FROM 1 January to 31 March 2019 the cost of living for Age Pensioners went up by a third of a per cent. Over the same period, there was no inflation in the economy overall.
Indexation of the Age Pension on 20 March and 20 September of each year uses one of three measures. Wage increases haven’t been used for a long time. It’s between the Consumer Price Index and the Pensioner and Beneficiary Living Cost Index these days.
Since the Consumer Price Index hasn’t gone up at all and since the Pensioner and Beneficiary Living Cost Index has gone up by 0.3 per cent, at the next pension indexation 0.3 per cent will be used.
This means that the Age Pension does not accurately reflect the cost of living for about six months.
When wage increases were used as the basis of indexation, this didn’t matter so much as wage increases outstripped inflation.
But when the cost of living goes up and the pension doesn’t until six months later, it does matter.
Maybe it’s a good idea if the pensions the Government pays were to include an amount for anticipated increases in pensioner cost of living.
There is a precedent for this. The Government, through the Australian Tax Office, levies Pay As You Go income tax based on what it thinks people will earn in the future.
What’s good for the goose is good for the gander.