Carbon cash for retirees

SELF-FUNDED retirees will receive quarterly cash payments from the federal government to make up for rises in everyday household bill costs associated with a carbon tax.

By InvestSMART · 3 Jul 2011

By InvestSMART ·
3 Jul 2011

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SELF-FUNDED retirees will receive quarterly cash payments from the federal government to make up for rises in everyday household bill costs associated with a carbon tax.

As the Multi-Party Climate Change Committee inches closer to a final deal on the tax, the government will match the sweetener delivered to pensioners when it unveils details of its compensation package.

The Prime Minister, Julia Gillard, will also pledge that motorists will be spared an increase in petrol prices as fuel will never be subject to the carbon tax, even if an emissions trading scheme is introduced in 2015, News Ltd reports.

For almost 300,000 self-funded retirees who already hold a Seniors Health Card, household assistance would be delivered through the seniors supplement.

It is understood that, of this number, 100,000 self-funded retirees will also receive tax cuts to help meet the added costs of the carbon tax.

Single people who earn up to $50,000 a year and couples earning $80,000 a year combined from their superannuation or other investments would receive a dollar-for-dollar payment equal to any indexed rise in the pension.

Pensioners are expected to receive a 2.5 per cent increase to their regular payments - a rise of about $500 a year for singles and $760 for couples - and that would be replicated for the nation's low- to middle-income-earning retirees.

The Minister for Climate Change and Energy Efficiency, Greg Combet, has promised "millions of households will be better off under the carbon price". More than 1 million low-income households will receive assistance equal to 120 per cent or more of their cost of living increases.

The Treasurer, Wayne Swan, said self-funded retirees had been hit hard in recent years by the global recession and would not be excluded from extra financial help.

"Self-funded retirees have worked hard all their lives to build up our country and provide for their own retirement, so the Gillard government is determined to provide cost-of-living help as we go about cutting carbon pollution," he said. "Australians on low, middle and fixed incomes have been front and centre for the Gillard government and we'll make sure we keep looking after them."

The government has already confirmed nine out of 10 households would receive a mix of tax cuts and increased payments to offset costs associated with the carbon tax.

Ms Gillard confirmed last week that tax cuts and increased family payments would form the bulk part of the carbon price compensation package.

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Frequently Asked Questions about this Article…

What kind of carbon tax compensation will self-funded retirees receive?

The federal government plans to provide quarterly cash payments to self-funded retirees to make up for rises in everyday household bills associated with a carbon tax. For many recipients, this assistance would be delivered through the existing seniors supplement.

Who qualifies as a self-funded retiree for the carbon-tax household payments?

According to the article, almost 300,000 self-funded retirees who already hold a Seniors Health Card would receive household assistance through the seniors supplement. In addition, single retirees with up to $50,000 a year and couples with up to $80,000 combined from superannuation or other investments would receive dollar-for-dollar payments equal to any indexed rise in the pension.

How much extra income will pensioners and low- to middle-income retirees get under the compensation package?

Pensioners are expected to receive a 2.5% increase to their regular payments — roughly $500 a year for singles and about $760 for couples. The article says this rise would be replicated for the nation's low- to middle-income-earning retirees.

Will motorists face higher petrol prices because of the carbon tax?

No. The Prime Minister pledged that motorists will be spared an increase in petrol prices: fuel will never be subject to the carbon tax, even if an emissions trading scheme is introduced in 2015.

How many households are expected to benefit from the carbon price compensation measures?

The government has confirmed that nine out of 10 households would receive a mix of tax cuts and increased payments to offset carbon-tax-related costs. More than one million low-income households are expected to receive assistance equal to 120% or more of their cost-of-living increases.

Will any self-funded retirees get tax cuts as part of the carbon tax package?

Yes. The article states that of the roughly 300,000 self-funded retirees with a Seniors Health Card, about 100,000 will also receive tax cuts to help meet the added costs associated with the carbon tax.

When might an emissions trading scheme be introduced, and how does that affect compensation?

The article mentions the possibility of an emissions trading scheme being introduced in 2015. Regardless of that timing, the government has said fuel will not be subject to the carbon tax and the compensation package — including tax cuts and increased payments — will be used to protect households.

Which government ministers have commented on how households will be affected by the carbon price?

The article quotes the Minister for Climate Change and Energy Efficiency, Greg Combet, who said 'millions of households will be better off under the carbon price.' Treasurer Wayne Swan is also quoted, saying self-funded retirees would not be excluded from extra financial help after being hit by the global recession. The Prime Minister, Julia Gillard, is reported to be matching the pension sweetener in the compensation package.