Push to increase Age Pension

There is no doubt that a media driven campaign to whip up concern about the possibility of the non-existent Carers Bonus being ‘cut’ in the upcoming Budget played a key role in the government’s decision to announce a few weeks ago that a ‘one-off’ payment of a Carers Bonus will be paid again (for what will be the fifth ‘one-offtime in a row). The Canberra Times’ Peter Martin outlined in detail just how shonky the campaign was against the alleged possibility of ‘scrapping’ the Carers Bonus. 

Having given themselves a pat on the back for getting a win for carers using a publicity campaign based on a false premise, it looks rather like the mainstream media are lining up for another pre-Budget campaign, this time pushing for an increase to the Age Pension (which currently sits at $546.80 a fortnight). 

Now there’s no doubt that many people on the Age Pension are struggling enormously, as a recent Senate Committee report highlighted, and a move to increase the Pension would be very welcome for many (even though one shouldn’t be blind to issues that might arise from doing so in the context of an economy facing inflationary pressures and an effort to cut growth in government spending).  However, singling out the Age Pension ignores people on other pensions who are struggling just as much, including the above-mentioned carers on Carers Payment, and people with significant disabilities on the Disability Support Pension

The payment rates (as well as things like income tests) for all these pensions are generally aligned. Increasing the Aged Pension in isolation from other payments will create one more anomaly amongst an already over-complicated welfare system. Of course, we could push up the basic pension rate for all these groups – something I’d sure few people would oppose in principle. But the cost of course would be many times greater again.

The other problem with just pushing up the base rate of the Age Pension is that, while many people on this Pension are undoubtedly facing major hardship, not all of them are. The housing affordability crisis means some of those who are renting their home or are yet to pay off their mortgage are in serious trouble. But many of those who own their home outright are not in such difficulty.  The income tax concessions for older Australians also mean that some people can be doing relatively well whilst still claiming part Age Pension.  I’m sure most of these people are more deserving than plenty of others, but my point is that just giving across the board payment increases in response to populist and over-simplified media campaigns – as we saw with the campaign on the carer’s bonus – is not necessarily a good way to get the most effective outcome for those most in need (or very good economic management for that matter).

The Senate Committee has it right in recommending a broader examination of all the factors, including the adequacy of Rent Assistance, for people receiving the Age Pension, rather than taking the easily populist option of calling for an across-the-board rise in the base rate.

I don’t want to complain too much.  The mass media will always want to run populist campaigns from time to time as a way of generating stories and kudos for themselves, so I’d much rather they do it to get more assistance for people like carers and aged pensioners, rather than some of the other topics that been pushed in the past, like promoting tax cuts for the rich or urging the government to start a war or running law and order beat-ups or vilification campaigns against vulnerable minorities.

However, governments and politicians are often rightly criticised by media commentators for acting in a kneejerk and irresponsible way when they make decisions based on political pressure or what might be popular rather than what is good properly thought through policy.  We can hardly expect governments to take rational, evidence based decisions if the media also want to behave as players and help create those political and public pressures in the first place.

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27 Comments

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  2. The standard package of assistance to single age pensioners is the equivalent of $571.83 a fortnight. They also get concessions which are quite valuable, but so variable in amount that it’s hard to put a $ figure on them. For an age pensioner couple, the amount is $938.63 a fortnight, which is actually more than the take-home a person on full-time minimum wages gets.

    That’s not to say anything about the merits of the case for an increase, just to put the numbers on the table.

  3. As a Disability Pensioner who has worked the last three days,earning nothing,2 days on a potato harvester and today in a shed,for rent forward,I say when I saw my last cheque,I was only slightly less angry,when it went over $500.00 under Howard the $54,000 man today,for governing.The latest was a staggering $600.00 figure,as another $50. on top of that would of rounded it off in $ss.I would rather see it going down,as it remained a valuable currency,this cheque represents a more costly failure of governance.Its frightening..when I look back to my first dole cheque..how the dollar has lost all sense to me of value.As we march into Globalism lead by morons afresh with its invigorating sense of participation,what the aged pensioners get is to see their values shaken completely,and ,what does the pension value mean after that!?The disgusting Coca Cola drink..what is it worth now!?And a hip replacement operation,if you payed cash!? There maybe many aged pensioners with opinions that still offend me,but what they get,isnt the last remnants of the lucky country.So I dont know if the dollars are that important,as one can see the scuttling of even the library service,in N.S.W.If someone asked me would I rather be in paid employment,I wouldnt know how to answer,because of the way employment is set-up now for the skullduggery of investment economics.

