19 August 2012

Calculating new pension rates - step 3 of 3

Pension rates are reset every six months using a 3 step process.  Last week's publication of the Average Weekly Wage figures by the ABS (here) provides the final ingredient for the calculation of the pension rates to apply from 20 September 2012. 
To recap the process so far, the first step was to adjust the rate using the change in the consumer price index (CPI), giving us the CPI rate.  The second was to adjust the rate using the pensioner and beneficiary living cost index (PBLCI), giving us the PBLCI rate.  Each of these steps was discussed in more detail in earlier posts (step one is here and step two is here).

Now we can calculate the rate based on Male Total Average Weekly Earnings (MTAWE).  Whichever of these 3 rates - CPI, PBLCI or MTAWE - is highest becomes the new rate.  The new MTAWE figure is $1285.10 a week, or $2570.20 a fortnight.  The combined couple rate of pension is 41.76% of this, and the single rate of pension is a shade under 2/3 of the combined couple rate.  The rate for single parenting payment (PPS) recipients is 25% of MTAWE.  After the requisite rounding required by the Social Security Act 1991 the resulting MTAWE based rates are as per the table below.

13 August 2012

Something for "The Kouk"?

The economist Stephen Koukoulos has an article in today's Business Spectator on living costs (it's here but might be hiding behind a [free] registration requirement).  Essentially, it says that, on average, living standards have increased over Labor's period in office and so, on average, whinges about increases in the cost of living and falling living standards are misplaced (to say the least).

One of the key elements in his argument is that wage increases (along with tax cuts and interest rate reductions, etc) have helped ensure this upward movement.  Now, if you've read my other posts you'll know that I don't think that over the period of the current government (Parliament 43) the tax-transfer system (tax cuts, welfare changes and the like) have actually done this, except at low incomes.  If you look at the 4 Parliament comparison posts you can see this effect and where it comes from.

05 August 2012

4 Parliaments - single income couple edition

This is the third episode of my 4 Parliaments series, comparing the tax-transfer system changes for different household types across the last 4 governments.  The first looked at single people aged under 55 years, the second, single parents.  This one features single income couples, and while I've already looked at them in a few earlier posts, none covered the 4 Parliaments thing.  So while this post might be single income couple overkill, it will enable comparisons with the other households should you feel so inclined.

In the following charts, both members of the single income couple are aged under 55 and there are no children involved. If this is your first foray into my 4 Parliaments posts, the idea is that you can look at a particular private income and see how the household type's disposable (after tax and transfer payment adjustments) changed from the beginning to the end of the government term of interest.

01 August 2012

Calculating new pension rates - step 2

Today's release by the ABS of the pensioner and beneficiary living cost index (PBLCI) for the June quarter allows for part 2 of the 3 part pension rate indexation process to be completed (Part 1 was covered in this earlier post).

The index number for the quarter was 117.4 and the previous highest June or December quarter figure was 116.7.  As with the earlier CPI result, after the required level of rounding, this is an increase over the period of 0.6%, so the CPI and PBLCI adjustments both produce the same result.  That certainly makes updating the table I started in the last post easy!

This is how the rates stand so far...

Payment
Current rate
CPI rate
PBLCI rate
MTAWE rate
Final rate
change
partnered pension
$ 524.10
$ 527.20
$527.20
?
?
?
single pension
$ 695.30
$ 699.40
$699.40
?
?
?
PPS
$ 627.50
$ 631.30
n/a
?
?
?
single NSA (lower)
$ 489.70
$ 492.60
n/a
n/a
$ 492.60
$ 2.90
single NSA (higher)
$ 529.80
$ 533.00
n/a
n/a
$ 533.00
$ 3.20
partnered NSA
$ 442.00
$ 444.70
n/a
n/a
$ 444.70
 $ 2.70

Now we have to wait until 16 August for the last piece of the puzzle - the release of the Average Weekly Earnings figures.  Given the low CPI/PBLICI results, I suspect it's fairly safe to assume that it will be the benchmarking of pension rates against the MTAWE figure that will drive the pension increase this time round.

Interestingly, if wages have grown enough it looks like either this time round, or maybe next time (March 2013) the base partnered rate of pension (as shown above) will exceed the higher single rate of Newstart allowance, not just the lower one (which it passed quite a while back).