Monday, September 19, 2011

Great if your're a pensioner. You'll get an extra $19.50 while others get...

Why are they so special?


Single NewStart Single pension

$11.73 per fortnight $19.50 per fortnight

Total payment after Tuesday:

$486.63 per fortnight $748.80 per fortnight

Total increase since 1990:

$208.93 per fortnight $466.40 per fortnight

What ACOSS wants:

A $100 per fortnight catchup for NewStart recipients

Source: Australian government, Australian Council of Social Service

Australia's 3.4 million pensioners can loosen their belts from tomorrow. They’ll get a pay rise of $19.50 per fortnight. Their fellow Australians on NewStart unemployment benefits and student allowances won’t be so lucky - they’ll get an extra $11.73 per fortnight.

The disparity means that NewStart - at present worth just two thirds of the pension - is set to fall to less than half of the pension by 2040.

Even worse, new rules governing eligibility for the disability support pension due to take effect in January will tip an increasing number of Australians off the disability pension onto NewStart, cutting their take-home pay $262 per fortnight.

“It’s a ticking time bomb,” says Cassandra Goldie, chief executive of the Australian Council of Social Service. “The government’s own estimate is the chance of getting assessed as eligible for the disability pension will drop 40 per cent. As existing recipients are reassessed they will drop onto an unemployment benefit that even the Organisation for Economic Co-operation and Development says isn’t up to the job"...

The OECD reported last year that NewStart had be come so low as to raise “concerns about its adequacy”.

A Bureau of Statistics survey this month found that four in every five NewStart recipients reported significant financial stress, more than any group identified.

The single NewStart rate is $34 per day, due to increase to $34.76 on Tuesday. By contrast after Tuesday the single pension will be $748.80 per fortnight - $53.50 per day.

Pensioner couples will get a combined $1129 per fortnight.

New rules introduced by the Rudd government increase pensions by the larger of three different indexes: the consumer price index, the pensioner living cost index, and male total average earnings.

Two of the past four half-yearly increases have been driven by male earnings; the other two by the pensioner living cost index. None have been driven by the lesser consumer price index.

NewStart and student allowances recipients get only CPI increases, which are typically the lower of the three measures.

The Centrelink website wrongly says the CPI increases adjust payments “in line with increases to the cost of living”.

The Bureau of Statistics website makes clear that the CPI is not a measure of the cost of living and has not been since changes were made to the index in 1997.

A large one-off jump in the pension in 2009 means that in the past two years the buying power of the fortnightly Newstart allowance has slipped $22 while the buying power of the pension has climbed $175.

“It’s not sustainable,” said Dr Goldie. “NewStart will have to climb and this will become more apparent as more disability pensioners find themselves reassessed on to it.”

ACOSS will ask at next month’s tax summit for an immediate increase in NewStart of $50 per week to take it to $586.60 per fortnight, somewhat closer to the $748.80 per fortnight single pension. The measure would cost around $1 billion.

“It’s the sort of range the Henry Review was looking at. We support the idea of trying to get people on the disability support pension into work, but giving them a pay cut along the way makes it too hard,” Dr Goldie said.

Published in today's SMH and Age

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