The soaring cost of living could bring a cash boost for pensioners and the unemployed with big rises now expected in September.
Fortnightly welfare and pension payments including Jobseeker and Youth Allowance are linked to inflation with new official consumer price index due for release on July 27.
Headline inflation in the year to March surged by 5.1 per cent – the fastest pace in two decades – but the ANZ bank is expecting the consumer price index (CPI) for June to surge by 6.3 per cent.
This would be the steepest increase since 1990.
Welfare payments are indexed to the CPI twice a year, in March and September, to reflect the most recent CPI increase, which includes surging petrol prices.
So a 6.3 per cent inflation rate, could see the $900.80 age pension rise by $56.75 a fortnight, on top of the $20.20 rise six months ago.
The rising cost of living is also set to push the fortnightly Jobseeker payments of $642.70 up by a possible $40.49, while Youth Allowance payments of $313.80 could go up by $19.77.
The soaring cost of living could bring a cash boost for those on pensions and Centrelink with big rises now expected
Fortnightly welfare and pension payments including Jobseeker and Youth Allowance are linked to the inflation rate-based Consumer Price Index (CPI) and will be going up in September
Even if the inflation comes in at a lower rate of 2.8 per cent, it will still push up pensions by $25.20 a fortnight, Jobseeker by $18.20 and Youth Allowance by $8.90.
The final figure will be decided when the payments are re-assessed in relation to the cost of living, based on the price of food, fuel, power bills and other vital items.
HOW PAYMENTS COULD RISE
Now per fortnight: $900.80
Rise if inflation is 6.3 per cent: $56.75
Now per fortnight: $642.70
Rise if inflation is 6.3 per cent: $40.49
Now per fortnight: $313.80
Rise if inflation is 6.3 per cent: $19.77
ANZ is expecting Australian Bureau of Statistics data, due out on July 27, will show underlying inflation – excluding high petrol prices – running at an annual pace of 4.8 per cent.
This is well above the Reserve Bank’s 2 to 3 per cent target and would mark a big jump from 3.7 per cent in the March quarter.
ANZ is expecting an annual headline inflation rate of 6.3 per cent for June, which would be the steepest increase since 1990, with petrol back above $2 a litre despite a six-month halving of fuel excise.
This would mark a big jump from the March quarter’s annual headline inflation rate of 5.1 per cent – itself the highest since 2001.
This number, also known as the consumer price index, includes big price increase like petrol and vegetables.
The spiralling inflation rate saw pensions get their biggest boost in nine years when the consumer price index-linked increase pushed them up $20.20, but the next rise could even overshadow that.
‘We are certainly looking forward to the increase, particularly as so many of the things most impacted by inflation are basic goods,’ Council on the Ageing chief executive Ian Yates told the Daily Telegraph.
‘Given indexation is six-monthly, it can mean pensioners get squeezed pretty badly [by rising inflation].’
The boost will come as Anthony Albanese’s government considers subsidising the price of electricity as Australians face soaring power costs due to an energy crisis.
The Labor government is discussing measures to alleviate pressure on households as power prices skyrocket due to a gas shortage, outages at coal-fired power stations, and a cold snap.
Experts have predicted fuel bills could even double in the current crisis.
With Europe also gripped by soaring costs after Russia’s invasion of Ukraine, the British Government announced it would give all homes a one-off $690 (£400) power bill credit in October.
With the CPI tipped to hit up to 4.8 per cent in the June quarter, the $900.80 age pension could rise by $43.80 a fortnight, on top of the $20.20 rise six months ago
Anthony Albanese (centre) is considering subsidising electricity bills as Australians face soaring power costs due to an energy crisis
Comparison site Finder warned electricity prices could double
The new Labor government will hand down its first budget in October, with Treasurer Jim Chalmers already considering cost of living relief measures.
States and territories have varying levels of power bill subsidies in place already.
Why are power prices soaring?
1. Coal-fired generators failing: More than 25 per cent have been offline for much of the year
2. Domestic gas shortages: Sources especially offshore in Victoria are running low and new development has been hindered
3. Ukraine-Russia war: European nations are moving away from Russian gas to punish Vladimir Putin, pushing up global prices
4. Cold snap: The cold snap in the east has led to increased demand
Source: Tony Wood, Grattan Institute
Victorian households get a $250 cash handout for simply signing up to the Energy Compare website while NSW households with dependent children can get a $180 discount.
In the year to March, wholesale electricity prices soared by 141 per cent.
States and territories have varying levels of power bill subsidies in place already
Australia’s economy grew by 0.8 per cent in the March quarter, a big drop from 3.6 per cent in the final three months of 2021 following the end of lockdowns in Sydney and Melbourne.
But wages are growing by just 2.4 per cent – less than half the headline inflation rate of 5.1 per cent, Australian Bureau of Statistics data showed.
State and territory power bills subsidies
In Western Australia, millions of residents are expected to receive $400 credit towards their power bill.
Synergy and Horizon Power customers in WA will have the one-off credit added to their electricity accounts from July.
New South Wales
In New South Wales, households with dependent children are eligible to an $180 credit on an energy bill.
Those receiving the payment in New South Wales must have been the recipient of the Family Tax Benefit (FTB) for the previous financial year and have had your entitlement to the FTB payments finalised by Centrelink.
Check your eligibility and apply at the Service NSW website.
Eligible South Australians on low or fixed incomes can apply for help with the cost of energy bills for their principal place of residence.
They can receive up to $233.60 a year to cover energy payments, including fuels used to generate energy (eg LPG bottled gas and petrol). The concession is calculated as a flat rate per day and is indexed each financial year.
To apply for the payment visit the South Australia government website.
Queensland pensioners and seniors may be eligible for the Electricity Rebate – $340.85 per year and the Reticulated Natural Gas Rebate – $76.19 per year.
To apply for the rebate, contact your power and gas provider. You can apply over the phone or ask your retailer to send you an application form. You will need to provide certain details and have copies of your bills and concession card handy so you can verify your eligibility. Rebates are automatically deducted from your bill.
Meanwhile, Queensland households experiencing problems paying their electricity or reticulated natural gas bills as a result of an unforeseen emergency or a short-term financial crisis can receive $720 once every two years.
For more details on the emergency payment in Queensland, click here.
Every household in Victoria is set to receive a $250 cash handout to help with the rising cost of living, as Dan Andrews launches a $250million cash splash.
Payments will start from July 1, with Victorians simply having to sign up to the Energy Compare website to become eligible for the huge cash splash.
The scheme was initially rolled out to ease the financial burden of struggling families during Covid-19 but has since been extended.
Residents will need to head to Energy Compare and register their details through the website before they can receive the one-off payment. For more details, click here.
The scheme will open on July 1 and run until June 30 2023.
Members of the Northern Territory (NT) Concession Scheme can claim a concession on household electricity costs for their main place of residence. This excludes any household used for business or commercial purposes.
You can get up to $1,200 per annum for electricity (8000kW).
For more details on the payment, click here.
Australian Capital Territory
The ACT Government offers an annual combined rebate of up to $700 through the Utilities Concession Scheme for low income households.
From 1 July 2021 the annual concession amount will permanently increase to $750.
In the 2021-22 financial year an additional $50 rebate will also be provided to eligible households, resulting in a total concession of $800.
The concession covers electricity, natural gas, water, and sewage.
For more details, click here.