THE pensioners snuck up on Kevin Rudd May 24, 2008 13:29:34 GMT -5
Post by keith on May 24, 2008 13:29:34 GMT -5
THE pensioners snuck up on Kevin Rudd and Wayne Swan and blind-sided them. It was an attack the Government did not see coming.
In last year's election campaign, Rudd matched what Howard offered to seniors, then added a bit.
He thought he had the oldies covered in a Budget that honoured his promises. Wrong!
No sooner had Swan delivered his Budget speech than Michael O'Neill, chief executive of National Seniors Australia, was telling reporters: "They have chosen in this Budget to treat senior Australians with contempt."
The senior citizens who stripped off to attract national attention via the TV cameras at a protest rally in front of Melbourne's Flinders St station three days later ensured that the word spread.
It was at that point the Government realised what was happening and twigged to the size of the political problem that had been created.
But the horse had bolted. The Prime Minister and the Treasurer have been trying to shut the stable door ever since. Too late.
There are a heck of a lot of pensioners, their votes matter and many of them are angry. Labor MPs are feeling the heat in their electorates.
Swan is no exception. Last weekend, as he did the rounds of his seat of Lilley in Brisbane, he kept running into pensioners demanding to know why they'd got nothing from the Budget.
Patiently he explained to each one what the Budget had actually contained for seniors. It was a lesson for the Treasurer - or should have been.
What it told him was that he had failed to get the message through on Budget night. What was in his Budget speech about pensioners, and what the Budget papers contained, had not penetrated to those affected.
There has been a lot of criticism of the spin, the PR, the managed "leaking" that was organised by the Government to extract every bit of political advantage that could possibly be gained from the Budget.
But it didn't work with the pensioners - perhaps because it was not tried. The Government's attention seems to have been elsewhere when it came to the Budget selling task.
The result is that the base level of the pension will have to be addressed in next year's Budget. Rudd won't let it go any longer than that, unless he wants to commit electoral suicide.
Pensioners will have to get a rise of some sort. The Government knows it.
But what has ministers really worried is the amount of money involved. We're talking big bucks.
Here is the rub.
What seniors groups are seeking, essentially, is a boost in the base rate of the pension from 25 per cent of male total average weekly earnings (MTAWE) to 35 per cent.
That would take the single rate pension from $273 a week to $382 - a $109 weekly increase.
The cost of boosting the pension rate by 1 per cent of male average earnings would be $1.2 billion. So increasing it by 10 percentage points would add $12 billion a year to the pension bill. Over the four years of the forward estimates the extra cost would be $51.4 billion.
So what pensioner organisations are seeking is no small matter. The sums involved are massive.
It is hardly the sort of thing a government only six-months-old could rush into. Especially since it is not possible to consider the pension rate in isolation.
Some retirees are solely dependent on the pension, some depend partly on the pension and partly on superannuation, and others are entirely self-funded.
"There are a myriad of interactions that you have to take into account," a Treasury source says. "You can't just walk out and say you're going to make some unilateral change to the base rate of the pension."
On Budget night, O'Neill said: "The single most important issue for national seniors in this Budget was for the Government to respond to the issue of the pension level - in particular, the single aged pension. They had a Senate Committee report recommending strongly that they respond to that."
What the Senate Committee actually recommended was that "the Government review the suitability of the base pension levels through economic analysis of amounts required to achieve at least a modest standard of living for retired Australians, with particular consideration given to the adequacy of the percentage rate for single older people receiving the age pension compared with couples".
The Government followed this advice. It set up a review of pensions as part of the root-and-branch inquiry into taxation and welfare being conducted by a task force headed by Treasury secretary Ken Henry.
This was not only announced in the Budget. Swan had telegraphed it in a TV interview two days before - though perhaps he did not emphasise the pension aspect of the inquiry as much as he would do now with the benefit of hindsight.
This aspect of the inquiry is being headed by Dr Jeff Harmer, secretary of the Department of Families and Community Services. He will report by the end of February next year.
That means the findings will feed directly into next year's Budget process.
Cabinet will have before it recommendations from the Harmer panel on appropriate levels of support and allowances including the pension base rate. Dodging the issue will not be an option.
And O'Neill can probably pat himself on the back. His claim that senior Australians "got nothing out of this Budget" was patently false.
Seniors got a $500 bonus and an increase in the utilities allowance from $107 to $500.
That means pensioners got an extra $900. Low-income "working families" got a bit over $1000. Comparable treatment.
And it was interesting that O'Neill, former chief executive of the Queensland Farmers Federation, bagged Swan's Budget when he had praised the Coalition's 2006 Budget which also failed to do anything about the pension level.
But the pension rate is now firmly on the political agenda, which is what O'Neill wanted to achieve. The Government is on the defensive and the Coalition has a ready-made issue it can exploit.
In a sense, Rudd only has himself to blame. He has a propensity to raise expectations.
Pensioners are just one group who emerged from the election believing Rudd would take care of them, irrespective of his actual words in the campaign.
The likelihood is that Rudd genuinely believes he can find an answer to the difficulties of pensioners and others.
But some things cannot be dealt with simply by working harder. The issue of pensions is complex and costly. And it is now a problem for Rudd to solve, and for the Coalition to exploit.
* Laurie Oakes is political editor for the Nine Network. He appears each week on the Sunday program and his column appears every Saturday in The Daily Telegraph.