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9.7.4 Historical Information

Document

Last amended 15 August 2013

Introduction of GST

On 1 July 2000 all pensions, allowances and threshold amounts were increased to compensate for the introduction of the GST, and the income taper rate was reduced from fifty cents to forty cents in the dollar for income support payments.    

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History Library - Effect of GST Compensative Measures

P5/C2

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Indexation of the MBR – Prior to-1 January 2010

    

VEA →

Certain indexed amounts to be increased in line with increases in Male Total Average Weekly Earnings

Section 59EA VEA

VEA → (go back)

Prior to 1 January 2010, the 'not a member of a couple' maximum basic rate [glossary:(:]MBR[glossary:):] of service pension was legislated to be at least 25% of Male Total Average Weekly Earnings [glossary:(:]MTAWE[glossary:):] at the March and September indexation points. If the 'not a member of a couple' MBR was not at least 25% of MTAWE after indexation against the Consumer Price Index [glossary:(:]CPI[glossary:):], it was further increased so that it was 25% of MTAWE. If the 'not a member of a couple' MBR was increased in this manner, the partnered MBR was increased by 83% of the 'not a member of a couple' MTAWE increase. The MTAWE increase was rounded up to the next multiple of $2.60.

Secure and Sustainable Pension Reform Package

On 20 September 2009, changes were made to pensions and allowances as part of the Secure and Sustainable Pension Reform package which was announced in the 2009-10 Budget.

These changes included:

Special provisions for pension MBR factor on 20 September 2009

In calculating the pension MBR factor on 20 September 2009, the new 'not a member of a couple' MBR is taken to be the MBR after indexation on 20 September 2009 but before the $60 increase to the 'not a member of a couple' MBR under the Secure and Sustainable Pension Reform package.

Adjustment of CPI and PBLCI indexation factors on commencement of clean energy supplement

On the commencement date of the clean energy supplement, the Consumer Price Index [glossary:(:]CPI[glossary:):] indexation factor and (where relevant) the PBLCI indexation factor for the relevant clean energy underlying payment will be reduced by 0.7 per cent. The reduction cannot reduce the indexation factor below 1.000. If the full 0.7 per cent cannot be deducted on commencement of the clean energy supplement, any unused amount will be carried forward to be used at later indexation points until the full 0.7 per cent is used.     

Goods and Services Tax

According to Schedule 6-B1 of the VEA a MBR is the person's maximum rate is ascertained at the date of grant of the designated pension, and is the maximum annual pension rate payable at the date of grant (excluding allowances).

 

 

According to Schedule 6-B1 of the VEA a MBR is the person's maximum rate is ascertained at the date of grant of the designated pension, and is the maximum annual pension rate payable at the date of grant (excluding allowances).

 

 

MTAWE is an amount set by the Australian statistician and published in a document called 'Average Weekly Earning, States and Australia'. Section 59EA of VEA specifies that certain income support indexed amounts are increased in line with increases in MTAWE. The first MTAWE increase of $6.80 per fortnight in the single rate of service pension occurred on 26 March 1998.

 

 

MTAWE is an amount set by the Australian statistician and published in a document called 'Average Weekly Earning, States and Australia'. Section 59EA of VEA specifies that certain income support indexed amounts are increased in line with increases in MTAWE. The first MTAWE increase of $6.80 per fortnight in the single rate of service pension occurred on 26 March 1998.

 

 

The consumer price index (CPI) provides the official measure of inflation in Australia. The CPI measures quarterly changes in the price of a 'basket' of goods and services which account for a high proportion of expenditure by the CPI population group (i.e. metropolitan households).

The consumer price index (CPI) provides the official measure of inflation in Australia. The CPI measures quarterly changes in the price of a 'basket' of goods and services which account for a high proportion of expenditure by the CPI population group (i.e. metropolitan households).

The Pensioner and Beneficiary Living Cost Index (PBLCI) is used to adjust the maximum basic rate (MBR) of pension where movement in the PBLCI is greater than movement in the consumer price index  (CPI) for the relevant indexation period. The PBLCI specifically measures changes in the cost of living experienced by pensioner and beneficiary households to ensure that pension rates keep up with the changes in their cost of living. Movements in the CPI will be compared to movements in the PBLCI and the pension MBR will be indexed in line with the higher of these two indexes before benchmarking to male total average weekly earnings (MTAWE).

