There were always a couple of areas where the Coalition’s preferred narrative of a bold, reformist government being stymied by a populist, obstructionist Senate was on the money. One was on fuel excise indexation. The other was its plan to use a normal indexation process for the age pension, rather than a higher wage-based index.

The pension indexation proposal was sensible — there’s no reason why the age pension should increase faster than other forms of welfare payments — and brave from the government, especially given its voting base tends to be old. But ever since its announcement, Labor has used the proposal to hammer the government, over and over.

Scott Morrison has now abandoned the pension indexation proposal, exchanging it for what is in effect the removal of higher, more generous pension tapering thresholds for high-income retirees put in place by the Howard government. Morrison’s replacement proposal is also sound policy — wealthy retirees should not be entitled to the pension, which is supposed to be a safety net, not a form of post-work welfare or reward for living a long time.

Ideally, we would have had both policies, providing the government with substantial savings in the years ahead. Nonetheless, Morrison has found a way out of the deep political hole the government dug for itself with its inability to justify its original indexation proposal.

Perhaps this government has some capacity to pull off worthwhile reform after all. The coming weeks will reveal whether Joe Hockey has managed to learn anything from Morrison’s example.

Peter Fray

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