UPDATE MARCH 18:
By Judith Ireland, smh.com.au
Another landmark policy loss is looming for the Abbott government, as Senate crossbenchers firm in their resolve to sink a $22 billion cut to pensions.
Just days after the Coalition's defeat on its higher education reforms, Palmer United Party's Zhenya "Dio" Wang and independent senator Glenn Lazarus have signalled their opposition to Scott Morrison's fresh bid to change pension indexation - where a lowering of the indexation rate would be accompanied by regular reviews of pension adequacy.
Senator Wang and Senator Lazarus' opposition follows that of independent senator Jacqui Lambie and strong reservations expressed by South Australian senator Nick Xenophon.
While fellow crossbenchers John Madigan and Ricky Muir are yet to state their positions and senators Bob Day and David Leyonhjelm have been more receptive to the Social Services Minister's proposal, even if all four agreed this would not provide the six votes the Coalition needs to pass legislation.
The government announced in the 2014-15 budget that it would lower the rate of pension indexation from September 2017, linking it with inflation instead of wages growth.
This was met by staunch opposition from Labor, the Greens and the crossbench. But there have since been hopes that Mr Morrison, who took over the portfolio in December, would be able to pass the outstanding measure before the next budget is handed down in May.
The change in pension indexation has been projected to save more than $22 billion over 10 years by the Parliamentary Budget Office.
Mr Morrison, who describes himself as a "fixer", recently proposed that the indexation change be accompanied by an independent review of pension "adequacy" every three years.
But Senator Lazarus' concerns have not been assuaged by the safety net idea, arguing it would only create more stress for pensioners.
"The concept of a three-yearly review [means] pensioners will no longer be able to plan for the long term and will be subjected to pension changes every three years," he said.
"Pensioners will be at the mercy of a review every three years.''
March 16:
Social Services Minister and Cook MP Scott Morrison chose Grandviews Bowling Club at Peakhurst on Saturday to propose a new mechanism to make pensions sustainable in the long term.
Mr Morrison proposed an independent review of the pension’s adequacy every three years to ensure it kept up with community living standards.
During those three years, the pension would increase in line with inflation (CPI) with the cost of living.
At present the pension is indexed to either male total average weekly earnings or the CPI and is matched to the higher of those two indices. In the long run the CPI tends to be lower than male average weekly earnings.
Mr Morrison said the government had a measure before the Senate which would see the pension indexed to CPI. But after about 10 years, it would then potentially shift to being matched to average weekly earnings.
The review report will be tabled before Parliament and the government of the day will have to respond to that through the budget process.
Mr Morrison said about 2.5 million people received the pension and it cost taxpayers about $40 billion. In the next 10 years that would rise to almost $70 billion.
‘‘So we need to get the rate of growth under control so we can make sure that the pension is sustainable and there for future generations but we also need to make sure that pensioners have a quality of life and a pension payment that keeps pace with community living standards.’’
See more in Thursday's Leader.
Is this an attempt to lower the pension?
