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Tanner leaves pension increase open

Posted October 13, 2008 09:03:00
Updated October 13, 2008 11:54:00

Finance Minister Lindsay Tanner has not ruled out an early increase to the aged pension as the global financial crisis continues.

The Federal Government says all pensions are being reviewed ahead of next year's Budget, but a new report by the Australia Institute suggests an immediate increase would stimulate the economy.

Mr Tanner has told ABC Radio's AM program that the Government is still considering where spending could be increased.

"I'm not going to speculate on what the possible target is for any assistance, via spending some of the surplus, to keep economic activity moving," he said.

"There's a wide variety of possibilities available to the Government. All of these things will be under consideration."

Yesterday Prime Minister Kevin Rudd said the crisis would cause a slowdown in Australia and cost jobs.

"We've entered a new and damaging stage in the global financial crisis with real impacts on economic growth and jobs around the world and with real impacts on economic growth and jobs here in Australia," he said.

Opposition Leader Malcolm Turnbull has backed an early increase in the rate of the pension to stimulate the economy.

"An immediate stimulus, a near-term stimulus has got to put money into people's pockets today and one way of doing that, of putting money into some very empty pockets is to give the $30 a week increase to the pensioners," he said.

Banking guarantee

Mr Tanner says it is "highly unlikely" the Government's guarantee of all bank deposits will ever need to be used.

Yesterday Prime Minister Kevin Rudd announced the unlimited guarantee, which he estimated amounted to around $700 billion.

Mr Tanner says international circumstances made the move necessary but it does not signal there are troubles within Australia's banks.

"The key reason for doing this is because other countries have been doing similar things, other countries which do have serious problems within their banking systems, which we don't," he told Radio National.

"The challenge for us though is if our banks are left unprotected then they are at a very serious competitive disadvantage relative to other banks."

Australia's major banks have welcomed the Federal Government's move to guarantee customer deposits.

The chief executive of the Australian Bankers Association, David Bell, says Australian banks are well run, well regulated and there has been no threat to depositors' funds.

But he says it is good move to give people confidence.

Mr Tanner echoed Mr Rudd's assessment that the international economic crisis has reached a "new and damaging stage" which made the guarantee necessary.

He also said the Government was continually considering whether more regulatory measures are needed and if any reforms are required they will be dealt with on a case by case basis.

The Government has also guaranteed money Australian banks borrow from foreign institutions and will put another $4 billion into shoring up residential backed securities.

Nationals Senator Barnaby Joyce says while maintaining confidence in banks is essential, the Government must also protect the public from rising unemployment in the coming months.

"Any person who loses a job or has a mortgage is in a very serious position and that's my main concern," he said.

"The working class suburbs of the major capitals is where this is going to bite."

Senator Joyce says he expects the Senate will support the legislation to guarantee deposits in principle but the detail of the bill must be considered.

While Greens Senator Bob Brown agrees that the measures must be taken, he is highly critical of the earnings of banking executives.

"There needs to be something done about the quite obscene rake-off from CEOs in banks in Australia which we've seen in the last 12 months," he said.

"We as parliamentarians - if we're going to relieve those bankers of the responsibility of securing their bank - need to look at relieving the taxpayers who ultimately pay extraordinary CEO multi-million dollar annual take-homes."

Tags: economic-trends, banking, aged-care, federal-government, international-financial-crisis, australia

Comments (34)

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• Pen Pal:

  13 Oct 2008 10:09:51am

  It's always amazing to me that it is only when there is a crisis at our backdoor that the government can see fit to consider adjusting pensions ahead of their planned timetable of May 2009.
  
  Also, Mr Tanner is making comments about the banks as if the government has natioanalised them - we must remember, the Government has only guaranteed the deposits, it hasn't actually given any money as yet and hopefully, they won't have to.
  
  

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  • Taiabada:

    13 Oct 2008 10:41:45am

    Pen Pal - Right On! But even the realisation now by the Government, is only playing catch-up to get us back to square one. The present economic situation is set to immediately place even more load on pensioners, many of whom had small fund investments which have now become almost non-existent. The May 2009 timetable, which was the date for the report to be considered, was only a delaying tactic by the Government and designed to put the actual cash-in-hand adjustment probably back to Oct-Nov 2009 at the earliest.

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    • Sadstateofaffairs:

      13 Oct 2008 11:03:05am

      Taiabada, if older peoples' investments have shrinked to nothing, that's the risk you take on the stock exchange. Simple as that! You must always remember.. ALWAYS.. that the previous government very little in a LIFE TIME of governance for non self-supported retirees. Australia, unlike so many other nations, has a wide and complex welfare system, and it's understandable that reform takes time. This is about major reform, after all! Older people must always remember that they're not the only ones that are waiting, nor are they the only ones that are struggling.

