Page 3674 - Week 09 - Tuesday, 23 August 2011
Next page . . . . Previous page . . . . Speeches . . . . Contents . . . . Debates(HTML) . . . . PDF . . . . Video
Canberra community in this context to highlight this factor. Former commonwealth employees and others who are on the CSS or PSS pension are now superannuants and they have complained for many years that they are disadvantaged because their pensions are indexed to changes in the CPI. Their argument is that by indexing their pensions to CPI, they are falling further and further behind in attempting to maintain their standard of living. As they get further and further behind in their relative cost of living, this is the case even though these superannuants are receiving pensions under a defined benefits scheme.
Strength is given to the argument of those superannuants by the actions of this ACT government in the 2006 ACT budget. Members will recall that in that budget, as a consequence of the still-secret Costello report into the ACT public sector and services, the ACT government itself announced that the general rates would be increased each year according to changes in wage price index rather than according to consumer price index. It is most instructive to see what the government said in support of this change from CPI to WPI. They said that the increase in general rates in the past has been capped at CPI. The cost of municipal services, however, increases at a higher rate. To maintain parity between revenue and expenses going forward, annual general rates will be increased with the wage price index.
So what the government said was that CPI is not the measure of what is happening in the community, that things are far more expensive because the basket that we use to take the CPI temperature does not include all of those things that reflect the day-to-day living costs of ordinary Canberrans. That is the problem for us. It is not just affecting superannuants; it affects all in the ACT. What is more interesting is that the analysis underlying this change in the summary of the Costello report, released as part of the 2006 budget, did not say any more than the comment in budget paper 3 page 40, which I just read out. So we still do not know the logic behind it. All we know is that the government has taken the measure that gives them greater revenue; an acknowledgement that their costs are going up, but they are not willing to assist Canberrans when their personal costs go up.
The ACT government made a significant change in the way in which rates are to be fixed, and there is a paucity of argument to support this change. So much for an open and accountable government. I think it is therefore up to us to speculate on why the ACT government made this change. I suspect that the CPI does not pick up the full extent of changes in wages and salaries, perhaps because the businesses providing some goods and services do not increase prices to the full extent of any increases in costs, especially employee costs, and it reflects the nature of the competitive market for many goods and services. The net result for consumers is that, for those who receive benefits indexed by CPI, they must fall further and further behind in their cost of living.
A third factor could arise for those families which have overcommitted in taking out a mortgage in the period prior to the global economic and financial crisis. Since that time, many families have come under considerable pressure as increases in interest rates cut into the net income coming into the households. One most significant factor from the global turmoil of recent years, among other factors, has been the increasing conservatism of Australian consumers. From being a nation of spenders, particularly
Next page . . . . Previous page . . . . Speeches . . . . Contents . . . . Debates(HTML) . . . . PDF . . . . Video