Measly pension increases here to stay
THE Australian Bureau of Statistics released the Living Cost Indexes (LCI) for December 2019. The LCI is designed to answer the question: ‘How much would incomes need to change for people to purchase the same amount of goods and services they previously bought?’.
The LCI is a Consumer Price Index for a particular group of people.
In the December 2019 quarter, the living costs of pensioner households rose 0.7 per cent, while employee households saw their cost of living rise by 0.4 per cent. In the same quarter, the Consumer Price Index rose 0.7 per cent, the same as the Pensioner and Beneficiary Living Cost Index.
What this means is that the pension would have to increase at the same rate as CPI so that pensioners can still afford to buy the same amount of goods and services.
Unfortunately, this also means that come indexation time in March 2020 the increase to the pension will not be significant.
Increases to the pension are evaluated by changes in both the Cost of Living Index and the Consumer Price Index as well as Total Average Weekly Earnings. As the Cost of Living Index and the Consumer Price Index are at the same low rate and wages are relatively stagnant, the next pension increase will most likely be small.
If the Consumer Price Index, the Cost of Living Index and wage increases remain low, pension increases will inevitably remain low.