Tuesday, June 23, 2015

Strange days: "New Matilda" agrees with the Abbott government

They have overcome their chronic Leftist rage long enough to see that the Abbott government really is trying to be fair.  I can rarely read much of "New Matilda".  Wading through all that rage is too depressing for a cheerful soul like me.  So am pleased to find something sensible and positive for a change

Last week, Social Services Minister Scott Morrison said something rather unusual.  “I commend the Australian Greens, and their new Leader Senator Di Natale, supported by Senator Siewert, for their constructive engagement with the Government,” Morrison wrote in a media release.

Did you read that right? Was Scott Morrison commending … the Greens?

Yes, he was. Morrison was talking about the government’s latest move on pension reform: a change to the way the pension is tested. As a result of the changes, about 170,000 mostly poorer pensioners will receive higher pension payments, while more than 320,000 wealthier pensioners will be negatively affected. Perhaps 90,000 Australians will lose their payments altogether.

The pension move saves the government $2.4 billion over four years. It also gets the Coalition out of a tight spot. Joe Hockey’s horror 2014 budget had foreshadowed a big cut to pension indexation, reducing all pensions inexorably over time.

Like so much of Hockey’s first budget, the pension indexation crimp was abandoned last year in the face of widespread community opposition to the measure. The new Liberal-Greens deal on pensions replaces that measure, but still saves the government some money.

The decision by new Greens leader Richard Di Natale to strike a deal with Morrison and the Coalition has drawn considerable criticism. Labor has launched a stinging attack on the compact, arguing it leaves many retirees on middling incomes worse off.

“The Greens and the Government have done a deal to sell out pensioners,” Labor’s Jenny Macklin thundered last week. “While the Government would like to portray this measure as only affecting millionaires, the reality is this pension cut is an attack on middle Australia.”

The Greens deny this. They say the current reform will make for a fairer pension system. They also point out it is longstanding Greens policy.

“More Australians who don’t have the advantage of a healthy super balance will be able to access a full pension when we undo John Howard’s tampering with taper rates,” Greens Senator Rachel Siewert said last week.

The Greens have put out a fact sheet that details the government modelling of the pension changes. This shows that the pension reforms do indeed help those at the lower end of wealth spectrum. But they also affect many pensioners in the middle and upper tiers.

So who’s right? The University of New South Wales’ Rafal Chomik has crunched the data... As you can see, the new pension test cuts in at a higher initial figure, but then tapers more quickly.

What this means is that some senior Australians with fewer assets will receive higher pension payments. Some pensioners with a lot of assets will lose their part-pension altogether.

In other words, the changes are progressive, even as they punish pensioners with higher assets. They help those in the lower tiers, and exclude more of the wealthy from accessing it.

For pensioners with very little, the changes will have no impact. There are nearly a million pensioners who neither own their home nor have more than $300,000 in assets. These pensioners will not be affected.


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