  4. The poverty line that’s recognised is approx $460 pw,so I can’t see how $570 is perceived to be OK,and spog “For an age pensioner couple, the amount is $938.63 a fortnight, which is actually more than the take-home a person on full-time minimum wages gets.” The magic word there is a”person”?Are you really suggesting,that just a bit more than one person receives is OK for a couple?Or the opposite?Pointing out how much of a pittance it is?
    Thanks to Howard,he changed the age of women to be on that pension to change,so that I’d have to wait until aged 63 instead of 60.Also,until this yr people on pensions apart from the aged pension didn’t get the lump sum each yr.I’ve received the 1st one and I’m on a DSP.The fact is,that the pension is buying less today,while everything has increased quite a bit.I heard Bob Brown advocate a $30 or $60 pw increase,and recently heard someone say,that $100 pw is needed.
    I find it quite amazing,& infuriating,that people on $100,000 or more per yr think it’s OK for us to be on less than 1/4 of that.Do they think we go to a different supermarket,that’s designated just for those on a low income.That happens in Venezuela,but not here.We pay the same price for petrol etc& the assistance with utilities is appreciated,but electricity & gas are increasing frequently it seems. I pay more for the service fee for gas,than the amt of gas used,even in winter.(I don’t have gas heating-YET)That’s another point.It’s virtually impossible to save for a frig or gas heater for example.They’re supposed to last forever,when everyone acknowledges that they’re designed to have a relatively short life.I’m sure my 15?20?(kindly given to me)yr old frig is costing more to run,than a newer one?More greenhouse gas emissions too I suspect!Can only get loans from ’sharks’ with huge interest charges.Impossible!

    I’m very lucky to be in public housing.I don’t know how people cope paying market rents – even with a bit of government assistance.

  5. Don’t forget Naomi the only way people get pensions is for people earning whatever be it 50, 100, or 500,000 becasue of producitev work that increases welath which can be redistributed as taxes.

    If you dont want it that way chuff off to some joint were everyone wallows in poverty.

    Oh by the way it’s a bit hypocritical to take all the support from the country that is such a nauseating and sickening and vomit inducing world pariah.

  6. Naomi, the last released Henderson Poverty Line has the single pension as being above the poverty line, even WITHOUT taking into account the value of concessions. Maybe you are using a different poverty measure?

    I put the reference to minimum wages in because people often measure payment rates against wage rates. Pensions themselves are benchmarked against 25% of Male Total Average Weekly Earnings.

    In your case you should find out the market value of your rental and compare it to what you are actually paying. The difference is a further payment you are getting from the taxpayer. I can appreciate you might not think it’s a great deal, but if you think about how much people have to actually earn to pocket the amount you get in-hand (including concessions and rental subsidy) you might have a slightly different perspective.

  7. I wonder how many people are aware that people under age 65 living on Disability Support Pension pay tax at a much lower threshold than age pensioners or sole parents – even if they are sole parents as well!

    A single person on DSP living with parents and having no Council rates, household maintenance costs or rent to pay, gets the same amount as people who are independent.

    Here’s something else to think about. People over 60 can get a Seniors Card and use it to get concessions on public transport, even if they and their partners are both working full-time jobs.

    Maybe someone else can tell us what other perks are involved with the Seniors Card.

    Phil:

    I really liked your comment about “the skulduggery of investment economics” in relation to employment.

    The projected -4% “return” on superannuation for the next financial year sounds like theft of the Principal to me.

  8. Lorikeet – the tax thing is odd, isn’t it. DSP for people under age pension age is not taxable, and making it taxable is something the DSP lobby has resisted. However, the fact that it’s non-taxable means they miss out on the pensioner rebate.

    “Senior Australians” have a higher tax threshold, not just age pensions. So a DSP recipient who is aged 65 also gets the higher threshold.

    As far as sole parents go, your comment is only true where the youngest child is under 8. After that sole parents get Newstart Allowance, and the tax threshold is lower.

    July’s tax cuts might change some of these relativities. You’ve made me curious so I might check it out.

    The seniors card has an income test, so whether they can get the card will depend on how much your two full-time workers are earning. Two full-time workers can also get age pension and a full-time worker can also get a pension as a sole parent. It’s the amount of money earned that is the issue, not whether the work is full-time.

