The PM has remembered how to differentiate cuts and lower increases but that won't quell anger down the line

The important difference between an absolute cut and a reduction in a predicted future increase was often lost on Tony Abbott in opposition.

He would, for example, warn of catastrophic job “losses” due to the carbon tax, using as evidence modelling that in fact showed employment would continue to grow strongly, but slightly less strongly than had the carbon price not been there.

He accused the former government of “cutting” the health budget when it had in fact pared back future projected increases in the health budget because of some statistical thing that no one could ever really understand.

But now, in government, he’s right on to the difference. It’s like a miracle, or something. And it’s Labor who are suddenly having trouble with the absolute cut versus lower future increase thing.

So when Bill Shorten accuses him of “cutting” or “ripping off” pensions, Abbott responds, quite correctly, that pensions will continue to increase every six months, imploring Labor to just have the decency to tell the truth.



Aged, disability and carer pensions will from 2017 continue to increase. But they will increase by the consumer price index (CPI) – in other words inflation – and not (as they have for the past 20 years) by average weekly earnings, an increase that is usually higher.



It sounds all very technical/boring/why would you even worry about it. And in the short term the impact will be mild.



But those lower increases make a big difference over time. It’s exactly because it increases at the higher rate that the aged pension is now worth more than $7,500 more a year than unemployment benefit, which has for the past 23 years been indexed to inflation as the pension now will be.



And just a few months ago the Abbott government passed legislation applying the more generous annual increases to some military superannuation benefits at a cost of $1.4bn over four years. The higher indexation arrangements, it said then, were “fair”.



But when it comes to aged, disability and carer pensions the same indexation arrangement it says is unsustainable, and must be changed to deliver a structural saving.



According to the Australian Council of Social Service, the new pension indexation rates will mean the pension is worth $4,000 a year less in real terms in 10 years’ time.



And according to the Council on the Ageing (Cota) that is definitely unfair. “From September 2017 the value of the pension will decrease every six months. The CPI does not reflect the spending patterns of low-income people, including pensioners. It does not keep pace with the standard of living. The government says that the pension is an income replacement payment. We agree, and that is why it must be linked to wages,” COTA’s chief executive, Ian Yates, said.



“The pension is not supposed to be some kind of subsistence payment,” he said.



In the first instance he is banking on the change being knocked off in the Senate, which seems likely since Labor, the Greens and the Palmer United party (PUP) have said they will vote against it and none of them are leaving much room to change their minds.



But if somehow it looks like getting through, grey power will once again be on the march. “If needs be, older people will make their views known,” Yates said.



Many of the highest concentrations of pension recipients are in National party seats, such as Page, Hinkler, Lyne, Cowper and Gippsland.



That could mean pension changes could have real political consequences for the Coalition. In absolute terms.

