The Guardian May 30, 2001

Budget cheats Australia's aged

by Peter Mac

Prime Minister Howard bit off more than he could chew on a pre-election 
walk through a busy shopping centre recently. Confronted with a very large, 
very irritated and very determined pensioner, he could offer no explanation 
as to why the $1000 promised to the aged to compensate for the GST was 
being reduced to $300.

Australia's aged have had plenty to complain about during the Howard 
Government's period in office. The biggest issue was surely the 
introduction of the GST itself, as a result of which pensioners are now 
paying tax on many goods and services where they previously paid none. 
Pensioner groups, who have demanded an annual bonus to compensate them 
adequately and permanently for the savage cuts to their income by the GST 
are irate at the failure of the budget to address this issue.

The government's "hard sell" regarding pensions and the GST was not 
assisted last week, when Treasurer Peter Costello inadvertedly drew 
attention to the miserly status of the government's $300 pensioner vote-
buying attempt, by repeatedly referring to it as "per annum", whereas it is 
actually a "one-off" payment.

It is, of course, an election year, and the government has offered a few 
"carrots" to the electorate, particularly to older voters. However, closer 
scrutiny reveals these to be very scrawny indeed. For example, the budget 
extends access to the benefits of the Seniors" Card, but the estimated 
50,000 who will benefit comprise a tiny proportion of Australia's older 

The "tax-free" income threshold for aged pensions has been raised to 
$20,000 per annum, but almost half of this increase was already due to come 
into effect this month as a result of existing pension arrangements. 
Moreover, the single aged pension is only $10,452, and pensioners can only 
earn another $2,756 before they begin to lose part of their pension.

So for the majority of pensioners who have a combined income of less than 
$20,000, raising the threshold to this level will be a hollow gesture of 
little or no benefit whatsoever.

The budget reverses the government's previous policy of including 
superannuation assets when assessing eligibility for welfare payments for 
those aged between 55 and 60.

However, the policy represented a gross injustice when introduced in 1997, 
since it effectively barred those who could not yet access their 
superannuation from receiving welfare, leaving them with little or no other 
means of support.

It also forced others to eat into their "super" nest egg, on which they 
were reliant for interest. Its removal, therefore, can hardly be described 
as an act of great generosity on the part of the government.

The budget includes provisions for the unemployed (including older workers) 
to earn up to $1000 before losing their entitlement to welfare support. 
However, this will actually save the government money. The previous policy 
was blindly focused on minimising the period in which people had access to 
unemployment payments.

This resulted in income gaps for those starting work, and therefore 
actually discouraged some people from applying for employment, particularly 
those seeking temporary or part-time work.

Again, this budget "initiative" actually represents rectification of a 
stupid and counter-productive policy, rather than arising from any real 
concern about the plight of the unemployed.

This initiative, and the small taxation rebates for pensioners, are blatant 
examples of increasingly desperate attempts to woo older voters prior to 
the federal election.

The Budget has some other nasty little messages for older citizens, buried 
in the fine print. For example, it includes funding provisions for the 
retraining of people over 50, but makes the payment of welfare support to 
these people conditional on carrying out community work or undergoing 
training, even though they have the least chance of getting work of any age 
group in the community.

The budget focuses on existing programs, but contains no real innovations 
in areas of greatest need for the elderly. The former program of free basic 
dental care, for example, has not been reinstated.

The implications of the budget for the elderly were crisply summed up by 
Greens leader, Senator Bob Brown, who commented: "It's a fistful of dollars 
budget which sets the scene for a winter election. The money being given on 
one hand is being taken away with the other."

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