  9. ken”Oh by the way it’s a bit hypocritical to take all the support from the country that is such a nauseating and sickening and vomit inducing world pariah”.
    Oh I see,if I receive a pension I should not complain about anything the govt or anyone else says or does!Well,that’s one view of living in a so-called democracy I suppose!Who pays your income & what gives you the right to contribute,argue,criticize?Andrew is paid by tax payers too,does it include him as well?Or is this just a class thing-against the lowest paid in the community, or a selection process, by your standards,of course?You’ll be the decider?We’ll forget about the years I was in the work force and contributed to the economy,or the yrs of voluntary work I did that cost me money,or raising 3 adults who are now paying tax!Or the fact that I’m disabled due to the PROVEN culpability of my employer?Perhaps by your calculations of peoples’ worth,you subscribe to the ‘little white pill philosophy’.Talk about being chauvinistic,unjust & judgemental with a high? degree of superiority?Try living with a high degree of pain every day all day for 24 yrs!

    spog-you still have 2 people living for 2 wks on an amt for one working person!
    lORIKEET-Apart from GST & tax via petrol,what taxes do people without any other source of income pay?how?I suggest people try living on it.I don’t think that people with $40-60,000 a yr income should get free licence or no rego payment only Greenslip.Apparently those only entitled to $1 pension pw get entitlements like I do-not right!People on full pensions only should get full concessions,extra money go to them-not just me,of course!I’ve heard that people paying full rent etc are thinking of suicide,unable to manage.Ken would probably applaud that solution!

  10. Naomi:

    If the government did what you want, there would never be any incentive for people to save or be self-supporting.

    As for Ken’s comment, I would give anything to be able to work at a full-time job again. Perhaps if he suffered pain every day, with accompanying social isolation and income restriction, he would be more compassionate.

    spog:

    If you are on DSP and have some income from investments, you get hit by income and assets tests, no Council rebates apply, and the taxman hits you at a much lower threshold than a fully able-bodied sole parent with a child under 8, even if you have dependent children of your own.

    You have to fill out the taxation forms and request a Low Income Tax Offset just to be treated equally, even though you don’t have an equal ability to work. I don’t think it is fair.

    I don’t think ANY pensions should be taxable. To my knowledge they aren’t, unless you have income above a certain amount i.e. the other income is taxed.

    Most people put their funds into superannuation, the income from which is not assessed by Centrelink, or Taxation in the interim.

    My concern is whether or not ANYBODY is going to get their super back, or if ANY income is going to be earned on it in the coming years. A minus score of 4% has been predicted for the coming financial year.

    Look at who is in charge of most of the superannuation funds.

  11. I actually quite agree wth you Naomi. Of course you are entitled to criticise and of course eevry one has contributed in some way – ackowldging this is fine. So lay off Andrew for criticsing overseas as being hypocritical.

  12. You watch the same Murdoch tabloids squeal like stuck pigs if the disabled and single parents get the same as the oldies.

    Some of those oldies have very expensive homes and other assets that are not counted when their pensions are calculated and saying people cannot live reasonably comfortably on the pension is a lie really.

    Although I liked the extra $15 per week I got last week I have to say that as I don’t run a car, drink or smoke and have very cheap rent I probably don’t need it.

  13. Naomi @ 8 – I don’t have 2 people living on the money for one. You are assuming that the minimum wage is based on one person’s living costs. It isn’t. It used to be based on what people thought was reasonable for a man with a dependent wife and some kids. That was a long time ago, and it’s value has certainly declined since then. However, I’m not aware of any attempt to link it to a single person’s requirements; it’s just an amount.

    Lorikeet @ 9 – your statement about the effect of investment income is true for all income support payments, not just DSP. Whether the council in your area is more selective about who gets rate reductions is their call, I guess, however the Pension Concession Card (that DSP, age pension and sole parents get) is issued on the same basis to all pretty much all pension types.

    You are right about the tax thing, but the July tax cuts will bring the income level at which tax becomes payable for DSP and sole parents much closer together than now. And you don’t have to apply for the low income tax offset, except to the extent that you need to fill out a tax return to get tax payments back. It’s calculated for everyone based on their income, whether from earnings or investment income, so in that sense it is quite equal.

    As to whether pensions should be taxable – good question. However, at present they are, except for DSP paid to people under age pension age. Taxable pensioners do, however, get tax offsets that reduce the tax otherwise payable, mainly so that if the pension is their only income all year they don’t end up paying tax.

