There’s good news and bad news. The bad news is that inflation has spiked. The good news is that the spike won’t be bad news for everyone, and for some older people, it may be very good news.
The news – good and bad – revolves around the recent increases to pension and Jobseeker payments. As both are linked to the inflation rate, and the inflation rate has spiked, the increases were significantly bigger than in recent years.
Single age pensioners, disability support pensioners and carer payments received a $20.10 rise, taking the fortnightly amount to $987.60. For couples, fortnightly Age Pension payments increased by $30.20 to $1488.80. The full suite of rises came into effect on 20 March.
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In announcing the rise, federal minister for families and social services Senator Anne Ruston said the 2.1 per cent increase to pension payments was the largest since 2013. “This is putting money in the pockets of all Australians who rely on our social security system and, in particular, older Australians.”
Not everyone, though, was impressed by Senator Ruston’s positive spin. Opposition Leader Anthony Albanese criticised her claims, saying: “This government is so out of touch that they’re prepared to spin out there saying how well off pensioners are going to be.”
Mr Albanese added: “When they [pensioners] get to the supermarket to buy products, they find that everything’s gone up.” The Opposition Leader was also quick to point out that the 2013 increase Senator Ruston mentioned came under a Labor government.
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In addition to the pension rise, other CPI-linked increases included:
- JobSeeker payment for a singles rose by $13.20 to $629.50 fortnightly
- Parenting Payment Single recipients went to $874.10, an increase of $18.20
- Rent Assistance fortnightly payments increased to $145.80 for singles and $193.62 for families.
These payments are all indexed to inflation and updated twice a year on 20 March and 20 September.
How much good news those increases deliver to those who receive the payments is debatable. For those who drive more than a few kilometres per week, the extra dollars are likely to go straight into the petrol tank – even with the six-month 20 cent per litre cut to the fuel excise.
The price of petrol in Australia had hit $2.20 per litre until the Federal Budget excise cut, but prices are still high. On average, to fill a 60-litre tank now costs $32 more than it did in December.
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Some wealthy pensioners may also have received good news as a result of the March increases. The qualification thresholds for a part pension also increased. For a single homeowner, the asset threshold increased from $593,000 to $599,750.
Given that the asset threshold incorporates super funds and share portfolios, and that many of these have fallen by more than 5 per cent since alteration to payment rates and thresholds in September last year, there may be some who might now qualify for the part pension.
If you happen to fall into that camp, the news is good for you.
The 2.1 per cent indexation applied to the Age Pension, however, still lags behind the December 2.6 per cent mean annual Consumer Price Index (CPI) and last year, inflation was officially 3.5 per cent while wages increased only 2.1 per cent.
Economists expect the Reserve Bank to announce its first lift in official interest rates in more than 11 years by June at the latest, and financial markets are betting the cash rate will reach 2.5 per cent. That may be good news for retirees with money in the bank earning next to nothing.
Economist Angela Jackson told the ABC we should brace ourselves for inflation of about 5 per cent and probably edging up to 6.
“Will it go as high as we expect to see, for example, in the US, where now they’re forecasting over 10 per cent?” she asked. “Probably not.”
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