Pension makeover looking good, says National Welfare Rights Network

The National Welfare Rights Network (NWRN) has welcomed the Government’s revised pension plan, which abandons the unfair indexation cuts of last year’s budget that would have hurt Australia’s poorest pensioners. The new proposal to tighten the assets test will affect wealthier retirees who are in less need of taxpayer support in their retirement. A boost to the ‘assets free area’ will mean increased pensions for some people.

“It’s pleasing that the Government has listened, consulted, and found what looks like a workable and fairer solution than what was handed to the community at last year’s budget. We will look very carefully at the Government’s proposals,” said Kate Beaumont, President of the National Welfare Rights Network today.

“Millions of age pensioners, carers and people with disabilities can rest easier with this confirmation that the Government has abandoned its unfair pension indexation changes that would have left pensioners out of pocket by nearly $23 billion over the next decade. The changed rules would cost pensioners around $80 per week after 10 years. Modelling by the ANU’s Peter Whiteford found indexing the pension to CPI from 2017 would have seen pension payments fall from 28 per cent of average male weekly earnings to just 16 per cent by 2055.

“The Australian Council of Social Service, NWRN and others called for a different approach and urged a reversal of the generous assets test thresholds that were relaxed in 2007 by the Howard-Costello Government.

“We call on the Government to use the savings from the tightening of the means test to plug the holes in the existing welfare system. Priorities include a $51 a week increase to the single rate of Newstart Allowance and related payments for young people.

“Payments for unemployed people are only linked to the CPI. As we have seen with pensioners, a link to a wages component ensures that their incomes do not fall behind the rest of the community. Linking unemployment payments to a wages component, would provide greater financial security for those looking for work, and would cost around $90 million per year.

“This measure was one of the proposals in our 2015 Federal Budget Submission. In that submission we identified some other potential savings, for example axing the Seniors Supplement would save a further $240 million a year. However, there are very few savings left to be found in the social security portfolio in terms of income support payments. According to the OECD we have one of the most targeted welfare systems in the world. Any further cuts are likely to impact harshly on those who can least afford it.

“These sensible pension reforms should be followed up with a more comprehensive review of the adequacy of social security payments for unemployed people, parents and students. The next step for the Government is to look at superannuation and taxation arrangements with a view to making them fairer and more sustainable.

“In next week’s Budget, the Government needs to draw a line under a number of other measures that are currently before the Senate. The Government must abandon its unfair and unnecessary six month waiting period for unemployed people under 30. Leaving job seekers without an income – for six months, or even one month, will not help them to find and keep employment, it will just push then deeper and deeper into poverty and away from the labour market. The proposals to make deep cuts to Family Tax Benefits, particularly those that will impact on families with children as young as six, must be reconsidered,” concluded Ms Beaumont.

For comment:

  • Kate Beaumont, President, National Welfare Rights Network, M: 0414 792 923 or
  • Gerard Thomas, Policy and Media Officer, National Welfare Rights Network: M: 0425 296 882.