The pre-Budget 2023 media circus begins
What can older Australians expect on 9 May?
THIS week the annual media circus about what’s going to be in the federal May Budget kicked off.
Deeming rates
It seems next month’s federal Budget was perhaps creeping up on the federal Treasurer, Jim Chalmers. When asked what would happen to the deeming rates for the Age Pension assets test, he did not seem aware, or had forgotten, that his government had announced they would be frozen until 1 July 2024.
He told the Australian Financial Review that the Government had yet to decide on whether to lift deeming rates in the upcoming federal budget. The next day, a spokesman corrected this and said that the Government had “no plans to increase the deeming rate”, adding that the “Albanese Government has given pensioners certainty by freezing deeming rates for two years”.
Once we get to 1 July 2024 though, it is likely that the deeming rates will go up. The higher deeming rate is 2.25 per cent now, while the Reserve Bank’s cash rate target is 3.6 per cent. As the Treasurer said, deeming rates “should broadly reflect movements in the cash rate”.
Superannuation
On the topic of super, the Treasurer said that the new tax related to superannuation member balances over $3 million would be the only thing about super in next month’s Budget.
Cost-of-living package
The Budget will feature a cost-of-living package. It won’t involve pension bonuses or any cash hand-outs. It will be energy bill relief. The Treasurer is anxious not to do anything that will increase inflation, although energy bill relief obviously also frees up money, which would otherwise have been spent to pay for electricity and gas. Energy bill relief is therefore also inflationary, but this the Government is prepared to countenance.
Jobseeker and rental assistance
Readers of CPSA News will recall that the Treasurer formed an Economic Inclusion Advisory Committee a while back. This Committee is an independent body made up of economists, academics and advocates. Their job is to advise Government ahead of the Annual Budget on policy settings and the effectiveness and adequacy of income support payments.
The Committee has come back with its report and recommendations and wants the base rates of JobSeeker Payment and related working age payments to be substantially increased as a first priority. Jobseeker should be increased to 90 per cent of the Age Pension. This would cost $24 billion over the four-year forward estimates period. The Committee also wants Commonwealth Rent Assistance to be substantially increased and indexation to be improved.
While the Treasurer has said no government could afford the expenditure increase to pay for raising the Jobseeker payment rate and rent assistance, the Government may not be able to totally avoid taking action.
The Economic Inclusion Advisory Committee was set up in exchange for the votes of the Senate crossbench on legislation the Government wanted to put through. Already the crossbench is becoming vocal about the Government wanting to ignore the recommendations of the committee.
This will play out in an environment where the Government knows the cost of delivering aged care will rise by 23 per cent, increasing from $24.8 billion to an estimated $29.6 billion annually. This does not take into consideration the pay rise for aged care workers, which will cost another $1.9 billion per year. Meanwhile, the Government has vowed to push ahead with the Stage 3 income tax cuts.
It looks as though people on Jobseeker are once again going to miss out when the music stops. Among those people are two groups that really need a substantial increase. Many people with disabilities are put on Jobseeker when in reality they should be on the Disability Support Pension. Then there are the over-55s who are trying to survive long-term on what’s meant to be a short-term benefit.
THIS week the annual media circus about what’s going to be in the federal May Budget kicked off.
Deeming rates
It seems next month’s federal Budget was perhaps creeping up on the federal Treasurer, Jim Chalmers. When asked what would happen to the deeming rates for the Age Pension assets test, he did not seem aware, or had forgotten, that his government had announced they would be frozen until 1 July 2024.
He told the Australian Financial Review that the Government had yet to decide on whether to lift deeming rates in the upcoming federal budget. The next day, a spokesman corrected this and said that the Government had “no plans to increase the deeming rate”, adding that the “Albanese Government has given pensioners certainty by freezing deeming rates for two years”.
Once we get to 1 July 2024 though, it is likely that the deeming rates will go up. The higher deeming rate is 2.25 per cent now, while the Reserve Bank’s cash rate target is 3.6 per cent. As the Treasurer said, deeming rates “should broadly reflect movements in the cash rate”.
Superannuation
On the topic of super, the Treasurer said that the new tax related to superannuation member balances over $3 million would be the only thing about super in next month’s Budget.
Cost-of-living package
The Budget will feature a cost-of-living package. It won’t involve pension bonuses or any cash hand-outs. It will be energy bill relief. The Treasurer is anxious not to do anything that will increase inflation, although energy bill relief obviously also frees up money, which would otherwise have been spent to pay for electricity and gas. Energy bill relief is therefore also inflationary, but this the Government is prepared to countenance.
Jobseeker and rental assistance
Readers of CPSA News will recall that the Treasurer formed an Economic Inclusion Advisory Committee a while back. This Committee is an independent body made up of economists, academics and advocates. Their job is to advise Government ahead of the Annual Budget on policy settings and the effectiveness and adequacy of income support payments.
The Committee has come back with its report and recommendations and wants the base rates of JobSeeker Payment and related working age payments to be substantially increased as a first priority. Jobseeker should be increased to 90 per cent of the Age Pension. This would cost $24 billion over the four-year forward estimates period. The Committee also wants Commonwealth Rent Assistance to be substantially increased and indexation to be improved.
While the Treasurer has said no government could afford the expenditure increase to pay for raising the Jobseeker payment rate and rent assistance, the Government may not be able to totally avoid taking action.
The Economic Inclusion Advisory Committee was set up in exchange for the votes of the Senate crossbench on legislation the Government wanted to put through. Already the crossbench is becoming vocal about the Government wanting to ignore the recommendations of the committee.
This will play out in an environment where the Government knows the cost of delivering aged care will rise by 23 per cent, increasing from $24.8 billion to an estimated $29.6 billion annually. This does not take into consideration the pay rise for aged care workers, which will cost another $1.9 billion per year. Meanwhile, the Government has vowed to push ahead with the Stage 3 income tax cuts.
It looks as though people on Jobseeker are once again going to miss out when the music stops. Among those people are two groups that really need a substantial increase. Many people with disabilities are put on Jobseeker when in reality they should be on the Disability Support Pension. Then there are the over-55s who are trying to survive long-term on what’s meant to be a short-term benefit.
