As Australia gradually recovers from the effects of Covid-19, Federal Treasurer Josh Frydenberg handed down the federal budget.
Typically delivered in early May, the budget speech was scheduled earlier due to the upcoming election.
Here are the salient features of the budget affecting Australian retirees.
More funding for aged care
The federal government will allocate $468.3 million over the next five years to continue the ongoing reforms announced in the last year’s budget and implement the provisions of the Royal Commission on Aged Care Quality and Safety.
A significant piece of the fund ($345.7 million) will go to the enhancement of the administration of medication management for retirees in residential aged care.
The budget cited around 218,000 retirees on Home Care packages, and 40,000 new Home Care Packages are scheduled to be released next fiscal year.
It was also noted that in September 2021, the waiting time for an aged care package was slashed by 25%.
Reducing the safety net threshold for the Pharmaceutical Benefits Scheme (PBS)
Starting 1 July, the federal government is lowering the safety net threshold for PBS.
For general patients, the threshold will be reduced to $1,457.10 from the current $1,542.10. With this reduction, non-concessional patients will only pay the concessional co-payment of $6.80 per PBS script for the year balance after the equivalent of around 34 full-priced general co-payments.
For concessional patients, the threshold will be reduced to $244.80 from the current $326.40. The 25% reduction can help seniors if they reach the threshold after 36-full priced concessional scripts. They are eligible for PBS medications at no charge for the rest of the year.
Therefore, patients can reach the threshold with about two fewer scripts for general patients and about 12 fewer scripts for concessional patients in a calendar year.
The budget paper estimates around 2.4 million Australians can benefit from this reform.
$250 payment to pensioners and other eligible Australians
The budget announced a one-off payment of at least $250 to around six million Australians. Qualified couples may receive $500 but are only available to residents who are eligible on 29 March.
The payments will be given by schedule from late April to concession card holders and qualified recipients of the following payments:
- Age Pension
- Austudy and Abstudy Living Allowance
- Carer Allowance (if not in receipt of a primary income support payment)
- Carer Payment
- Commonwealth Seniors Health Card holders
- Disability Support Pension
- Double Orphan Pension
- Farm Household Allowance
- Jobseeker Payment
- Parenting Payment
- Pensioner Concession Card (PCC) holders
- Special Benefit
- Veterans’ Affairs payment recipients and Veteran Gold card holders.
- Youth Allowance
The tax-exempt payments will not be counted as income support for the purposes of any income support payment. You can only receive one payment even if you are deemed qualified for two or more of the payments listed above.
Increasing low-income thresholds for Medicare levy
Starting 1 July, the government will increase the threshold of Medicare levy for low-income seniors, pensioners, singles, and families.
This is to consider the recent movements in the Consumer Price Index so that low-income residents can still enjoy levy exemptions.
The threshold for single seniors and pensioners will be increased to $36,925 from the current $36,705.
On the other hand, the family threshold for seniors and pensioners will be increased to $51,401 from the current $51,094.
Minimum pension drawdown rate reductions will be extended
Retirees living off their super savings are required to withdraw a minimum amount from their account every fiscal year.
The payment rate is a portion of the account balance and is influenced by the pensioner’s age.
During the early months of the pandemic, the government reduced the pension drawdown rate by 50%, and the reduced rates will be extended for the next fiscal year.
Budget changes offer ‘temporary relief’ for seniors
National Seniors Australia (NSA) Chief Advocate Ian Henschke welcomes the relief offered in the Budget but said he is disappointed by the lack of long-term structural reform to make the pension system simpler and fairer, and the lack of more funding to further address the crisis in aged care.
NSA has been campaigning for an Independent Pension Tribunal and a rise to Rent Assistance to ensure pension rate is enough for all.
“We are disappointed this opportunity for pension reform was not taken,” Mr Henschke said. “There has been some extra money provided to improve residential aged care. However, it is disheartening there has been limited investment in home care and in the aged care workforce more generally.”
Mr Henschke added that older Australians will undoubtedly welcome the government’s six-month halving of fuel excise to blunt skyrocketing fuel prices. But he said that the government could have looked at working with state and territory governments to deliver free public transport for seniors.