(Transcript from SBS World News Radio)
Wealthy pensioners are in the federal government's sights with a tougher assets test likely to be approved by cabinet.
Social Services Minister Scott Morrison has all but confirmed that tighter rules on the assets senior Australians can own and still qualify for a part-pension will be announced in next week's budget.
The measure will replace last year's unpopular budget plan to adjust the way pension increases are indexed by linking them to the cost of living.
Amanda Cavill reports.
(Click on the audio tab above to hear the full report)
The Social Services Minister, Scott Morrison, says the Government is considering scrapping its plan to change pension indexation, instead looking at tightening the assets test for the part-pension.
The new pension assets test, expected to be announced in next week's budget, would scale back payments to older Australians who have substantial private wealth in addition to their family homes.
Mr Morrison has told the ABC it is premature to comment on the issue, but it is not out of the realms of possibility.
"What's important though is that I mean we've been in discussion now for months and months and I've said all along that if a measure was to come off the table, like CPI indexation for the pension, then new measures would have to go on and they're exactly the discussions we've been in. And the issues of eligibility have been widely canvassed with stakeholders, including with my own backbench colleagues, and the crossbenchers as well."
The anticipated changes will not change the test-free status of the family home, leaving most pensioners unaffected.
But a lower "other assets" test threshold will trim the part-pension for an estimated 200,000 seniors.
In 2007, a more generous pension taper rate was introduced, halving the assets test so that pension recipients lost $1.50 per fortnight, rather than $3 for every $1,000 of assets above the threshold.
Mr Morrison says that decision has added one billion dollars a year to the welfare budget.
A couple now can own $1.15 million in non-family home assets, and a single person $775,000, and still qualify for a part-pension.
Opposition Families spokeswoman Jenny Macklin says Labor is yet to see the details of the proposal.
Ms Macklin says Labor is prepared to consider the changes as long as the original indexation proposal is dropped.
She says the government needs to abolish tax concessions to people who earn high incomes from superannuation.
"We do want to have a sustainable retirement income system and we want the whole system, superannuation and the pension, to be there for people in their retirement, to make sure people can have a comfortable retirement as they age. We have recently announced that we think that the concessions that go to very high income earners who have large superannuation accounts should be reduced. We certainly don't want to see the sort of cuts to pension indexation that Tony Abbott and Joe Hockey announced in last year's Budget."
Independent Senator Nick Xenophon says he's open to the idea of an assets test.
Senator Xenophon says he thinks it should be possible to take a bipartisan position on the issue
"If you have a careful tightening of the asset test, while keeping the current basis of increases in the pension based on weekly earnings, that would be a much fairer and much more sustainable system. That's why I'm prepared to look at this. I'd like to think this is an issue that both sides of politics should embrace because, after all, if the Government is talking about going back to a system that was in force under the Keating and Howard eras, when there was little controversy about that, I think we should be looking at that."
The Greens say they will also consider the plan.
But Greens spokeswoman Rachel Siewert says there will need to be an independent review into retirement incomes before a decision is made.
"The Greens will be carefully reviewing the government's proposals to change the pension. We welcome the fact they've seen the light and look like they'll be dropping the unfair indexation of pensions which would have seen a cut to pensions hitting on the most vulnerable Australians. We will be reviewing this next proposal very carefully but we want to see a retirement income review. So we will be carefully reviewing the Government's current proposals to see what impact they will have, to see if there is any unintended consequences."
The government has repeatedly said it will make no changes to pensions or superannuation until after the next election, due at the end of next year, so any changes are not likely to come into force until 2017.
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