As the 2009 Federal Budget approaches, the fate of millions of pensioners hangs in the balance. The plight of aged pensioners in particular has captured the attention of the nation’s media. But in fact there is a broader crisis also affecting the disabled, carers, students, sole parents and the unemployed.
This paper is one last call to the Federal Government to enact comprehensive reform in the provision of pensions.
With only a few days to go, however, the findings of the government’s Pension Review have not even been made public. Indeed, upon calling the relevant help line, I was informed that the release of the Review’s report would only be released “at the Minister’s discretion” and indeed that it may not be released at all.
Meanwhile the circumstances I considered a few months ago in the Left Focus blog are still pressing and urgent.
The ranks of the unemployed are set to swell. The ABC has reported that the unemployment rate could rise to more than 1 million, or 8.5 per cent, in 2010. If the plight of aged pensioners is already an urgent matter of public interest, so too are the straits of the unemployed.
Nevertheless, while the Newstart payment for unemployed singles is $453.30 a fortnight, the single aged pension is $569.80. That’s a difference of more than $100 per fortnight. The National Welfare Rights Network has projected that a $30 increase to the Newstart and Youth Allowances would cost $800 million.
Assuming that these payments were brought “in line” with other pensions, after these had been raised by $30 a week, the cost would be in the vicinity of $3.2 billion.
This sounds daunting - but again - such figures must be taken in the context of an economy of over $1 trillion.
Wayne Swan is avoiding being “pinned down” emphasising the need for “responsible” financial management. There have been rumours suggesting that there will be a “scaled back” payment of an additional $20 a week for aged pensioners to pay for an increase to Newstart.
The Greens, in particular, have been concerned that pensioners of all types should not be divided against each other. Regarding aged pensioners and the unemployed, Bob Brown has suggested that it is a false dichotomy that we must choose “one or the other”.
In the context of a rising cost of living, though, there is a strong case for a significant increase in the base rate for aged pensioners, disability pensioners, carers, sole parents and also the unemployed.
Students, meanwhile, should also receive additional support so they are financially able to devote their full attention to study.
The argument for an increase in the base rate of all pensions: and an easing of means tests for those on meagre incomes is strong. Critically here there also needs to be additional assistance for the most vulnerable of all.
The Combined Pensioners and Superannuants Association (CPSA) has argued for a tightly focused assistance package for the 1.5 million pensioners surviving on full rate pensions. The CPSA’s proposal covers aged, disability and carers' pensioners. Such a measure, according to CPSA, would cost about $3.2 billion: minimal in the “big picture” of the Federal Budget.
The CPSA has also suggested the needs of sole parents be seen to - and has criticised the absence of their needs from the Pension Review.
Prime Minsiter Kevin Rudd, however, is proving to have insufficient flexibility in the face of the financial crisis. Still he is insisting that taxes remain steady - not increasing as a proportion of GDP. Furthermore his suggestion that $2 billion for aged pension reform is “a truckload of money” is deceptive when that amount is considered in the context of an economy in excess of $1 trillion.
When the Greens suggested a $30 a week increase to pensions my immediate reaction was that surely such reform is insufficient to lift vulnerable Australians out of poverty, and keep pace with a cost-of-living “spiraling out of control”.
This remains the case - even if the Greens have taken a less equivocal position than Labor.
It is most important that we have formulae for calculating all pensions, which automatically adjust according to the cost-of-living; and which lift all Australians out of poverty.
The current formula for aged, disability and carers' pensions is 25 per cent of Male Average Total Weekly Earnings (MATWE). Given cost-of-living pressures, it is reasonable to suppose that this ought to be lifted to at least 30 per cent of MATWE.
It is critical that such adjustment includes the unemployed - who cannot be blamed for the world recession, and the resulting fall in employment levels.
This would lift such pensions (at the full single rate) to about $17,537 a year: a significant improvement - but still short of the CPSA’s figure of $19,399 (which they calculate as being “low income”).
The Rudd Labor Government’s pension reform agenda must begin by addressing the needs of the most vulnerable: those struggling on the full pension rate with no other source of income.
The CPSA’s proposal for an $80 a week supplement for these people should be implemented by the Rudd Labor Government if it is serious about fairness. Thereafter, the government needs to provide a fair means-testing formula that provides enough for all pensioners - that they are raised out of poverty.
To lift most pensioners out of poverty, the full single rate of $19,399 is desirable - but a formula of 30 per cent MATWE, with an immediate figure of about$17,537 would still be a significant and welcome improvement. Less than this simply does not do enough to address the cost-of-living pressures Australian pensioners face.
And as Charmaine Crowe of the CPSA has argued, further reform in other areas is also needed (for instance: abolition of the Pharmaceutical Benefits Scheme co-payment).
Pension reform has real consequences for the quality of life of millions of Australians.
Among other factors it determines whether or not these people can afford proper nutrition; enjoy heating and air-conditioning; have adequate shelter and access to water and energy; and also have access to information and communications technology others take for granted. It also influences access to transport and opportunities for social connectedness: as well as ability to deal with unexpected contingencies (for example, a broken-down car, fridge or TV).
Importantly, the formula for sole parents needs to be adjusted to accommodate the additional costs associated with raising a family.
It says something about the kind of society we live in that Bob Hawke’s statement in 1987 that “no child live in poverty” is looked upon as ludicrous.
It is within our means now, though, that the PPS (“Parenting Payment Single”) be raised according to a “basket of goods” necessary for sole parents and their children. It is within our means to provide for vulnerable sole parent families: the sole parent pension should be provided until the youngest child reaches the age of 16 not the threshold of 8-years-old introduced by the Howard government.
The domestic labour of sole parents in raising young families is just as important as labour market participation.
According to a May 2009 ACOSS (Australian Council of Social Services) factsheet, “there are about 360,000 sole parent families with around 600,000 children between them on this payment”.
The Federal Labor Government ignores this demographic at their own peril.
As the Federal Budget approaches, we cannot allow different pensioner groups to be divided against each other. With organisation and solidarity we can achieve change. Those concerned need to hold Rudd Labor accountable.
And the Opposition needs to be exposed for its hypocrisy in favouring the aged pension ahead of other pensions - for purposes of political opportunism.
The rights of the vulnerable and disadvantage must be prioritised. This includes the unemployed, the disabled, sole parents, the aged, carers, and students.
As I have written elsewhere: in a fair society “none ought to be left behind”.
Tristan Ewins, May 2009
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