Australian pensioners have every right to feel betrayed by Tony Abbott. Before the election, when he was Opposition Leader, Tony Abbott promised there would be no changes to pensions.
After the election, he broke his promise with an unfair attack on Australia’s pension system, and the millions of people who rely on it. Bill Shorten and Labor will continue to oppose Tony Abbott’s attack on pensioners. The Liberals and Tony Abbott plans to cut the current indexation system, which helps the pension keep pace with the rising cost of living.
What do the Abbott changes to indexation mean for pensioners?
There are 8240 aged pensioners in Melbourne Ports alone who will be affected by the Liberal’s proposed changes, and 591,635 across Victoria. The current system ensures that the pension goes up by whichever is higher – CPI, the Pensioner Living Cost Index or Male Total Average Weekly Earnings. If Tony Abbott gets his way the Age Pension will only be indexed to one measure – CPI.
According to the Australian Council of Social Service (ACOSS) Tony Abbott and Joe Hockey’s plan to reduce pension indexation will mean pensioners will be around $80 a week worse off within ten years. The independent Parliamentary Budget Office (PBO) says this change to pension indexation will mean $23 billion will be cut from expenditure on the Age Pension by 2024–25. Research from the Australian National University shows that if Tony Abbott gets his way, the pension will drop from 28 per cent of average weekly earnings today to just 16 per cent by 2055. This risks pushing pensioners into poverty and creating a permanent underclass in Australia.
The Liberals have already has cut $1.3 billion in support and concessions for vital services such as public transport, electricity and water bills. Labor has condemned the Abbott Government’s decision to axe the scheme. Unfortunately, these concessions were contained in an agreement between the Commonwealth and State and Territory governments axing the concessions did not require legislation.
- Tony Abbott’s cuts to pension indexation will leave pensioners up to $80 a week worse off within ten years.
- Currently the Pension is indexed in line with the highest of three measures: Consumer Price Index (CPI), Male Total Average Weekly Earnings (MTAWE) or the Pensioners and Beneficiary Living Cost Index.
- Importantly the current system ensures that the pension is linked to wages growth.
- The Age Pension qualifying age will rise to 70 by 2035.
- The Abbott Government abolished the $1.3 billion National Partnership Agreement on Certain Concessions for Pensioners Concession Card on 1 July 2014.
- If Tony Abbott gets his way the deeming thresholds used in the pension income test will be slashed from $46,600 to $30,000 for singles and from $77,400 to $50,000 for couples from 2017. This means that more of pensioners’ financial assets will be assessed in the pension means test, making part-pensioners worse off and throwing many off the pension entirely.
- The Abbott Government is abolishing the Seniors Supplement for Commonwealth Seniors Health Card (CSHC) recipients. This is worth around $900 a year for seniors (not pensioners).
Seniors Supplement for holders of the Commonwealth Seniors Health Card.
The government has introduced legislation into the parliament that would abolish the Seniors Supplement for CSHC holders
This change will leave around 290,000 Australian seniors worse off. (by $886.60 per year for singles and by $668.20 per year for each eligible member of a couple.)
It will rip $1 billion from the pockets of Australian seniors.
Labor will stand up for Australian seniors and pensioners by opposing the Abbott Government’s budget cuts.
Inclusion of Untaxed Superannuation in the Commonwealth Seniors Health Card (CSHC) Income Test (Government measure supported by Labor)
On 1 January 2015, non-taxable superannuation income became included in the Commonwealth Seniors Health Card (CSHC) income test.
This means that untaxed superannuation income streams will subject to the existing income test for the Commonwealth Seniors Health Card.
This will affect all new CSHC holders.
This is subject to a grandfathering provision.
This means that there will be no change for existing CSHC holders as of 1 January 2015 and who have existing superannuation account based income streams.
However any new superannuation account based income streams purchased by these customers after 1 January 2015 will be subject to the new deeming rules.
Normal Deeming Rules being extended to Account-Based Income Streams (Labor Measure from MYEFO, legislated by current government)
From 1 January 2015, the normal deeming rules were extended to superannuation account-based income streams, bringing their treatment into line with other types of private income retirees receive from financial assets (e.g. dividends from shares or interest on bank deposits).
This means all financial assets are assessed under the same rules.
Account-based income streams held by pensioners and allowees prior to 1 January 2015 will continue to be assessed under the existing rules unless they choose to change products or buy new products from 1 January 2015.
Pensioners and allowees granted pensions from 1 January 2015 with account based income streams will be impacted by the new rules.
This means that income from various sources will all be treated the same.
Importantly for someone who became a pensioner or allowee prior to 1 January 2015, they will continue to be assessed under the existing rules unless you choose to change products or buy a new account-based income stream, after 1 January 2015.
Portability of Commonwealth Seniors Health Card (CSHC)
The portability for the Commonwealth Seniors Health Card has increased from 6 to 19 weeks from 1 January 2015.
This means that holders of the card can travel overseas for up to 19 weeks before having their card cancelled.