ABBOTT WRONG ON PENSION INDEXATION AGAIN
March 16, 2015
The Prime Minister today continued his misleading campaign on pension indexation.
In Question Time, Mr Abbott said:
“Under Labor’s favoured indexation method, pensions would be lower at this time.”
TONY ABBOTT, HOUSE OF REPRESENTATIVES, 16 MARCH 2015
This is wrong.
Currently the Age Pension is indexed in line with the highest of three indices: Consumer Price Index (CPI), Male Total Average Weekly Earnings (MTAWE) or the Pensioners and Beneficiary Living Cost Index (PBLCI).
The current system of indexation - created by Labor - ensures the pension is indexed by whichever is the highest of these three measures.
Yet if Tony Abbott gets his way the Age Pension will only be indexed to one measure - CPI.
The Parliamentary Budget Office (PBO) says this change will result in a $23 billion cut to the Age Pension by 2024-25.
Former Liberal Prime Minister, John Howard knew the importance of indexing the pension against a range of cost of living measures, including wages.
That’s why the Howard Liberal Government benchmarked the Age Pension to Male Total Average Weekly Earnings (MTAWE) in the 1990s.
Mr Howard said:
“The pensioner continues to be protected of course by automatic indexation of their pension, a guaranteed 25 per cent of male average weekly earnings.”
JOHN HOWARD, A CURRENT AFFAIR, 12 MAY 2004
Labor built on these reforms by boosting pension levels and further strengthening the wages benchmark to 27.7 per cent and introducing a new pensioner living cost index, to better reflect pensioners’ rising costs of living.
But Tony Abbott’s proposal will drive down the value of the pension, pushing pensioners into financial hardship and poverty.
Mr Abbott should stick the facts, and tell the truth about his cuts to pension indexation.
MONDAY, 16 MARCH 2015