High earners may pay for pension reform

Prime Minister Kevin Rudd has hinted the government could target high income earners
as a way of funding a pension increase in next month's federal budget.
The government has also confirmed the budget will contain forecasts beyond the usual
four years, as it seeks to bring the expected blowout in the deficit under control.
While he was careful to say his comments did not refer to the budget, which is less
than three weeks away, Mr Rudd said it was a question of fairness as to how to fund
pension reform.
"Well, pensioners get more or we can make savings elsewhere ... or longer term you
have to look at what can be afforded by way of additional support from those who are
better off," Mr Rudd told Fairfax radio on Friday.
He said that in last year's budget people earning a salary of $150,000 had limits
placed on their access to various government benefits such as the baby bonus and
childcare rebate.
"People who are at the upper end over time, perhaps, could be in a position to
provide greater support," Mr Rudd said.
The government has promised to reform Australia's pension system, fuelling
expectations it will raise payments to more than two million aged pensioners by
about $30 a week.
But, Mr Rudd said it would cost "a truckload" of money and could add between $1
billion to $2 billion to the government's annual funding for each $10 increase to
the pension, which is $569.90 a fortnight for a single pensioner.
Asked if a tax rise was being considered, Mr Rudd said the government would not
increase taxes as a proportion of domestic product but that did not mean there might
not be changes to the "taxation mix".
He repeated his comments that the budget will be the toughest to frame in anyone's
lifetime and that the government would be looking at everything in an effort to find
savings.
"It's going to be very tough. We have spent a lot of time working our way through
this and we've still got some work to do," Mr Rudd said.
Opposition Leader Malcolm Turnbull said the government had failed to spend enough
money on infrastructure, instead splashing it about on one-off cash bonuses.
He said the latest evidence he'd seen showed that only 17 per cent of the $10
billion December economic stimulus cash handouts had been spent.
"I mean, that is a hopeless return," Mr Turnbull said on Friday.
"Whereas, if you spent it on a road or infrastructure of some kind it would all be
spent and you end up with an asset that adds to economic growth and prosperity in
the years ahead."