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      • Pen Pal:

        13 Oct 2008 11:38:43am

        It is a "sad state of affairs" when we just put the pensioners in a basket and close the lid and then tell them that it is just their bad luck if they have lost money on the Stock Exchange.
        
        It is not the pensioners who brought this crisis on - it's the people in lending institutions who don't have as much idea about running a company any more than the average Joe in the street. But you want to deny the pensioners some natural justice and yet I don't read of your complaining that the government has guaranteed your money in the bank!

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      • Sadstateofaffairs:

        13 Oct 2008 11:59:50am

        I don't have any money anywhere. I'm a welfare recipient because of illness. This government has not and WILL not do any such thing, mate.. ie 'just put the pensioners in a basket and close the lid and then tell them that it is just their bad luck if they have lost money' TRUE, SIGNIFICANT REFORM TAKES TIME, NOT JUST FOR THE ELDERLY PENSIONERS, BUT FOR EVERY PENSIONER! That's all...

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      • Taiabada:

        13 Oct 2008 12:28:26pm

        No risks taken by this 70+ y.o. pensioner. I wasn't referring to Stocks held. My meagre fund was from AMP superannuation, to which I had obviously contributed over my working life rather the peeing my earnings against the wall to become a drag on the government. Either way this government is still on the "smoke and mirrors" path and the PM on the same ego-trip.

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      • Sadstateofaffairs:

        13 Oct 2008 12:39:53pm

        I disagree, and ofcourse I'm free to do so. We seem to have forgotten the big general slogans of previous leaders, that Australians haven't been better off, that Australia hasn't been better off, that we're in a very good place now..... (??)

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• Ivan:

  13 Oct 2008 10:12:50am

  Oh ... The Labor Party has heard.
  
  Goes to show what a loud wake-up call can do!

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  • Ping Pong:

    13 Oct 2008 12:51:29pm

    Ah, the art of the backflip. Will we see Mr Rudd take this art to a new high? Me-thinks Me-too will dazzle us will his skills in this art form.

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• JC:

  13 Oct 2008 10:19:33am

  Finally our "leader" has decided to do something by introducing these guarantees. All last week he was calling for the need for a "global approach" to the crisis but was unwilling, even up until Friday, to take up the lead of other nations. The market response - billions of dollars moved offshore to safer havens and our dollar goes backwards. Thanks Mr "reaction man." Did he get a phone call from sidekick Swan saying, "hey, we've got a real problem here, the DOW is stuffed, markets are falling and things are looking a bit "iffy?"'
  
  And now the latest - ohh gee, we think we might be able to do something for the pensioners now because the world is becoming tough and we really think we may need to give you a bit of cash to help out!
  
  Excuse my sarcasm and cynicism, but leaders are elected to lead not to react. Come on Kev, we deserve better. If you cant lead, hand the reins to someone else within the party. Nearly 12 months down and you arent showing much.
  
  

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  • rb:

    13 Oct 2008 10:49:28am

    Re- "leaders are elected to lead not to react".
    
    That's exactly what Kevin Rudd did!
    
    He did not do the populist, knee-jerk Turnbullnesque reaction, but thought - yes thought - good and hard on the best course of action to be taken and announced a very measured response to the global financial crisis affecting Australia.
    
    A message for all Keven Rudd bashers - just get over it.

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    • JC:

      13 Oct 2008 11:01:45am

      Is that why he has taken up the "knee jerk populist Turnbullesque reaction?" Come on RB, both these "announcements" could have been dealt with a lot better without causing additional "angst" with our economy. There is enough pressure in finance circles without decisive leadership. Mr Rudd has had enough on the job training. If he cant hack the job, or the criticism (and that goes for his supporters too), then he should move over. He is not in the diplomatic corps any more. He is there to be a strong effective leader.
      

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  • Horrocks:

    13 Oct 2008 10:52:17am

    JC
    
    it's funny though that Turnbull argued for $100 000 and the government decried it, now they have gone even further now they are talking about raising the pensionafter poo pohing Turnbulls bill the other week, shades of last year and the kevin Me too syndrome, now they just do the same thing, wait for the opposition to make a suggestion, decry it and then wait for a few days and come up with an announcement similar but not a perfect copy as if it is their idea. How gullible do they think we are, surely most people have woken up by now that Rudd et al have absolutely no idea as to how to govern and only govern by reaction, so who is populist in reality

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    • Sadstateofaffairs:

      13 Oct 2008 11:13:20am

      It's simply political stunts, and that's dangerous stuff mate! I would say that Turnbull deserves all the poo-hooing going. His every appearance on television depicts a patrician toff with an answer for everything. He's ridiculous. HOW CAN ANYONE SIMPLY PROVIDE QUICK AND FIRM ANSWERS FOR ALMOST EVERYONE AFFECTED UNDER SUCH EXCEPTIONAL CIRCUMSTANCES? WHAT RUBBISH!
      The government must act swiftly in such unprecedented turmoil, but it must .. MUST act in the BEST interests of its' nation and the people. I believe consultation is MORE THAN IMPERATIVE! It's a tight wire! Our leaders' are simply men and women, nothing more! Mr Turnbull must think that he's an emperor or something.....

