Pensioner cost-of-living index attacked
A new cost-of-living index designed just for pensioners has been condemned by a former Public Service chief who said the index would greatly understate increases in the cost of living faced by pensioners.
The index is being based on a different mix of costs to the mainstream Consumer Price Index and will be used to increase pensions at times when it grows faster than wages.
But Tom Hayes, a former head of the Department of Industry, told The Australian newspaper that it would only measure “pure” price increases rather than actual price movements.
“Washing machines, for example, increase in price. But because they get better all the time the Bureau of Statistics discounts the new higher prices to compare machines of equal quality.
“In real life lower priced machines of the old quality will almost certainly no longer be available. All that pensioners can find in the stores is an ‘improved’ model with a shelf price not matched by the ABS estimate,” Mr Hayes said.
“Aspects of this new index might well be more relevant to pensioners than the existing CPI, but they will be completely swamped by the use of pure pricing and not shelf pricing,” he said.