  14. Lorikeet#9-You fail to acknowledge one simple fact,that women of my age were part of a discriminatory rule,that denied then access to superannuation.As an employee of the NSW govt I didn’t have the luxury to be contributing to a super scheme.It’s was recently acknowledged,that women my age are impoverished not through any fault of our own.People wrongly assume,that super was an option for women yrs ago.To emphasise this point,women in the 1960’s who were employed by the Fed govt had to leave the workforce when they married.That happened only 40+yrs ago!It has nothing to do with encouraging people to save,the reality is,that it wasn’t an option for most of the yrs I worked from 1974 onwards.Having super now is compulsory,which is a great idea!In the meantime,unless people want enforced euthanasia, people in this rich country are entitled to live a dignified life!

    Ken-“So lay off Andrew for criticsing overseas as being hypocritical.”Excuse me Ken,I wasn’t criticising Andrew at all,I was challenging your statement about my not having the right to criticise due to my income derived from peoples’ taxes.Not bad!Twisting what I said around,and using it to make a pretty grotty & untrue statement.I was criticising YOUR paternalistic,patronising & ageist comment,that being the recipient of a govt income,I shouldn’t criticize govt policy etc!

    Marilyn#11-As I said,older citizens with assets plus a $40-60,000 annual income,shouldn’t be able to receive any pension.And people like myself,reliant soley on a pension should receive more,&those others shouldn’t receive the subsidies at all.I welcome the increase,& believe that I deserve it,I need it & I’m entitled to it!

    Ken,I took on my employer,my barrister,a concerted media attitude out to demean,deny & belittle my(our)claim for justice-and they lost!

  15. Naomi:

    My goodness! I didn’t know some pensioners were getting $40,000 to $60,000 per year. Could that be accurate?

    I didn’t “fail to acknowledge” anything. If you want to make a point, please don’t insult other people while doing it. Like you, I know very well what it is like to be on the receiving end of sex discrimination.

    Spog:

    In my area, you can’t get a Council rebate unless you receive a full pension.

    I had to apply for a Low Income Tax Offset at the end of the 2006/2007 financial year.

    I hope you are right about the changes, but it won’t make any difference to the fact that I’ll probably have to fill out forms and apply for a tax offset again this year.

  16. Naomi Cartledge:

    Back to literary form Naomi.

    paternalistic,patronising … nauseating and sickening and vomit inducing …. chauvinistic,unjust & judgemental … degree of superiority

    You left out “patriarchal

    Lorikeet: You really are against super’ aren’t you. Have you previously spelt out why so? For my part I’d prefer not to have politicians, beaurocrats and middle men in charge of my funds (yet meantimes my broker is due to lob on my doorstep).

  17. Lorikeet “I didn’t “fail to acknowledge” anything. If you want to make a point, please don’t insult other people while doing it.” You implied by your opening comment,that some people on a pension are that way due to not saving during their life,or perhaps contributing to super in the past.I pointed out that you didn’t acknowledge the past laws or opportunities or lack of them.That’s all!I didn’t insult anyone.On the contrary,Ken showed his true colours by using income,& who provides it,with a person’s right to disagree,hotly or in any other manner.I CERTAINLY WAS NOT HAVING A SHOT AT ANDREW,WHO I BOTH RESPECT & ADMIRE!I was making the point,that as a politician he too is paid out of the public purse.I fail to see anything insulting in either case,and can assure you that none was intended to either you or Andrew!

    Like you Lorikeet,I’d have given anything to have been able to have a job,full time or otherwise. I passed the entrance exam to Uni with my painful disability which was a horrific effort. I tried to do the course but had to stop as I was in too much pain with the physical requirements of driving there & doing the work! There are many people on DSP through no fault of their own.
    The fact is,that with no other income,either from savings,super,lottery wins etc,the pension is only a pittance,and in this rich country,it should be higher – unless we just pay lip service to our high standards as civilized people, particularly as its been acknowledged in the recent past,that some millionaires are in receipt of family benefits.
    I also spent many years,along with some siblings of fighting for,taking care of & generally seeing to my late parents.This is the path more women than men find themselves in today!

  18. Naomi:

    I agree with most of what you have said, but I do think that people should be encouraged to save and live within their own means, WHERE POSSIBLE, but there’s no real incentive to do it.

    Many elderly people get upset by being cut out of every available payment and concession, after they have been financially responsible all of their lives.

    By comparison, a relative of mine took his superannuation as a lump sum, gambled it all within 2 years, and then applied for a pension. He and his wife had to live off her pension, while he gambled his – quite a terrible situation. See what I mean?

