The government is pushing to reduce the age pension by hundreds of dollars a year as part of its omnibus savings bill, angering welfare advocates.
A bill tabled in Parliament on Wednesday proposes to get rid of the energy supplement, which was put in place by Labor to compensate for the carbon tax.
It is currently worth an extra $366.60 per year for a single pensioner and $551.20 for a couple ($275.60 each). Anyone who received the supplement for the first time after 20 September 2016 will be cut off on 19 March 2017. But it won’t be removed for recipients who qualified before 20 September 2016.
A spokesman for the Australian Pensioners and Superannuants’ Federation (APSF) said the supplement should not be “stripped” from retirees.
He argued the government’s safeguard mechanism, a part of the Abbott-era Direct Action Plan that came into force on 1 July, will continue to drive up energy costs and is “very similar” to Labor’s abolished emissions trading scheme.
The scheme imposes emissions caps on about 140 of Australia’s biggest carbon emitters, including electricity generators. Companies that exceed their limits must buy credits from lower emitters.
“Obviously that’s going to lead to price increases in electricity, and that is our main argument for wanting to keep the energy supplement, and to preserve the indexation mechanism that goes with it,” APSF policy coordinator Paul Versteege told The New Daily.
Mr Versteege also argued that pensioners often incur higher energy costs than the average Australian, and struggle to pay their bills.
“Pensioners tend to be at home a lot more than people who work, so they use a lot more power than a normal household or equivalent. There are a lot of people who are simply not able to afford their power bills and get into trouble.”
A coalition of welfare groups, including ACOSS, wrote a letter to Prime Minister Malcolm Turnbull on 19 August protesting the removal of the supplement, which will also affect the unemployed.
ACOSS chief executive Dr Cassandra Goldie said the letter has received no response.
“The removal of the energy supplement will mean a loss of $7 a week for a single pensioners,” Dr Goldie told The New Daily.
“Many pensioners already struggle to make ends meet, particularly single pensioners in the private rental market. The supplement should be retained for all payment recipients.”
A spokesperson for Social Services Minister Christian Porter defended the proposal by saying welfare recipients should not be compensated for a non-existent tax.
“As the carbon tax was abolished by the Coalition government, future entrants to the welfare system will not receive compensation for a tax which no longer exists,” the spokesperson told The New Daily.
“Had the carbon tax not been repealed it would have caused long-term increases in electricity prices which was why the compensation was thought necessary. As the carbon tax no longer exists, the carbon tax compensation is unnecessary for new recipients.”
The government says the savings from the supplement will be used to fund the National Disability Insurance Scheme.
The Social Services Minister also introduced a savings bills on Thursday that will, if enacted, reduce the length of time pensioners can claim their benefit while living overseas from 26 weeks to six weeks, and also remove the pensioner education supplement and pensioner education entry payment.
Greens pension spokesperson Senator Rachel Siewert said the removal of the energy supplement “staggers” her. She also opposed the changes for overseas pensioners.
“It still staggers me that the government is happy to chip away at payments to some of the most vulnerable members of our community to plug up the budget. Time and time again we have said that there are better ways to balance the books,” Senator Siewert told The New Daily.
“We shouldn’t be cutting the energy supplement as it reduces support for those on income support and it is mean to cut the amount of time that pensioners can spend overseas as they will no doubt have saved in order to take such a trip.”