Does this government have a short-term memory deficit? That comes to mind when yet again Mr Hockey has been let loose to find savings from pensioners. He now has an ally in Scott Morrison, who seems out to prove that stopping the boats was a fluke.
Mr Morrison said a number of times that the proposed change to pension indexation remained on the table until other measures to screw pensioners could be found to replace it. This, of course, is an embellishment of his language. But that is exactly what he meant, as shown by the measures which are apparently (according to May 7 news reports) contained in the coming budget. These measures will remove or reduce payments to 327,000 people currently on part pensions. Let’s count how many votes lost that represents.
If bringing into account the family home is ruled out, as it has been by both sides of politics, then no one on a part-pension is well enough off to afford a cut.
Under the current arrangements, pensioner couples lose any part pension when their assets outside of the family home exceed $1.15 million ($1.298 million for non-home owners). At three percent investment return (for a risk-averse pensioner couple) $1.15 million brings in $34,500 per year and $1.298 million brings in $39,000. Luxury living indeed and ripe for pillage by a government that apparently intends to provide extra money (that it doesn’t have and will have to borrow) for child care, early childhood education and small business taxation relief.
Reportedly, by reversing the change to the taper rate brought in by Mr Howard, the part-pension cut-off point for couples with a home will be reduced to $823,000 ($1.023 million for non-homeowners). Howard’s, well-made change, halved the taper rate at which the part pension is reduced, from $3 to $1.50 per fortnight for every $1000 in assets owned above a prescribed threshold.
Pensioner couples with more than $452,000 in assets (if they own their home) and those with more than $699,000 in assets (if they don’t) will be made worse off. Apparently the blow is to be softened. Those at the lower end will get a little more money. This does not save the strategy.
Let’s be clear, there is no room at all to move for any of those on part pensions; particularly when interest rates are so low on the interest-bearing assets held by pensioners. Some people (conservatives notably among them), might say, well, let them sell down their assets. The answer to that is that undoubtedly many are already running down their capital, rather than live on hard tack. Some pensioners might also be concerned about their capital running out if they were to live for a long time, rather than doing the decent thing by dying early.
When the budget is in deficit, and debt is building, a government has no spare money to spend on anything new. But, if it is reckless enough to throw yet more borrowed money around it should not mitigate that extravagance by taking money from pensioners; in this case, from those who’ve saved enough during their working life to save taxpayers money by ‘requiring’ only a part pension.
Leave the morality aside; it is political poison. Watch for the examples of hardship to come out after the budget and take the air, yet again, from the government’s post-budget sails.
Fortunately for the government, the cross-benchers stymied Hockey’s first pathetic attempt to perniciously impoverish pensioners through the device of replacing the current indexation arrangements. You might also recall Morrison’s mooted compromise of having three-yearly reviews by some independent panel? You don’t? Well, that’s because it was consigned tout de suite to the dustbin of silly ideas.
The cross-benchers, even the Greens (be afraid), have made soundings that they might not be so kind this time around; they might support the government. I doubt it , actually, when it eventually comes to the point. But, even if the enabling legislation fails to pass, the government will be stuck with its smelly carcass. Maybe you can get away once with trying to screw pensioners. Twice is a triumph of political hopelessness over painful experience.