Abbott reveals budget plan: No changes to age pension for three years

Prime Minister Tony Abbott has ruled out making changes to the eligibility or indexation of the age pension for the next three years.

Responding to speculation that the government would seek to change pension rules in next month’s budget, Abbott said in a pre-budget speech at the Sydney Institute yesterday he would keep his 2012 pre-election promise not to change the age pension for now.

“To keep our commitments, there will be no changes to the pension during this term of parliament but there should be changes to indexation arrangements and eligibility thresholds in three years’ time,” said Abbott.

However, the government looks likely to proceed with its plans to raise the retirement age to 70, as previously flagged by Treasurer Joe Hockey. Fairfax reports the change will come into effect around 2029.

“I want to assure vulnerable people that the age pension won’t be less tomorrow than it is today and that people turning 65 tomorrow are certainly not going to have to wait five years to retire,” said Abbott.

“Still, with four out of five seniors on the pension, the number of workers per retiree dropping from five to three by 2050, and more than 1000 people becoming eligible for the age pension every single week, long-term reform is essential and unavoidable,” he said.

Abbott used the occasion to confirm some inclusions in his government’s first budget, including the introduction of co-payments for GP visits and cuts to disability and other welfare payments and family tax benefits.

The Prime Minister did not rule out a temporary increase in personal income tax, the so called ‘debt levy’, which has been slammed by business groups who have warned that it would hit small businesses the hardest.

However, Abbott said the budget will affect all taxpayers and that if implemented the measures included in the budget will “make personal tax cuts much more likely in four or five years’ time”.

“The budget pain will be temporary but the economic improvement will be permanent,” he said. “I can assure you that everyone will be involved, including high income earners such as members of parliament.”