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Thursday, 25 March 2004
Page: 27375

Mr Organ asked the Minister Representing the Minister for Finance and Administration, upon notice, on 2 March 2004:

(1) Is he aware that the increases to ComSuper pensions paid to retired public servants are based upon increases to the Consumer Price Index (CPI).

(2) Has he considered basing future increases to ComSuper pensions on increases to Average Weekly Earnings; if so, will he explain why increases are still based on the CPI.

Mr Costello (Treasurer) —The Minister for Finance and Administration has supplied the following answer to the honourable Member's question:

(1) Yes.

(2) The Government considers that indexation using the Consumer Price Index (CPI) increase method provides an equitable and satisfactory method for calculating pension increases and protects the living standards of retired Australian Government employees.

The best analysis of the cost of living of retirees is contained in a recent article published by the Australian Bureau of Statistics (ABS) entitled “Analytical living cost indexes for selected Australian household types: update to June 2003”. In this article the ABS measured and compared changes in the CPI against changes in prices of out-of-pocket living expenses experienced by different categories of households, including self-funded retiree households. The results have revealed that the CPI compares favourably with the cost of living index for self-funded retiree households over the four year period to June 2003. Based on these results, the ABS article concluded that “the CPI provides a reasonable estimate of changes in living costs for each of the selected household types over this period.”

The ABS findings reinforce the Government's belief that the CPI does provide a reasonable measure of the cost of living, and that the living standards of retired Australian Government employees are not being eroded because of this method of indexation.