Let them eat jam

September 20, 2008

On September 15, in his last full day as federal opposition leader, Brendan Nelson confronted the Labor government with a tin of baked beans and a jar of jam. "That is the reality for Australian pensioners: baked beans and jam sandwiches", Nelson said, moving a censure motion against the government for its failure to agree to increase the Age Pension by $30 a week.

As political theatre, Nelson's swan-song was a little half-baked. While it highlights the refusal of Kevin Rudd's government to increase the Age Pension, at least until the next federal budget in May, it also highlights the Coalition's failure to deal fairly with pensioners over its 12 years in office. On August 17, 2007, both Labor and Liberal combined to defeat a Greens motion in the Senate for an immediate $30-per-week increase in the single Age Pension.

Greens leader Senator Bob Brown said that such an increase to the single aged pension would cost around $1 billion per year. "This is far less than the $3.5 billion in tax cuts for people earning over $75,000 a year in this year's budget", which the Greens opposed, Brown said on September 10.

There are around 600,000 single aged pensioners in Australia, a minority of the more than 2 million people receiving the disability, carers, veterans, widows or other pensions, or who are aged pensioner couples, receiving only 60% of the pension earned by two single aged people. As the government's own review into pension rates admits, "Many people who rely on the income support system for a basic acceptable standard of living say that they are finding it harder to make ends meet". To say the least!

While paying some lip-service to the fact that pensioners are struggling with rising prices, the Labor government is sending mixed messages. It has established a review of the pensions system, to be conducted from next May by the head of the Department of Families, Housing, Community Services and Indigenous Affairs (FaCSIA) with the brief to "investigate measures to strengthen the financial security of seniors, carers, and people with disability". Yet, the same department produced a submission to a Senate inquiry into the cost of living pressures on older Australians last March suggesting that old-age pensioners are doing just fine.

FaCSIA dismissed concerns expressed by the St Vincent de Paul Society that costs are rising faster for pensioners than inflation (as measured by the Consumer Price Index — CPI). FaCSIA argued that Vinnies' use of a Relative Price Index (RPI), which attempted to account for the extra proportion of pensioners' income that they are forced to spend on necessities, was faulty.

The FaCSIA submission to the Senate inquiry smugly asserts, "Even if the claims made on the basis of the RPI are taken at face value, pension increases over the period [1990 to 2005] far exceeded the estimates of price increases generated by the model, and also were well above the rate of inflation derived from the Consumer Price Index".

FaCSIA also found that increases to pensions more than matched the increase of the Analytical Living Cost Index, prepared by the Australian Bureau of Statistics on the spending patterns of aged pensioners. The ACLI for aged pensioners for the last financial year finds that, because fruit and vegetable prices decreased, the overall increase in the cost of living for pensioners was actually lower than the CPI.

If such "analysis" underpins FaCSIA's review of pensions, then pensioners can expect little real relief from the Labor government.

Yet accounts of pensioners doing it tough persist. "The other day I received a phone call from Bruce, a pensioner renting a small unit in Sydney's outer suburbs", Charmaine Crowe, policy coordinator for the Combined Pensioners and Superannuants Association of NSW (CPSA) wrote in the September 15 Herald Sun. "He pays $235 per week in rent. He receives $273 per week in his pension and $53 per week in rent assistance.

"That leaves Bruce with $91 a week for food, electricity, medication, clothing and transport. Bruce worked and paid taxes for more than 50 years, contributing to a nation that now expects him to survive on $13 a day."

Crowe told Green left Weekly on September 17, "What CPSA would like to see is a supplement to be paid to those pensioners … who are really doing it tough. The supplement would ensure that they could pay for basic goods and services, because currently, for those living just on the pension, you can't afford those things."

The CPSA is calling for a pension increase that will allow pensioners to "live modestly", based on a study done by Westpac and the Association of Super Funds Australia in conjunction with the University of NSW. The study found that a single person who owns their own home would need around $19,000 a year, while home-owner couples would require $26,500. For a single pensioner, this would require an increase of $80 per week.

"What we would like to see is the pension indexed according to what a pensioner spends their money on, so how much a pensioner needs each week to get by", Crowe told GLW. She derided FaCSIA's claim that pension increases have outstripped inflation: "Even if you do increase the pension in accordance with CPI, what's missing is how much a pensioner actually needs in the first place."

The problem is that the pension amount, set at 25% of average total male weekly earnings, is simply too low. "The pension needs to be tied to a budget standing that reflects what a pensioner actually needs in income to live modestly", Crowe said.

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