Australian Associated Press Saturday 7 March 2015

Coalition says it will discuss changes to the aged pension to prevent the incomes of older Australians dropping too far below wage earners

The Coalition has signalled it will water down its previous plans to change the indexation of the pension, leaving aged pensioners worse off over time. Photograph: AAP

The federal government says it’s prepared to discuss proposed changes to the aged pension with Labor and the minor parties.

But Labor says it won’t support any initiatives that would send millions of Australians below the poverty line.

The Coalition has signalled it wants to water down its plan to index the payment to inflation from July 2017.

Instead it would be adjusted over time to prevent the incomes of older Australians sinking too far below those of ordinary workers.

The social services minister, Scott Morrison, is expected to put the change on the agenda in talks with the Senate, NewsCorp Australia has reported.

The original change would see the value of the pension slump from 28% of average weekly earnings today to just 16% by 2055.

Morrison told the ABC the pension could be tied to inflation until the budget returned to surplus.

“Right now it’s a matter of talking through with the crossbenchers the best way which we can have a sustainable management of the pension over time,” he said on Saturday. “I think if we’re going to make changes we’ve got to start making them now. You can make them more gently if you do it over a long period of time.”

The treasurer, Joe Hockey, said the government remained committed to altering the pension but was eager to discuss changes with its opponents in parliament.

“What we’ve said is we’re prepared to discuss these issues,” Hockey told reporters in Sydney.

“We want to do everything we can but we also need to get back to the point where we live within our means. We’re the only ones offering a proposal.”

The opposition’s families and payments spokeswoman, Jenny Macklin, said cuts to the pension indexation wouldn’t be supported by Labor and the budget plan should be dumped altogether.

“Labor will oppose any move to cut the indexation of the pension,” she said in Melbourne.

“This kind of chaotic and dysfunctional policy making has nothing to do with protecting pensioners and everything to do with protecting Tony Abbott’s leadership,” Macklin said. “The only way to protect pensioners is to scrap the proposed cuts to indexation entirely.

“We want to make sure the pension is kept up with the general standard of living of Australians and the best way to do that is to link the pension to the total male average weekly earnings.

“Scott Morrison should give pensioners the certainty they deserve and drop these cuts forever.”

Superannuation was the best way to ensure a sustainable retirement pension scheme, she said.

She also rejected an idea floated by Hockey for first homebuyers to draw on their superannuation to buy their first home, saying it would push up the price of housing.

The prime minister’s parliamentary secretary, Alan Tudge, said the government had an “absolute commitment to the pensioners of Australia”.

“We want to provide a pension that is as generous as possible but which is nevertheless affordable,” he told Sky News.

“Our guarantee is that at the very least pensioners will have an increase every March and every September in line with cost of living, and ideally it would be above that.”

He said he was open to discussion with crossbenchers about exactly what the “formula would look like”.

Labor MP for Kingsford Smith, Matt Thistlethwaite, said reducing the value of the pension over time would mean “more Australians slip into poverty”.

“It won’t keep pace with average weekly earnings and pensioners will fall further behind,” he said. “What we won’t do is attack the most vulnerable in our community.

Abbott ministers want to negotiate watered-down pension changes | Australia news | The Guardian