Joe Hockey has conceded the government’s planned changes to the aged pension would result in payments being about $7bn lower than they otherwise would be in 10 years, as the treasurer was the target of a parliamentary question time attack over the budget.
Hockey acknowledged the estimates but said he was taking steps to ensure spending was sustainable, while defending the expensive paid parental leave scheme as being important for workforce participation.
Labor’s series of questions sought to intensify pressure on Hockey and culminated in the opposition leader, Bill Shorten, telling Tony Abbott to “either dump his treasurer or dump the budget”. The question to the prime minister was ruled out of order.
The scrutiny on the budget comes amid considerable uncertainty over the fate of contentious measures including the proposed new GP co-payment, which the influential Palmer United party (PUP) has declared to be dead.
University vice-chancellors have stepped up their efforts to lobby crossbenchers over the proposed deregulation of fees, with the education minister, Christopher Pyne, due to present his legislation to parliament on Thursday.
Representatives of major community groups also visited Parliament House on Wednesday seeking to persuade senators to block contentious welfare measures, including the proposal to strip young jobseekers of income support for six months at a time.
The Australian Council of Social Service and more than 100 community groups signed a joint statement condemning “unnecessary and harsh proposals” in the budget, such as changes to pensions and family payments that would “erode the value of the payments over time”.
Labor took up the issue in question time on Wednesday, pointing to a parliamentary budget office (PBO) report quantifying a slowing in the growth in the age pension.
This is partly the result of a budget decision to index the age pension to movements in the consumer price index (CPI) from September 2017, ending the current practice of pegging increases to average wage growth or CPI whichever is higher.
“In 2024-25 savings measures relating to the age pension are projected to reduce spending by $6.9bn,” said the PBO report released last week.
Hockey told parliament: “I am actually advised that over the next decade the pension is going to increase by 5.1% on an annualised basis and in 2024-25, according to the parliamentary budget office, instead of being $74.8bn a year it is $67.9bn a year.”
The treasurer said the age pension would continue to increase every six months, but the move to CPI increases only would ensure spending remained sustainable.
Labor challenged Hockey over his previous comment in a radio interview that “it is strongly arguable that pensioners are going to be better off”.
Hockey told parliament the starting point was the government’s success in scrapping the carbon tax and keeping the compensation that was attached to it.
“The only way the age pension system can be affordable, sustainable and generous into the future is if you have a government that lives within its means,” Hockey said.
The treasurer accused Shorten of “crying crocodile tears” and demanded Labor spell out its plan to return the nation’s finances to surplus. Hockey reaffirmed the Coalition’s broader narrative about the need to tackle debt and deficit left by the previous government.
The opposition also targeted Hockey over another finding in the PBO report that spending on the government’s proposed paid parental leave scheme was “projected to grow in real terms by 12% annually over the medium term”.
Hockey said the policy was an important part of efforts to increase workforce participation and would be fully funded by a levy on the largest companies in Australia.
The treasurer was angered by a question from Shorten suggesting the government would force children with profound hearing loss to “get by with less support once they sell and privatise Australian Hearing”.
Hockey said the question was “complete, unmitigated rubbish” and reflected “a scare campaign against the most vulnerable in the community on the basis of total misinformation”.
Australian Hearing did “an outstanding job”, he said, but it competed with a range of other private sector providers who also provided appropriate services.
In response to a separate question about how many people would be deterred from seeing a GP by the proposed $7 Medicare co-payment, Hockey confirmed it was estimated to have a 1% impact on attendance numbers in the first year.
Labor’s treasury spokesman, Chris Bowen, said in a statement that the government should scrap the budget and “go back to the drawing board”.
Bowen said despite Hockey’s claim about workforce participation benefits, the Productivity Commission had questioned the merit of the Coalition’s expanded paid parental leave scheme.
The opposition’s spokeswoman on families and payments, Jenny Macklin, said Hockey had “finally admitted” in question time that the government was cutting the age pension.