Australian Council of Public Sector Retiree Organisations (ACPSRO)
ACPSRO is the peak council for organisations representing retired civilian and military public sector workers from the Commonwealth, State and Territory governments. The number of people represented by our grass roots organisations is in the region of 700,000. When their dependents are taken into account the people we are speaking for number about 2 million Australians or almost 10% of our population. On matters of common interest the members of ACPSRO ask the President to approach Government on their collective behalf.
How to contact ACPSRO
Australian Council of Public Sector Retiree Organisations
12 Muresk Street
FARRER ACT 2607
Tel: 02 6248 9609
Mob: 0412 164 404
Fax: 02 6248 0709
The inadequacy of the CPI
As part of its push to demonstrate the inadequacy of the CPI to reflect real costs of living for all sectors of the community, ACPSRO wrote to the Minister for Finance on 12 September 2017, as the minister responsible for the Australian Bureau of Statistics, recommending that while capturing statistics that measure the CPI, ie including quality adjustments, the ABS should publish the raw retail prices from which those CPI figures are derived.
We received the Minister’s response on 23 October 2017 which, readers will note, attempts to answer some matters that were not raised in ACPSRO’s letter but does not address all the issues raised or the questions that were asked. It does, at least, seem to recognize that there are problems with national standards of living which the Government does not propose to try to quantify!
A 7 November 2017 article in the Australian Financial Review (AFR) about changes being made to the CPI, which will have the effect of further reducing the CPI, was responded to by an ACPSRO letter to the AFR’s Editor on 9 November 2017. That, in turn, appeared to trigger an article in the Canberra Times written by their Economics Editor, possibly at the behest of the Australian Bureau of Statistics. That has been responded to by ACPSRO’s 15 November 2017 letter to the Canberra Times’ Editor, drawing attention to the fact that the CPI is becoming increasingly irrelevant to people’s standard of living.
On 29 November 2017, the Canberra Times published an article by their correspondent Ross Gittins about the cost-of-living pinch on wage earners. In the article, Ross Gittins, said that rising wages are the main cause of rising prices. Price rises have been small because wage rises have been small. For the past four years, wages have only risen by about 2% per year, barely keeping up with the rise in consumer prices (as measured by the CPI). Increased competition and changes in technology have been driving down the prices of many things. He said that prices of various commodities had been falling, but provided no price data to support that assertion.
In a letter to the editor, published the following day, ACPSRO explained that wage earners are now experiencing the same cost-of-living pinch that retirees and many pensioners have been experiencing for years, due to the use of CPI indexation.
On 14 December 2017, Peter Martin, The Age’s Economics Editor, had an article published in both the Canberra Times and The Age, explaining that the Government is very concerned that wage demands are not high enough to stimulate the economy. In a letter to the editors of both papers, published in the Canberra Times on 18 December, ACPSRO tried to explain that statisticians have been adjusting the CPI since 1995-6 to minimise social welfare and wage demands. Now that is taking effect, the inadequacy of the CPI to maintain standards of living is becoming apparent to everyone.
On 16 January 2018, The Canberra Times published an article by Erik Bagshaw (headlined in that paper as “Counting the cost of low wage rises”) expressing concern because “The government has predicted inflation will rise from 1.9 per cent to 2.25 per cent by next year, which could leave some workers with a pay cut in real terms.” ACPSRO responded with a Letter to the Editor on 17 Jan, explaining that, due to the way the Consumer Price Index is calculated, even a wage increase equal to the CPI leaves a worker worse off, in terms of purchasing power. As defined benefit pensioners will be well aware, due to compounding over several years those workers with just CPI wage increases will have to reduce their spending, which will have an adverse effect on the national economy.
On 3 February 2018, The Canberra Times published an article by Ross Gittins trying to explain that everyone is getting it wrong when they think that prices are rising faster than their incomes. ACPSRO wrote to the Editor, explaining that, with wages growth at or less than CPI, actually almost everyone – wage earners, Age Pensioners, Centrelink beneficiaries and retirees – are getting it dead right. That’s because, due to “quality adjustments”, the CPI reduces the retail cost of the basket of goods that it measures. The ACPSRO letter is shown in the table below.
You can read or download the correspondence in the table below.
|Date||Click here to download|
|4 February 2018||ACPSRO Letter to the Canberra Times 4 February 2018|
|17 January 2018||ACPSRO Letter to the Editor Canberra Times 17 January 2018|
|14 December 2017||ACPSRO letter to the Editor – 14 Dec 2017|
|30 November 2017||ACPSRO Letter to the Editor 30 Nov 17 2017|
|15 November 2017||ACPSRO Letter to the Editor Canberra Times 15 Nov 2017|
|12 November 2017||Peter Martin article on CPI Canberra Times 12 Nov 2017|
|8 November 2017||ACPSRO Letter to the Editor Financial Review 8 Nov 2017|
|12 September 2017||ACPSRO letter to 12 September 2017 re CPI|
|23 October 2017||Government response to ACPSRO re CPI|
The ten percent cap issue explained
One of the issues ACPSRO, together with SCOA, has been advocating on recently, is the so-called Ten Percent Cap issue. In the following, you will find comments and links to what we have done so far. Please check this page regularly. It will be updated as we continue to pursue this issue and achieve the outcome we want for our members, the repeal of the legislation.
