Much to be happy about but pension indexation flaw ignored

A 22 cent reduction in the fuel excise is something every owner of a non-electric car will welcome, not just pensioners and self-funded retirees, but there are some goodies in this Budget just for older Australians.

There is the one-off cost-of-living $250 payment for self-funded retirees and pensioners alike. It’s not as generous as the tax offset for low- and middle-income earners, but still.

As so often occurs, pensioners and retirees are treated the same, while the differences in wealth and income are quite marked. The (non-retired) low- and middle-income earners receive a tax offset that varies with their income, so go figure.

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With $120,000 set as the highest middle income and any retiree with a Commonwealth Seniors Health Card being paid hard cash, the government’s plea for re-election is quite obvious.

But to look past the initial euphoria of receiving $250, the fact remains that particularly full rate pensioners and those on unemployment benefits will probably be shielded from cost-of-living increases for now only.

If, as tipped, inflation continues to go up, the game of catch-up with high cost-of-living increases will resume for those just above and those under the poverty line.

Full rate pensioners are close to dropping below that line. The recent indexation compensated them for the loss of purchasing power over the six months prior to indexation. During those six months, people coped unaided with loss of purchasing power.

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While one-off handouts are better than nothing, an independent review of social security payments, would be a better way. Obviously and very importantly, it would only be a better way if the recommendations from such a review were implemented rather than stuck in a drawer or in the circular file.

One of the things such a review should look at is what structurally can be done to prevent social security recipients having to cover cost-of-living increases in the months before indexation.

The cost-of-living handout and cutting the petrol excise in half were the most notable things in the Budget for older Australians but, wait, there is a little bit more.

The government is lowering the PBS safety net threshold by just over $80 (from $326.40 to $244.80) for concession card holders. Combined with the concessional rate of $6.80 per prescription, this generally will provide for about 12 more free prescriptions a year. Not to be sneezed at!

Poor mobile phone coverage and ability to contact emergency services is a major concern for older Australians in regional areas and outer suburbs. It is hoped that $812 million over six years for the Mobile Blackspot Program will finally address that concern. I stress, hoped.

There were a couple of very important omissions from the Budget.

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While the Budget provides an $18 billion infrastructure commitment for dams, train lines and roads and bridges, it continues the decades-old neglect of the important category of infrastructure that is – a roof over people’s heads. It continues the decades-long neglect of social housing in the face of growing homelessness.

It is also disappointing that no provision has been made in the forward estimates for a pay increase for aged care staff. It is clear that a significant increase is needed. However, the government, which effectively pays the vast majority of staff wages in aged care through subsidies, has ignored the issue altogether.

Make of it what you will, but do so before the election in May.

Paul Versteege is policy manager for the Combined Pensioners and Superannuants Association.

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Written by Paul Versteege

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