25 August 2016

The curse of special money...


Shortly after this year’s Federal budget it dawned on me that the Government’s proposal to scrap the energy supplement for new claimants of certain transfer payments (eg, Newstart allowance) would actually make them worse off than if the supplement had never been introduced in the first place. To draw attention to this issue, on 4 May I started what has been an ongoing series of posts about it on Twitter, along with a more detailed blog post on 14 May.

Since then I’ve been writing to MPs, Senators, Ministers and their parties about it, as well as journalists in the major media outlets, mainly via Twitter. I’ve also chatted (in the good old fashioned verbal way!) with a few people about it over the intervening months.

These efforts have shown me that it can actually be a bit difficult for some people to get their head around how it’s possible to remove a no-longer-needed extra bit from a payment and in doing so have people end up with less than the original, pre-extra bit, amount. So here’s another go at explaining it; one that doesn’t use pictures or tables or discussions about the CPI. It’s a vast simplification compared to what is actually going on, but the essential mechanism is there…