The federal government is seriously considering scaling back access to pensions for wealthy Australians.
Social Services Minister Scott Morrison is in talks with crossbench senators and the welfare sector to pass laws which would ease spending on pensions over coming decades.
If nothing is done, the intergenerational report projects the government will spend 3.6 per cent of GDP annually on pensions by 2055.
Under the government’s current plan being blocked in the Senate the bill would be 2.7 per cent of GDP, or $14.4 billion a year less, Mr Morrison says.
The Australian Council of Social Service has asked the government to cut the asset test threshold from $1.1 million to $794,250, excluding the family home.
ACOSS chief executive Cassandra Goldie describes the proposal as fairly modest, arguing the pension should target people who really needed it.
Mr Morrison says the proposal is a “real option” which he would cost alongside a plan by South Australian independent senator Nick Xenophon.
The minister met with Senator Xenophon on Wednesday to discuss the idea of a tapered assets test, which existed under the Keating and Howard governments.
The taper rate under the Keating government was about $3 per fortnight cut from the pension for every $1000 of assets held over the threshold.
“That to me seems a sensible starting point to look at some pragmatic changes that are fair to pensioners and ensure the long-term viability of the pension,” Senator Xenophon said on Thursday.
However, he is certain the government’s proposed change to pension indexation would never get through the upper house.
Mr Morrison said big spending items such as the national disability insurance scheme – due to cost the federal government an extra $10 billion over a decade – would be at risk if the pension could not be made sustainable.
The minister declined to comment on another suggestion, to bring back the pension bonus scheme.
However, Prime Minister Tony Abbott said it was worth looking at the scheme, in which people who work past their retirement age are paid a benefit through the pension system.
The pension bonus scheme, which has been closed to new applicants since July 2014, paid a lump sum of up to $49,000 to people who deferred claiming the age pension and stayed in paid work.
Shadow treasurer Chris Bowen – who convened a meeting of peak superannuation bodies, business, unions and community groups in Sydney on Thursday – described Mr Morrison’s position as “the latest in a long line of thought bubbles”.
National Seniors chief executive Michael O’Neill said the government had not made the case that there is a pension crisis.
Recent OECD figures showed Australia spent 2.5 per cent of GDP on pensions while the OECD average was 8.7 per cent, he said.
Much of the pressure on the budget was the fault of the government having dropped billions of dollars in savings.
“Pensions are being targeted as low-hanging fruit,” Mr O’Neill said.