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• bec:

  13 Oct 2008 10:19:54am

  I totally agree with Senator Bob Brown. How could Richard Fuld (Lehman brothers) be given a package of $480million over the past 8 years when the company ran to ruins?.... It seems like the money has gone into the pockets of the executives, and out of the taxpayer's pockets.

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• Kim D:

  13 Oct 2008 10:23:31am

  So, who wants to remind our politicians of a little thing called Disability Support Pension?

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• P Q:

  13 Oct 2008 10:24:19am

  Guaranteeing our banks is a very bad idea. They have borrowed huge amounts from overseas and therefore owe large amounts in foreign currency. The depreciation of Aussie dollar means that our banks may not survive. This was what triggered the Asian Financial Crisis but our banks and the former government did not seem to learn from that mistake.
  
  If Kevin Rudd and team want to save our banks, they have to take over control of them and sack senior executives who made such basic mistakes. In addition, the regulatory authorities need to cap foreign borrowings to avoid future risks.

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  • Pen Pal:

    13 Oct 2008 11:47:27am

    P Q - what makes you think a Government can run a bank better than the private sector?
    
    I don't trust the Government ('specially this one) with my taxes, let alone my savings & investments.
    
    The Commonwealth Bank has only become stronger since it was privatised.

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    • Roberto:

      13 Oct 2008 1:16:15pm

      Well the Commonwealth Bank became stronger for shareholders, not for customers.
      
      I would trust the government sooner to give pensioners a basic fee free account with some minimal overdraft coverage against OD fees.
      
      For example, it's usually the battlers and strugglers and pensioners who fall into overdraft as they move from pension payment to pension payment trying to pay their bills, but the banks still heartlessly grab $25 in fines each time from those who can least afford it.
      
      I've always supported an idea of a fee free pensioner-type account handled through Australia Post for instance to allow pensioners to get paid, and pay their bills and avoid the banks altogether.

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• stephen:

  13 Oct 2008 10:25:00am

  Saying and doing are not the same thing. What is $30 but something which has already been absorbed by the rising cost of living? $30 equates to NOT ENOUGH. Snap out of it... if Australia cannot afford pensions now or in the future, say so now and lets have people die for lack of nutrition. That way we'll save on overall service provision.

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• watcha:

  13 Oct 2008 10:35:04am

  How do you spell flip - flop?
  
  One day it's the the poor old pensioners who will have to suffer to help the governments new found, well paid pals on the bank boards and the next we find they may actually be able to save the economy.
  
  I am not sure that lifting the investment support for the non bank mortgage market will help the economy all that much in the long term.
  
  While boosting confidence in the financial sector is important, as Mr Joyce says, the demand for housing loans in this time of financial turmoil is going to plummet.
  
  As I have said before on these pages, a better alternative would be to ensure that the workers in the construction sector (and associated industries) are kept in their jobs.
  
  This could be facilitated by way of a Private Public Partnership (PPP) between the state and federal governments with the banks and builders to build more public housing stock.
  
  There is a huge demand for housing across the country due to the well documented shortage and keeping the construction industry ticking over (albeit slowly) and people in their jobs (for the next 10 years?) is vital.
  
  The government could actually allow the superannuation funds to foot the bill as they will receive a return on their investment (by way of rent) which won't be happening through the sharemarket for quite some time. A small return is better than nothing.
  
  But, given the amount of time it takes messers Rudd, Swan and Co to make a decision a strategy of this nature may take 3 years to implement, which is far too long.
  
  The government must act and act now or the roads of this country may end up full of swagmen again.

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• grumpy grannie:

  13 Oct 2008 10:35:21am

  oh the irony!
  
  I don't know whether to laugh or jump up and down in rage (but either way it's keeping me warm so excuse me while I turn the heater off and save electricity)
  
  so Lindsay's thinking he might pay us enough to give us a bit of pocket money so that the widow's mite can save an economy stuffed-up by people who siphon up salaries with too many noughts to fit on this line!!
  
  seems like the old and infirm might have their uses after all
  
  got ten cents for a boy scout mister?!

