Money Retirement ‘These cuts are savage’: A retiree’s letter to the PM
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‘These cuts are savage’: A retiree’s letter to the PM

malcolm turnbull
More than 300,000 pensioners will lose some or all of their payments in January. Photo: Getty
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Dear Malcolm,

You obviously do not understand what is happening with the impending savage cuts to the age pension.

You have joined the chorus of your ministers condemning the recent automated phone call sponsored by the Australian Council of Trade Unions, claiming they are scaremongering “on the eve of Christmas”. That couldn’t be further from the truth.

The caller says, “I’m worried about my dad”, and goes on to explain: “He’s a retiree on a fixed income and really needs the pension just to get by each week.”

Newly-minted human services minister Alan Tudge has the unhappy task of sending out the letters. Photo: AAP
Human Services Minister Alan Tudge has the unenviable task of overseeing the cuts. Photo: AAP

This is perfectly true for many thousands of Australians. It is not scaremongering — it merely alerts pensioners to what may be about to happen to them.

Alan Tudge, the Minister responsible for Centrelink, displayed his ignorance when he called on Labor leader Bill Shorten to distance himself from the “disgraceful union campaign”, and went on to say on ABC radio that the changes would “rebalance the system” and that only pensioners with high assets would be “negatively affected”.

He, too, could not be further from the truth.

The changes unbalance the pension system and savagely reduce the pensions of homeowners the moment their total assets exceed the new exempt thresholds of $250,000 for singles and $375,000 for couples.

My attached chart shows that the current asset and income tests reduce the pensions of homeowners faster than their investments produce income so that, when their assets reach the cut-off points, the total income is significantly less than the full age pension.

These figures include the personal possessions as well as the life savings of pensioners. Their part-pensions are absolutely necessary to cover their daily living expenses.

In an effort to belittle homeowners and justify their harsh treatment, they are often described as living in multi-million dollar mansions. Whilst this is true of a few pensioners, it must be remembered that the Social Security Act says that a pensioner is a homeowner “if they are living in … a campervan, caravan, transportable home or boat in which they have reasonable security of tenure”. There are thousands of pensioners in this situation.

Singles with $300,000 additional assets and couples with $450,000 additional assets lose their entire pensions ($22,804 per year for singles and $34,382 per year for couples).

‘Not enough warning’

Centrelink has failed to properly inform pensioners about the savage cuts, so many are waiting with bated breath for their January payment to learn their fate.

pensioner-letter

Mr Tudge recently claimed his department had clearly communicated the changes with pensioners, saying they had been “forecast for 18 months” and that affected pensioners had received two notifications: a warning their pension might be impacted, and then formal notice if it would be.

In fact, the first letter, sent in October, went to only some pensioners telling them about the changes “which may affect you”.

All pensioners should have been told precisely how their pensions were going to be affected, based on the current records held by Centrelink.

Also, not everyone who received an October letter has received a confirmation letter in December, so many are left wondering if they are unaffected or whether their letter has been delayed.

‘We can’t get through’

The December letters tell pensioners they must inform Centrelink “as soon as possible” of any changes to their financial circumstances.

centrelink
Mr Parry says the phone lines are clogged. Photo: Getty

Any changes will, of course, change the amount of pension. I attended a free seminar on November 8 and we were told by a Centrelink officer that we should be quick to contact Centrelink because there was a backlog of four months in dealing with correspondence and it was near impossible to make phone contact (as was suggested in the October letter).

There has been a serious breach of natural justice. Pensioners have not been fully informed of their rights.

I recently tried phoning the nominated Centrelink phone number to discuss a query. A financial officer answered after 29 minutes, then after spending 10 minutes getting nowhere I was advised to go online. After 10 minutes on the Centrelink website describing my query the screen suddenly told me “time has expired” and I was disconnected.

Abbott’s broken promise

Former prime minister Tony Abbott successfully delayed the compulsory super increase when he was in power. Photo: Getty
Former PM Tony Abbott promised no pension cuts, then legislated them. Photo: Getty

Malcolm, the most deplorable fact is that no mention is being made of the solemn promise made by Tony Abbott on the eve of the 2013 election that, if elected, “there will be no changes or cuts to pensions”.

Mr Abbott was supported in that pledge by Joe Hockey, who became the Treasurer, and Scott Morrison, who became the Social Services Minister in December 2014 and the Treasurer in September 2015.

You say: “Our older Australians should be respected, not deliberately frightened for political gain.” Don’t you also agree they should be treated honestly, with promises delivered faithfully?

What the PM must do

Malcolm, if you really want to show true leadership and earn the respect of all Australians, you should immediately admit Mr Abbott’s legislation was a blatant breach of an election promise and grossly unfair.

You should give pensioners a real Christmas present by announcing you will honour Mr Abbott’s promise by deferring any change until the new Senate has the chance to hold an extensive enquiry.

The first payments slashing age pensions do not occur until January 17 so there is still ample time to tell Centrelink to hold off.

Robert Parry is a retired chartered accountant living in Victoria. This letter has been emailed to the Prime Minister’s office. The published version has been lightly edited for length and clarity.

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