- Assets test to be tightened for wealthier pensioners
- Part-pension to be increased for those with relatively modest assets
- Access to Commonwealth Seniors Health Card to be retained
- Read our full coverage of Budget 2015-16
The Abbott Government may be left with a budget blackhole as wealthier pensioners restructure finances to avoid $1 billion worth of cuts.
The government is considering dumping its unpopular proposed changes to pension indexation in favour of a tighter test on assets, as well as higher payments for pensioners with less wealth.
The measures - expected to be laid out in Tuesday's budget - are likely to impact 80,000 of the 2.4 million Australians on the pension, with wealthier recipients to receive a lower rate than their current payment.
But the proposed savings may not eventuate, according to one researcher from think tank Centre for Independent Studies.
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Research fellow Simon Cowan told SBS that the government was unlikely to receive the $1 billion of proposed savings.
“I think you’ll find pensioners will restructure their affairs to avoid losing the pension, by transferring superannuation assets into housing assets,” he said.
Mr Cowan said further action was needed to address the unsustainable system.
“With 2.4 million pensioners and four out of every five people of retirement age on the pension, there’s a significant cost to society of the pension going forward,” he said.
“It’s currently $42 billion. In a few years’ time, it will be $50 billion. In 30 years’ time, it will be $150 billion. So the government really needs to get on top of this now.”
Mr Cowan said the government should move to include the family home in the asset test, a proposal put forward in his recent paper.
'In 30 years’ time, it will be $150 billion. So the government really needs to get on top of this now'
He said without the inclusion of the family home, the system would remain unfair and the government would be losing a potential $14.5 billion a year in savings.
The proposal has been rejected by both the government and the opposition, as well as interest groups such as National Seniors Australia.
The group’s CEO Michael O’Neill told SBS that the family home was “sacred”.
“It’s also an important part of their emotional attachment to their local neighbourhood,” he said.
“We’re pleased that both the government and the opposition have indicated that the family home will remain excluded from the assets test.”
Mr O’Neill has welcomed the potential changes to the pension expected in the budget, saying the outcome would be preferable to the previous indexation proposal.
“[The] changes to indexation would impact on everybody who was on the pension,” he said.
“They now get parked. The new proposals are more likely to impact on people with substantial assets over $800,000, excluding the family home.
“I think that’s more likely to be a more preferable outcome.”
'It’s all very well for the government to say people need to get a job, but the jobs just aren’t there'
Mr O’Neill said there were concerns however regarding employment measures to encourage older people to remain in workforce.
“I would hope there would also be some activity around supporting skills development,” he said.
His concerns were shared by St Vincent de Paul Society, whose CEO John Falzon said that there may not be enough positions for older jobseekers.
Dr Falzon said across the entire unemployed and underemployed population, there were effectively 13 job seekers competing for every one job position.
“We’re certainly not opposed to participation in the workforce where that’s appropriate and possible, but we hate seeing people being blamed for not being able to find work when work isn’t there,” he said.
“It’s all very well for the government to say people need to get a job, but the jobs just aren’t there.”
'For something to come off the table, like indexation, something has to go on'
Social Services Minister Scott Morrison has not specifically confirmed that a tighter assets test will be in the budget, but said the government had been openly discussing options.
"I've been consulting widely with stakeholders and crossbenchers and backbenchers within the government," he said.
"For something to come off the table, like indexation, something has to go on."
Opposition Leader Bill Shorten flagged Labor's support for the measure, but wants to see the detail.
"Labor has been up for a sensible discussion about means testing," he said.
With AAP.
