There were always a couple of areas where the Coalition’s preferred narrative of a bold, reformist government being stymied by a populist, obstructionist Senate was on the money. One was on fuel excise indexation. The other was its plan to use a normal indexation process for the age pension, rather than a higher wage-based index.
The pension indexation proposal was sensible — there’s no reason why the age pension should increase faster than other forms of welfare payments — and brave from the government, especially given its voting base tends to be old. But ever since its announcement, Labor has used the proposal to hammer the government, over and over.
Scott Morrison has now abandoned the pension indexation proposal, exchanging it for what is in effect the removal of higher, more generous pension tapering thresholds for high-income retirees put in place by the Howard government. Morrison’s replacement proposal is also sound policy — wealthy retirees should not be entitled to the pension, which is supposed to be a safety net, not a form of post-work welfare or reward for living a long time.
Ideally, we would have had both policies, providing the government with substantial savings in the years ahead. Nonetheless, Morrison has found a way out of the deep political hole the government dug for itself with its inability to justify its original indexation proposal.
Perhaps this government has some capacity to pull off worthwhile reform after all. The coming weeks will reveal whether Joe Hockey has managed to learn anything from Morrison’s example.
Credit where it is due.
The petrol excise should have been supported by Labor, it was a bad idea when John Howard removed it, principally to shore up his flagging support.
Let’s hope they try again and the Greens do what they should have done in the first place, and supported it. Their response was one of the few brazenly political tactics they have ever succumbed to, and now that Milne is going they may want to change their response.
On the other hand, perhaps Natale was shoe-horned into the Leaders role to continue craven politics over good policy.
As for the pension indexation, I can’t see why it is good policy to index according to movements in the average wage. The pension is not supposed to replace a wage, it is a living cost, and CPI is the appropriate adjustment. Labor and all the independents should have supported it.
And who brought that one in? Yep, more Howard/Costello rubbish that has to thrown out at great political cost.
Finally, I hope there is bi-partisan support for wealthy pensioners to receive less in terms of pension payments. I am likely to be one of those wealthier pensioners, if I ever get there, and I don’t think I should be supported by the taxpayer while I have substantial assets outside the home.
Good luck with that.
You say that “perhaps this government has some capacity to pull of worthwhile reform..” This change is welcome but hardly significant. I presume the Oz will bang on about class warfare. I’ll praise their reformist zeal when I see a carbon tax, an appropriate level of taxation on extractive industry, a vision for innovative manufacturing, an approach to resolving the fundamental disadvantage of our indigenous people, an education system that works to improve the lot of all Australians. As for the Greens, they stand for re-election, they’re never about implementing good, practical policy as evidenced by Rudd’s carbon tax failure and their policy last year on the fuel excise.
What a load of rubbish…Pensions should be linked to average wages. Otherwise they will slowing fall back into poverty. And the old age pension IS there for people after they reach an age when working become difficult. It should be seen as a reward not welfare. Think about all the stimulus that lots of old folks with spending money do for the economy. And finally who wants to work till they drop….get over yourselfs!
Given that the dole is currently at such a low level that studies have found it to be a barrier to getting work, perhaps the reform a sensible government should pursue is to raise the rate of the dole. Other government benefits such as DSP are hardly goldmines either. Given that, surely there is a case for other benefit payments to rise according to the more generous wage based index.
But of course, when looking to fix the budget emergency (2008-Sept 8th 2013), the government’s first, if not only, instinct is to beat the poor. Of course, they are ably assisted by the media, which is very willing to support the “brave, courageous” government lay into the poor while sweeping all sorts of tax rorts like super concessions and negative gearing under the rug.
The reason Newstart is so low is that its rate of increase has been linked to the CPI rather than average wages. The CPI leaves out a lot of items when it is calculated and the actual cost of living rises more than the CPI. Why should pensioners live in penury, as they would in a few years time if rises were linked to the CPI, after they have worked hard and paid taxes all their life or in the case of women, who are the ones likely to be on the pension, raising children and caring for the family?
Better to tackle the superannuation tax distortions rather than a payment which already only allows a frugal way of life and that is if you own your own house and car.