Pension reprieve off the table?

Federal finance minister Mathias Cormann appears to have started the process of walking back Prime Minister Scott Morrison’s talk about providing extra assistance to pensioners in the wake of there being no pension increase in September.

On Tuesday afternoon, the Department of Social Services confirmed that there would be no indexed Age Pension increase until March 2021 at the earliest.

The next morning Mr Morrison told journalists that he would work with treasurer Josh Frydenberg on a response to the pension freeze, offering a potential reprieve.

Appearing on ABC News Breakfast on Friday morning, Mr Cormann attempted to walk back any commitment to extra assistance and suggested that pensioners were still in a better position despite the pension freeze.

Mr Cormann said that any additional government support for pensioners was “going to be a matter to be determined in the context of the budget”.

With the federal budget in the red by $85.8 billion in 201920 and a forecast deficit of $184.5 billion in 202021 (the biggest deficit since World War II), this is not good news for pensioners.

“Well, the cost of living has gone backwards but, of course, the pension will not go backwards,” Mr Cormann said.

“Indexation arrangements are there to take account of the rising costs of living. Self-evidently, if the cost of living goes backwards yet the pension remains the same, then that is an improvement in the relative position.”

While inflation was negative for the last quarter, falling 0.3 per cent, there are problems equating the rate of inflation directly with the cost of living.

Breaking down exactly how inflation figures relate to the cost of living for retirees is one of the key reasons YourLifeChoices works with The Australia Institute to publish the quarterly Retirement Affordability Index (RAI).

As YourLifeChoices reported on Friday morning, Australian Bureau of Statistics chief economist Bruce Hockman said that a 95 per cent drop in the cost of childcare during the June quarter (due to the pandemic), a big fall in the price of petrol and a drop in the price of preschool and primary education were to blame for the consumer price index (CPI) fall.

“Excluding these three components, the CPI would have risen 0.1 per cent in the June quarter,” he said.

What do you think? Are pensioners better off despite the pension freeze? How much money have you saved on childcare and primary and preschool education? Should Mr Cormann have a better grasp of these figures, given that he is finance minister? Do pensioners deserve extra assistance, given the fact that there will be no pension increase in September?

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Written by Ben


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