Labor will oppose the Abbott government’s proposal to tighten the eligibility test for the part pension, making it harder for the Coalition to get nearly $3bn in budget savings through the parliament.
The opposition leader, Bill Shorten, confirmed the decision to block the measure at a Labor caucus meeting in Canberra on Tuesday.
The Coalition is seeking savings of $2.4bn over four years from changes to pension asset tests, a policy that replaced the unpopular plan in the 2014 budget to cut pension indexation across the board.
The government’s policy would create winners among retirees with more modest means and losers among those with significant assets. It includes a reduction in the maximum value of assets people could hold to remain eligible for the part pension.
About 91,000 current part-pensioners would no longer qualify for the pension and a further 235,000 would have their payments reduced, but the government says more than 170,000 pensioners with modest assets would have their pensions increased by an average of more than $30 per fortnight.
A Labor source said the changes would affect more people over time.
“These are not rich people, they are not on high incomes – and they deserve dignity and security in their old age,” he said.
“This government is attacking two generations of pensioners rather than tackling generous super tax breaks for a very wealthy few. Pensioners are always the first people this government goes after.”
The $2.4bn saving from the pension asset test is part of the government’s social services legislation amendment (fair and sustainable pensions) bill 2015. Together with some smaller measures in the same bill, Labor is opposing $2.9bn in savings. But it will support a further $1.5bn in savings, including scrapping the seniors supplement.
Labor’s opposition to the pension asset test changes forces the Coalition to seek a deal with the Greens, or alternatively with six out of eight crossbench senators. The Greens have signalled their openness to the changes so long as the government agrees to a comprehensive review of retirement incomes, including superannuation tax concessions.