    GZG:

    I have been suspicious as to whether or not people would ever get their superannuation back for the last 13 to 15 years, but it hasn’t been discussed on this blog.

    I think most of the financial market is controlled at a global level.

    My concerns have mounted quite a bit since hearing of the projected 4% loss on super this year.

    Added to this, a man on TV said he had lost $200,000 in what he thought was a safe investment with an international company backed by one of the “BIG 4” Australian banks.

    I think people would be wiser to put their money into property. Maybe that’s why there are so many investors in the property market already.

    I think it would be safer for us to consider the old maxim which said: “Don’t put all of your eggs in the one basket.”

    The financial market is completely corrupt.

    I think the government would prefer everyone to die without ever recouping superannuation or applying for a pension.

    We are certainly moving in that direction.

  19. Naomi@14 – from July 2008, single pension ceases to be payable when income reaches around $39,000, and for a member of a couple, around $65,500. These numbers are higher if the person is also getting rent assistance as part of their pension.

  20. I should have said that the figure for the member of a couple includes their partner’s, although I guess that’s fairly obvious.

  21. Lorikeet, people are “encouraged to save and live within their own means”. The government provides incentives to put extra money into superannuation which many people take advantage of. For some reason you seem to be opposed to superannuation, which is probably the best incentive to save as many people weren’t doing so already.

    As to the concessions, they are designed to help those in need, and therefore a privilege – not a right.

    As to your relative, people are entitled to do whatever with their money, be it gamble, drink or whatever.

  22. Muzz:

    One minute you say that people are encouraged to be responsible and save – and the next minute you’re in favour of them throwing money away.

    Your opinion also overlooks the possibility of people losing their superannuation. The money is generally tied up and untouchable, except in extreme circumstances.

    Another large company went into liquidation today, following hard on the heels of yesterday’s fiasco. Investors saw fit to withdraw the money before theirs disappeared as well.

    In this week’s local paper, real estate agents are also pushing investment in property more heavily than usual.

  23. You misread my post Lorikeet. I am not encouraging anything – rather I am observing people’s freedom.

    This freedom allows people to blow away their money on anything from booze to overseas holidays rather than saving it. And this makes superannuation a good idea; it forces them to save for the future.

    And yes, super funds can get into trouble, but that is not a fault of the concept. We also now have the freedom to choose our own super funds – which is why my money is in an ethical trust.

  24. Lorikeet.In any topic that’s raised,and the arguments put forward,there’s always the personal accounts that differ;there’s also about 2%of population who will abuse any benefit,but the topic here is the “push to increase the age pension”. I personally have difficulty in many of the lerks & perks to big business etc via subsidies to fossil fuel mining companies like bhp billiton who then boast of making $5 billion profit in 6 mnths only!There’s billions going out to companies that shouldn’t;conversely there’s many areas that should have been receiving more encouragement & active financial support like renewable energy sources for example.

    spog-I have a real problem with people with huge assets like a home,boat etc,& an income of even $39,000 getting a pension of the same amt as a person without assets except a car(a gift from a son)and household goods(not new).I also disagree that they get the same benefits such as free licence,utilities payments etc.I readily accept,that some can be assets rich but little to live on & this could be handled case by case. If there was a means test,then perhaps more could go to people totally reliant on a pension.It seems that govts reward wealth but punish total dependency-without any knowledge or appreciation of why?This really made me angry when Tony Abbott whinged about no increases this yr,and having to ‘survive’ on over $100,000 income?Poor little diddums!I thought he was going to announce where to post donations to?Didn’t he save anything in almost 12 yrs on his higher income?Politicians vote themselves an almost 14% increase in about 17 mnths-Howard’s was 3 times(2006) what I’m supposed to live on for 1 yr,and then just over twice in 2007?His & Costello’s ‘efforts’ insured them a combined $2 million when they retire,plus??

  25. Naomi:

    A person living on a DSP without dependent children can earn $132 p/f before pension is reduced.

    After that, Centrelink takes 40% of income from work and financial investments out of your pension.

    The amount of $39,400 being discussed here is not the income but THE ASSET LEVEL at which the 4% deeming rate changes to 6%.

    You can make $3432 per annum ($132 x 26 fortnights) before the income test is applied.

    Under the current deeming rates of 4% and 6%, the amount invested could be no more than $70,333 to receive a full pension.

    People living on a Widow Allowance face a much harsher income test ($62 p/f before payment reduces), and a Centrelink payment which is about $110 p/f less.

    I don’t know how anyone could live on that.

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