Social Services Minister Scott Morrison has laid out the case for changes to the age pension amid growing speculation the Government will tighten access for wealthier retirees.
The Government has failed to win over Senate support for its plan to change pension indexation to inflation, and instead appears to be moving towards lowering the assets threshold for the part-pension.
Last month, Mr Morrison said he was “seriously considering” the option, but today he refused to confirm newspaper reports that Cabinet had settled on the plan.
“We still haven’t had our final Cabinet meeting as yet so I think that’s all a bit premature,” Mr Morrison told Radio National.
“But there’s been no secret about the fact that we’ve been in a conversation now for some months that has been widely reported on.”
Mr Morrison said he has been consulting with crossbench senators about alternative savings to the pension system.
“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,” he told AM.
“The issues of eligibility have been widely canvassed with stakeholders, including with my own backbench colleagues and the crossbenches as well.”
He reiterated today the family home would be exempt from any new assets test.
Labor families spokeswoman Jenny Macklin said the Government had broken its promise from the last election not to make any changes to the pension.
Ms Macklin said no changes should be made to either pension indexation or the assets threshold.
“I just say to Tony Abbott, you promised there would be no cuts to pensions, no changes to pensions — he should keep his promise,” Ms Macklin said.
Under the current rules, retired couples who own their home and have other assets up to $1.15 million would still qualify for a part-pension.
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 said those changes were introduced when the budget was in a much better position.
“It is true to say following with the changes to the pension taper rates in 2007, when there was $20 billion surplus and $40 billion in the bank, that they were changed and halved and that added to the cost of the pension by about a billion dollars a year,” he said.
“These are measures that have been part of those discussions. But we’ll make further announcements on those when the matters have been finalised.”
Budget will be worse than first thought, economists warn
Economists have warned the Federal Government’s budget deficit will be worse than first thought.
Deloitte Access Economics is predicting this year’s deficit will be $5.5 billion worse than predicted a year ago, and will be close to $45.9 billion.
Mr Morrison said the Government would address the deficit while ensuring they helped those who are most in need.
“We’re looking to ensure that the pension is sustainable, that it lives on and that we address the fiscal challenge the country has,” he said.
“At the end of the day, the welfare system is there for people most in need. It’s there as a safety net, it’s not there as an incentive system.”
Mr Morrison acknowledged there was a problem with the current pension rules.
“One alternative that we’re not considering is doing nothing,” he said.
“The Labor Party thinks they can do nothing to ensure the sustainability of the age pension.
“In fact they don’t think there’s a problem that it’s growing at over 6 per cent a year, and [that] it’s $42 billion and it’s going to grow to over $60 billion in the next 10 years.
“We’re not going to walk away from that challenge, but we’re going to do it in a way that’s fair, which is consultative and which is reasonable and which is measured.”
Ms Macklin said rather than making changes to the pension, Labor would look at making changes to superannuation tax concessions.
“We think that the concessions that go to very high income earners who have large superannuation accounts should be reduced,” she said.