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• P:

  13 Oct 2008 10:47:09am

  It's all designed to bring us into line with the New World Dis-order's agenda - led by a new UN financially green charter. Rudd as suspected follows orders.

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• chris:

  13 Oct 2008 10:50:20am

  Now there is a real rish that the banks will have no fear with what they do with investers money and will keep ripping out big greedy bonus`s Its a sad joke that banks are geting help but not those with morages who are loseing their homes who are not geting help from these same banks !! If I hear of some banker walking away with millions after whats happen this goverment will not be geting my vote next time!!!

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• db:

  13 Oct 2008 11:05:07am

  If this is being done to give the economy a bit of a kick, why is it not being extended to self funded retirees, and others?
  They, like pension recipients, contribute to the economy too.

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  • Diane:

    13 Oct 2008 11:33:53am

    It has been shown that any increase the poorer groups are given, gets spent. They don't save it or hoard it. So give an increase to the Pensioners (please include Disability and Carer pensioners) and single parents. They will spend the money and keep the economy going.

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    • db:

      13 Oct 2008 12:42:30pm

      Diane, I agree entirely about Disability and care pensioners, they must be included, however, you are making a big assumption that self funded retirees would horde the money. They are just as likely to spend it as anyone else.
      Why shouldn't they get something? They've paid their taxes, probably still are.

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• WBEMBRIDGE:

  13 Oct 2008 11:16:42am

  It easy to find money for pensioners just cut back on foreign aid we give millions away, the government is alway gutting back everywhere else why not in this area

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• Diane:

  13 Oct 2008 11:30:22am

  Can someone please explain to me why everyone is shouting for an aged pension increase and no increase for the Disability Support or Carers pensions? Are you under the impression that the other pensions will automatically receive the rise as well? We won't. We are also only receiving $273 per week and some of us have medical needs that aged pensioners do not. There aren't as many of us. If we protested at an intersection we probably wouldn't even disrupt traffic. Please, please, please consider a rise for those of us, who aren't aged pensioners but who are also struggling on $273 a week.

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• Rainbows End:

  13 Oct 2008 11:33:34am

  Now how good was the Howard Government?
  Let the CEO's and Financiers runaway with obscene golden parachutes at the expense of Pensioners, Investors & Taxpayers, then when we sack the Pollies they all runaway from their mess to live happily ever after on their self created golden handshake thanks to us. Remember the Squillions on self promotion, the great Pal G. Bush, the Vaille sell out, from your predecessor Mr Turnbull.
  Now at least we are in repair mode, and as pensioners we built this country, so we need some cash back so we can get the economy back on track, and legislate so the silvertails cant stuff it in the future with their self interest dream schemes and golden rake offs.

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  • wmc:

    13 Oct 2008 12:23:34pm

    The Howard government left it's successor with an excellent budgetary position that can now be used to reduce the effect of the crisis on people like you.

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• Cynic:

  13 Oct 2008 11:54:52am

  I had hoped this government would take a harder line with the banks, by, for example, requiring them to provide a minimum number of fee free transactions for everyone each month. After all, as Paul Keating put it in a recent interview, the banks are really in the role of public utilities. In previous times it cost nothing to use one's own money, but now they slug us at every turn and pay themselves fortunes from the proceeds. Have a look at the Commonwealth Bank's agenda for the next AGM - big increases for directors and management, who have stood by while shareholder value evaporated. Rudd's lot are clearly in bed with grossly overpaid bank executives. In return for deals which prop up bank management he should exact a price - caps on vast salaries, fee hikes and the like. Don't hold your breath.

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• Roberto:

  13 Oct 2008 12:46:33pm

  The best way to help our banks is to give our pensioners another $100 per week in their pensions. Pensioners SPEND their money on life's necessities including mortgages (money goes to the banks), or rent (money goes to the banks as most rental properties are bought on mortgages) or spending on groceries (most stores have been set up on business loans), so you see, any pension increases will just go to the banks anyway...
  "Two birds with one stone" ??
  
  And by the way, pensioners spend the money IN Australia. Self-funded retirees deal in trust accounts where moneys are invested oversees like China maybe? I'd rather give to pensioners who spend here and help Aussie businesses.

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• rammergramps:

  13 Oct 2008 1:05:18pm

  Common guys they have been putting out this dribble for so long.
  I will believe it when it hits my bank account.
  I am on DSP too, so how about equal grounding as its being discriminating, the pensioners have the same ammount of income.
  In government housing my rent will go up too.
  Give me the $500 like the AGED get and I would be happy as it would also offset the rising accounts.
  So enough discrimination. Be equal and fair to DSP as well.
  We have medical expenses just like the AGED. Some of us reside in country Australia and cannot access like people are able to do in most parts of capital cities.

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