The 2015 Budget measure known as the 10% Cap came into effect on 1 January 2016.
The measure reduced from 50% to 10% the amount of tax-free income that defined benefit pensioners can exclude from the age Pension income test. The only justification that has ever been provided by the Government has been based on pensioners’ pre-30 June 1983 service.
The then-Minister for Social Services, Mr Morrison, gave, as his one example, that it is possible for a retiree couple on a defined benefit pension of $120,000 pa to receive a (very small) part Age pension. To their credit, on 25 June 2015, the Australian Greens, in the Senate debate on the measure, expressed misgivings about the likely actual effects of the 10% Cap, and promised to review the matter if their misgivings proved justified.
On 9 March 2016, after the effects of the 10% Cap would have become clear, ACPSRO wrote to the Minister for Human Services, requesting simple data about its impact on various levels of retirees’ income and, in particular, how many of those affected had no pre-30 June 1983 service at all.
Eventually, after attempts by the Office of the Minister for Social Services to avoid answering, eg claiming the Caretaker Convention, the Department of Social Services responded on 18 May 2016. In the second paragraph of the second page, the Department advised that it does not hold “administrative data” about who has, or has not, any pre-30 June 1983 service. The subsequent data provided in that letter, however, demonstrated that the financial effect of the 10% Cap measure has fallen predominantly on defined benefit pensioners on quite modest retirement incomes. Almost none of the data appears to to match Mr Morrison’s May 2015 example of a retiree couple with a defined benefit pension of $120,000 who had been receiving a part Age pension.
On 13 July 2016, after the General Election, ACPSRO wrote to the Minister for Social Services, pointing out the inconsistency of the data with the original claimed intention of the 10% Cap measure, and requesting corrective measures be taken.
On 16 August 2016, a departmental officer responded on behalf of the Minister, maintaining the original official line on the justification for the 10% Cap. ACPSRO responded on 26 August 2016, pointing out why the original concern about pre-30 June 1983 service is misconceived and, more pertinently, that imposing the 10% cap measure on retirees with no pre-30 June 1983 service is quite unjust.
In the same late-August period, ACPSRO wrote to the Australian Greens, requesting them to make good on their 25 June 2015 promise to have the matter reviewed if experience demonstrated unintended consequences, and sent letters to the Senate cross-bench, for example to Senator Xenophon, providing them with the background if the matter comes up for discussion.
On 9 December 2016, the Government’s “answers” to a number of Greens’ Questions on Notice that had been asked in Senate Estimates hearings were published here. Readers can see that most of the questions were not answered and ACPSRO released a media statement on 16 December 2017 which concludes:
“We are approaching the anniversary of the implementation of the 10% cap policy. Its history is replete with prevarication, prejudice and now more evasion. As they reflect on the cuts to their own retirement incomes, many far from affluent defined benefit retirees feel bitter contemplating the tax cuts and pork-barreling which the Government has felt able to provide to others this Christmas“.
ACPSRO is not aware of any subsequent action by politicians of any party to query or seek further advice on the Government’s non-answers on the 10% cap.
At that point (i.e. December 2016), strident public protests commenced about changes to the age pension assets test, which were to apply from 1 January 2017. One saving grace for those pensioners was that at least that 2017 assets test measure did not affect part-age pensioners with smaller asset levels. That is in contrast to the 2016 10% cap, which reduced the age pensions of even low-income defined benefit pensioners if more than 10% of their benefit defined pension was tax-free income derived from the retirees’ own contributions.
In early 2017, outcry about both those issues – the 10% cap and the assets test changes – was swamped by even wider public concern and ridicule about Centrelink’s attempts at automated data-matching to recover claimed over payments of all forms of pensions and allowances. The public furore obviously won’t help defined benefit pensioners who were affected by the 10% cap but it may give them some satisfaction to watch the Government’s continuing discomfort.
ACPSRO recommends that member organisations bring this compendium of documentation to the attention of affected retirees so that they may raise the matter with politicians.
On an associated matter, ACPSRO has made a submission to a Senate inquiry into legislation which attempts to define the objective of superannuation. Readers will see that the thrust of ACPSRO’s submission is that any consideration of the objective of superannuation must include how to maintain real world purchasing power of all forms of superannuation income.
The above quoted documents are also available in the table below.