 

 

MTAWE is an amount set by the Australian statistician and published in a document called 'Average Weekly Earning, States and Australia'. Section 59EA of VEA specifies that certain income support indexed amounts are increased in line with increases in MTAWE. The first MTAWE increase of $6.80 per fortnight in the single rate of service pension occurred on 26 March 1998.

 

 

A form of pension that is paid to the partner of a veteran where the veteran has died as a result of war service or eligible Defence ServiceWar widow's/widower's pension is also paid to the partner of a veteran whose death was not war caused if the veteran was a ex-prisoner of war or if the veteran was receiving Extreme Disablement Adjustment Rate, Special Rate (T&PI) or a rate increased in respect of certain war-caused injury or disease.

 

Utilities Allowance was rolled into the pension supplement and ceased to be paid on 20 September 2009.

 

 

Telephone Allowance was rolled into other payments and ceased to be paid on 20 September 2009.  For income support recipients, TA was rolled into the pension supplement. For CSHC and gold card holders (not receiving income support).TA was rolled into the Seniors supplement. Disability pensioners (not receiving income support) receive a veterans supplement instead of TA.

 

 

Pharmaceutical Allowance was rolled into other payments and ceased to exist in the VEA and MRCA on 20 September 2009. PA that was paid to income support pensioners was rolled into the pension supplement. For war widows, it was added to a component of the war widow pension. For other payment recipients, PA was replaced with the veterans supplement.

 

 

Goods and Services Tax

One element of the means test for income support pensions whereby the rate of pension payable to a pensioner reduces progressively as their income increases above a certain threshold known as the income free area (IFA).

 

 

The taper rate is used to reduce the rate of a person's service pension or income support supplement if they or their partner have any ordinary income in excess of the ordinary/adjusted income free area (IFA). Any income in excess of the IFA will reduce the maximum payment rate by a 'taper rate' of 50 cents in the dollar (or 40 cents for transitional rate of pension). The result is the income reduced rate.

The same taper rate is also used in disability income rent test calculations to determine the amount of rent assistance for service pensioners and income support supplement recipients.

In addition to the income test taper, any assets in excess of the assets value limit will reduce the maximum payment rate per fortnight by 37.5 cents for every $250 over the Asset Value Limit. The result is the assets reduced rate

 

The income free area is the amount of income that an income support pensioner may receive without suffering any reduction in pension under the income test.

The pension bonus scheme closed to new entrants on 20 September 2009. Existing members can continue in the scheme under the rules that existed prior to 20 September 2009. The pension bonus scheme provided an incentive for older Australians to remain in the workforce and defer receipt of income support pension. The incentive was a bonus, payable if all eligibility criteria and rules were satisfied.

The pension bonus was a once-only, tax-free lump sum payable to a person who, on reaching their special date of eligibility, voluntarily deferred retirement for at least one year and registered as a member of the scheme. The pension bonus was claimed at the same time as claiming pension and is calculated using the annual rate of basic pension payable at grant, multiplied by the bonus periods accrued.

The work bonus exempts the first $250 per fortnight of employment income for eligible people over pension age or qualifying age. From 20 September 2009 to 27 June 2011, only half of the first $500 of the person's fortnightly employment income was disregarded.

 

 

Seniors Concession Allowance ceased to exist on 20 September 2009. It was combined with telephone allowance and both were replaced by the seniors supplement.

 

 

The veterans supplement was introduced on 20 September 2009 as part of the Government's Secure and Sustainable Pension Reform package. It is a fortnightly payment that replaces pharmaceutical allowance and/or telephone allowance for compensation recipients who are not in receipt of an income support supplement. There are two rates, the veterans supplement low rate and the veterans supplement high rate. The low rate replaces one of the allowances and the high rate replaces both. The low rate is indexed every January to the Consumer Price Index (CPI). The high rate is always twice the amount of the low rate.

 

 

The consumer price index (CPI) provides the official measure of inflation in Australia. The CPI measures quarterly changes in the price of a 'basket' of goods and services which account for a high proportion of expenditure by the CPI population group (i.e. metropolitan households).

The consumer price index (CPI) provides the official measure of inflation in Australia. The CPI measures quarterly changes in the price of a 'basket' of goods and services which account for a high proportion of expenditure by the CPI population group (i.e. metropolitan households).

A clean energy underlying payment means any pension, payment, supplement or allowance under the VEA or MRCA that attracts a clean energy advance and energy supplement .