Social Services Minister Scott Morrison has given the clearest signal yet the government will tighten the assets test for people on a part-pension and drop plans to index pensions at a slower rate.
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But Labor leader Bill Shorten said the government should keep its pre-election promise not to touch pensions and "stop breaking promises", while the ALP released modelling it said demonstrated pensioners would be worse off under the tighter asset test.
The 2014–15 budget set out a plan to change indexation arrangements for the aged, disability support and veterans' pensions, carer payments and the single parenting payment designed to save $449 million over five years.
The change would have seen those payments grow more slowly, over time, in line with inflation, rather than in line with CPI or the Pensioner and Beneficiary Living Cost Index and then "benchmarked" against Male Total Average Weekly Earnings.
But amid hostility to the change in the Senate, and after indicating last month the government was considering changes to the assets test, Mr Morrison on Tuesday said "we've been in discussions now for months and months and I've said all along that if a measure was to come off the table like CPI indexation for the pension then new measures would have to go on".
Mr Morrison said he had canvassed eligibility changes with his backbench colleagues, the crossbench and sector stakeholders.
At present, a retired couple who owns a family home and holds up to $1.15 million in assets can still qualify for a part pension. The Australian Council of Social Services, for one, has called for that asset threshold to be lowered to $794,250, excluding the family home.
"It is true to say that following the changes to the pension taper rates in 2007 when there was a $20 billion surplus and $40 billion in the bank, that they were changed and halved and that added to the cost of the pension by about $1 billion a year," Mr Morrison told ABC radio.
"Some four million Australians are affected by the indexation of pensions and if you're going to not proceed with that, then obviously you need to go forward with something."
If the change goes ahead, it would save the federal budget an estimated $1 billion.
Mr Morrison also said that the government's childcare package, due to be unveiled before the budget, would be focused on "ensuring that people can stay in work, be in work, get in work" and was contingent on the Senate passing billions of savings currently blocked.
Mr Shorten called on the government to stop having "thought bubbles" and selectively leaking and said that "they just need to come clean".
He was repeatedly asked but declined to say if Labor would support a tightening of the assets test for the part pension or a return to the less generous pre-2007 settings because he "would not deal with hypotheticals".
The Labor modelling suggested a single aged pensioner who owned their own home and who had $775,000 in assets, from which he or she earned about $35,000 annually at 4.5 per cent while receiving about $19.10 a week in part pension would, as a result of the lost pension, lose $993 annually.
Similarly, an aged pensioner couple who owned their own home and had combined assets over the current $1.15 million threshold - and who received $25.90 in pension between them and a combined income of $49,500 per year - would lose their pension and be $1500 a year worse off.
"There is only one detailed proposal on the table, this was cutting indexation rate of pensions," Mr Shorten said.
"We don't know where they will set their tests or what they are going to do [in the budget]."
