Government slugs welfare recipients — yet again

by Jules Andrews

Pensioners, students and the unemployed will cop another GST slug next 
month, when their payments will rise by only half the rate of inflation. 
The Federal Government says it gave the poor a two percent bonus last year. 
Now it wants it back.

With inflation running at four percent over the last six months, pensioners 
under normal indexation should receive a payment increase of $15.80 per 
fortnight from March 20 onwards.

But they will receive only half of that. The Minister for Family and 
Community Services, Senator Amanda Vanstone says that the difference was 
given as a temporary bonus to cushion the blow of the GST nine months ago.

The Government trumpeted its generosity last year, announcing a four 
percent increase to all Social Security payments from July 1.

At the time it was obvious that the amount — about $7.45 a week — would 
not compensate for the price hike expected. Figures supplied by the 
Combined Pensioners' and Superannuants' Federation suggested pensioners 
would be $9 per week worse off.

With the Government now withholding another $3.95 the most disadvantaged 
Australians fall further behind.

"How can they justify clawing back part of this modest compensation for 
unemployed people and pensioners when they're not proposing to do anything 
of the sort for high income earners who got overcompensated for the GST?" 
said Michael Raper, President of the Australian Council of Social Service 
(ACOSS).

John Howard's tax cut for the rich has handed them $62 a week in GST 
compensation, or $3224 a year to spend on luxury items discounted under the 
new tax regime.

His generosity did not extend to the most disadvantaged in society whose 
total compensation now only amounts to only $3.86 a week, which must be 
stretched to cover previously tax-free items of food and clothing, public 
transport, many pharmaceutical and medical expense, and telephone bills 
which make up the bulk of their weekly budget.

The other part of the story the Government isn't telling is that the 
remaining two percent that pensioners were given last year will also vanish 
into thin air.

The Government is dedicated to not letting pensions fall below 25 percent 
of Male Total Average Weekly Earning (MTAWE). That is, as wages increase 
the Government has promised to "top-up" pensions so that they never fall 
below the 25 percent of MTAWE.

As average wages are estimated to increase 3.5 percent more than the CPI 
over the next few years, pensioners could expect a top up of 3.5 percent. 
When the time comes for the rise though, only 1.5 per cent will be needed — 
effectively wiping off the remaining two percent compensation.

The Government will have taken back the four percent "compensation" for 
higher GST-related costs by quietly absorbing it.

Ultimately, despite having to pay a new 10 percent tax on three quarters of 
their budget items, pensioners will not have received once cent of extra 
income from the Government.