Wayne Swan and Kevin Rudd have benefitted from enormous good luck so far in their time in office. But things even out eventually, and for the Government at the moment it’s happening on pensions. They can’t take a trick.

Pensioners did well out of the Budget. Up to an additional $900 a year for various allowances, and a commitment that the base level of the pension – which is already indexed – would be reviewed in the taxation and transfer payment review to be run by Ken Henry. And, you’d have to think, that review ain’t gonna recommend a reduction.

But the idea has taken hold that pensioners had a legitimate expectation that they would get a big handout in the Budget. This is partly John Howard’s fault. Having doled out one-off bonuses in previous Budgets, seniors have grown accustomed to getting handouts every May. It’s as if the malign policy influence of Howard is continuing to wreak havoc from beyond the grave. But it’s also a consequence of a wilful misinterpretation of the Prime Minister’s remarks during the February problems with the carers’ and seniors’ bonuses, that “they wouldn’t be left in the lurch.”

You can, if you were in full-on Howard-hating mode, partly blame this on John Howard too. As if burnt by his history of relying on casuistry and grammatical distortions to claim that he never said inconvenient things, Swan and Rudd are now being held to a very high standard on their public remarks. Say you want to look at ways to ensure petrol and grocery prices are as low as possible, but that there’s no silver bullet? Well, “people heard” that you were going to lower petrol and grocery prices. Declare that pensioners won’t be left in the lurch? That means an increase in the base pension.

Doesn’t really matter what you say – it’s what the punters thought you said.

The Opposition would have gleefully exploited this, except that obscure Gold Coast MP and ageing spokeswoman Margaret May got carried away on Friday and went beyond Coalition policy. Nevertheless, no-one has really picked up on that fact that the Opposition and the Government have exactly the same position – that the base pension will be reviewed before the next election.

Never mind that stuff about the Coalition not doing it for twelve years while running the place.

A $35-a-week increase in the aged pension would, based on calculations done by the Greens during the election, cost the best part of $4b pa. In an era of $21b surpluses, this doesn’t look like a lot, but it’s still a huge figure and, in comparison, will look – forgive the Eastlakeism – even huger if the economy slows by as much as the more pessimistic commentators are predicting. And it’s the reason why even the Coalition in full-blown populist mode is unwilling to embrace the idea.

The Government’s approach is the correct one – properly assess retirement incomes in the Henry Review. At a time when, with the benefit of a week’s analysis, some commentators are starting to seriously attack the Government over its lack of aggressive expenditure cuts, it must be galling indeed for Rudd and Swan to be copping it about pensions. Kerry O’Brien even devoted five pointless minutes of The 7.30 Report last night to trying to get the Prime Minister to agree that pensions were a last-minute addition to the Henry review’s terms of reference.

There’ll be a lot more of this to come. It’s amusing (or sickening, for those with weak stomachs) to have pensioners stripping in protest, but this is a powerful lobby group that is, courtesy of our demographics, growing remorselessly. And we’re only just seeing the arrival of the baby boomers – not exactly known for their selflessness and sense of inter-generational equity – arriving in the seniors cohort.

The longer politicians can stick to rigorous analysis about retirement incomes, the better for the rest of us.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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