Labor leader Bill Shorten has warned the federal government's changes to the aged pension system will place massive new pressures on the system, while creating a perverse incentive for part-pensioners to draw down on their assets over time.
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In a speech to the annual Australian Council of Social Service conference on Friday, Mr Shorten set out Labor's reasons for blocking the pension changes, which ACOSS backed and which Social Services Minister Scott Morrison secured with the support of the Greens.
The changes in the budget will boost payments made to 170,000 pensioners by about $30 per fortnight, while also delivering a $2.4 billion budget saving over four years through changes to the so-called taper rates, which reduce payments to pensioners by $3 a fortnight for every extra $1000 in assets they own over the minimum threshold for the full pension.
The asset threshold to receive access to the part-pension will be reduced from $1.15 million to $823,000 for a retired couple excluding the value of the family home.
The Opposition Leader said that while the government had focused its rhetoric on so-called "millionaire pensioners", in fact "only around 0.3 per cent of all pensioners have assessable assets beyond $1 million, less than 9000 pensioner families out of 3 million".
"And there are only around 165,000 pensioner families with assessable assets of $500,000 or greater. Barely 5 per cent of all pensioners," he said.
"The vast majority of the 330,000 pensioners affected by the government's cuts do not have high incomes."
With that in mind, Mr Shorten said, Labor took the decision - for which it has been widely criticised - to block the pension changes.
An unapologetic Opposition Leader defended the party's decision to block the change in his address to ACOSS and signalled the ALP will continue to fight the government on equity grounds.
"It is low income people - the people whom ACOSS serve and represent - who will be hit by these changes over time."
And referring to the final version of a NATSEM report prepared for Labor that examines the changes, Mr Shorten said that under the revised asset taper, "pensioners now lose $78 per year for every $1000 in assets beyond the threshold, double the previous loss of $39 per year".
"The new analysis shows that a pensioner has a lower combined annual income from the aged pension and an equivalent annuity on their asset base at an asset level of $900,000…than they do at $400,000," he said.
"This means the system now contains an inbuilt incentive to draw down on assets in the short-term, so you can claim a full pension over the long-term."
Ultimately, Mr Shorten said, the changes created a kind of "perverse incentive [that] will place massive new pressures on our pension system".
This was why, the Opposition Leader said, Labor had instead targeted the tax concessions offered to the wealthy in the superannuation system.
