable, ignore the fact that for we pensioners, there is a limited pot of money, and we have to pay what we can and cut other expenses where we can’t pay them. This means we cut food, heating, lighting, fuel, insurance, dental and health.
Basically, we withdraw from a society that no longer cares and just wants us to go away and free up funds we have contributed to, for other more politically correct purposes. What a sad society. Our governments become more like Pol Pot every day.
If they were serious about the indexation, there would be a real increase, not this gradual degradation of the Aged Pension. For years Governments have wanted to eliminate it, ever since they plundered the welfare fund for their own benefit.
When they index quarterly or twice yearly based on a backwards view, when the inflation rate is running as they project it will, it is not an increase, but a steady reduction in the aged pension so people can’t live on it and the demand for it will decrease.
This will be helped by those who are reaching retirement age having private super. So, the Government will be able to cancel the Aged Pension, just as they have forecast to the public, when they have been telling younger Australians, that there will be no aged pension when they retire.
I agree with Mr Ryder re quarterly indexation, especially with the rise of prices and inflation, and then return to 6 months when inflation goes down in a couple of years or so.
Quarterly indexation is fairer to those who rely solely on their pension otherwise they will be left further behind with no chance of getting above the bread line!
Those age pensioners who have worked hard and helped the governments by attempting to help look after themselves when they are no longer working should be rewarded for doing so. Also, those genuine disability pensioners and those who have a disability that doesn’t apparently qualify for a pension due to their disability not being classed as stable should also be looked after. However, those who have not worked a day in their life because they didn’t want to or couldn’t be bothered should not. More scrutiny of those people would provide a lot more money for the genuine cases.
Totally agree, but we are considered no longer productive to society and are therefore expendable. Whay waste public resources on us?
How does the government know what electricity prices will be if they are not themselves driving them. Remember electricity was once a government service but was sold off to companies who made big profits, paid no tax and didn’t reinvest in more efficient, cleaner energy production.
Now the public is being punished for the short-sighted view of politicians who sold off electricity to balance their incompetence in managing a budget, just like they plundered the welfare fund (pension fund) to do likewise.
And the pensioners who paid for the electricity system and the welfare fund have memories of this, so what better than to just eliminate them by making it so difficult for them to survive that they just disappear.
There have been many dictators who have tried this, but it seems our so-called caring governments are achieving the same result quietly.
When China took a virus to the UN as a way to manage the global population, they were seen as inhuman for wanting to eliminate the unproductive section of society. Our politicians are less up-front about it.
The $11B extra over the next 4 years will only cover the number of new recipients of the aged pension and the government who claims to be sensitive to pensioners have only committed that they will continue the indexation of pensions twice a year.
The increase in the budget is set for 4.8%, which means on the government’s own numbers, pensioners will go backwards by more than 11% per year.
But they’ll continue to lie about caring and doing their bit. At the same time, they didn’t touch the tax cuts for the rich and gave more to help the younger members of society join the workforce. What a bunch of sick puppies the public have elected.
Who do they target next? Those who wear glasses, those who receive NDIS, those who are left-handed, those who are…
100% Magdalena, enough of throwing money at every whinging bludger that puts his or her hand out. Reign in immigration and socalled refugee’s and stop making everyone who arrives in Australia an Australian Citizen 5 minutes after they get here. They should all be required to serve a minimum probation/good behavior period of at least 5 years, before being considered for Australian Citizenship. And No Benefits until they are finally Australian Citizens. Jacka.