A SECRET plan to kick millionaires off the aged pension was shelved by the Abbott Government’s budget razor gang in favour of slashing the indexation of payments for every pensioner in Australia.

The Sunday Telegraph can reveal that cabinet’s budget razor gang was asked to consider reforms to slash pension payments to wealthy seniors last year by changing the taper rate.

In another stunning leak from the nation’s most powerful cabinet committee, senior ministers have confirmed they agonised that the Prime Minister would be accused of kicking seniors off the pension and breaking a clear election promise not to cut pensions.

Instead, Treasury proposed a change to the indexation arrangements for all pensioners _ meaning the rate of increase would effectively be slowed _ from 2017.

“They got political, and said we won’t break the promise if we don’t do this until 2017,’’ a Liberal source said.

“They didn’t go in blindly. They still believe they haven’t broken the promise and they haven’t cut pensions.

The indexation change was announced in the May budget. Welfare groups and Labor argue it will cut pensions by $80 a week within 10 years. According to the Parliamentary Budget Office, this amounts to a $23 billion cut to the cost of the age pension by 2023.

For the first time, Liberal sources have revealed the indexation cut was not the preferred option of former Social Services Minister Kevin Andrews.

Mr Andrews had instead proposed a targeted cut that would only hurt wealthy seniors.

His preferred solution was to change the taper rate to withdraw pension payments faster from wealthy seniors with investment properties and investment income. The family home would have remained exempt from the pensions asset test.

Over time, this would have helped slow the growth of the large numbers of asset-rich Australians who claim the age pension.

This proposal would have reversed the 2006 decision by the Howard Government which brought more higher income seniors into Australia’s aged pension system by easing the taper rates.

Treasurer Joe Hockey preferred a cut to indexation for all pensioners because it would deliver a larger “structural save’’ to the budget. It was argued that this could be achieved without breaking the budget promise to protect pensions, because the change would not come into effect until 2017.

Privately, the Department of Treasury also raised concerns at the time that any change to the taper rate would act as a disincentive for seniors to save. However, the Department of Social Services argued there was little evidence for this assumption.

Senior Liberal sources have also revealed senior ministers also kicked around options to slash indexation payments within Mr Abbott’s first term as PM. This would have delivered a clear breach to the Prime Minister’s election eve declaration that there would be “no change to pensions’’.

Labor leader Bill Shorten told The Sunday Telegraph the revelations of the secret cabinet deliberations were a disgrace.

type_quote_start “Every pensioner in Australia will be worse off under this Liberal Government” type_quote_end

“Tony Abbott lied to pensioners before the election, and now every single pensioner has to pay the price for that lie,’’ Mr Shorten said.

“Every pensioner in Australia will be worse off under this Liberal Government.

“It’s ridiculous that while the pension is being cut, some multinational corporations are paying little to no tax, and multi-millionaires are receiving new tax breaks from the Government.’’

The Sunday Telegraph has approached the Prime Minister’s Office for comment.

The Audit Commission report also suggested a similar reform to the taper rate, suggesting it be increased to withdraw benefits at the rate for 75 per cent the dollar after pensioners reached an income threshold. Currently, the rate is 50 cents in the dollar.

Currently, around 80 per cent of seniors still claim the pension despite the introduction of compulsory superannuation.

Economists, senior groups and even welfare groups would have supported the taper rate proposal with the Australian Council of Social Services promoting before the last year’s budget as a targeted cut to middle class welfare.

Debate over the aged pension is set to flare again in the lead up to the Abbott Government’s second budget because it costs taxpayers $40 billion a year.

New Social Services Minister Scott Morrison has ruled out any changes to the pensions assets test that would include the family home.

According to government figures, around 80 per cent of seniors claim the aged pension.

Last week, The Sunday Telegraph revealed that the Prime Minister defied the concerns of Mr Andrews and Employment Minister Eric Abetz to impose a six months wait for the dole for school leavers under the “earn or learn’’ policy.

The senior ministers had raised concerns within the budget razor gang that the waiting period was too lengthy and would require more exemptions.

The report followed another major leak from the budget razor gang last month that revealed the Prime Minister defied the wishes of Treasurer Joe Hockey and former Health Minister Peter Dutton to impose a $20 cut to the Medicare rebate.

The policy proved a political disaster, with the Prime Minister backflipping over the proposal after a backbench revolt.