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12 March 2015

Tony Abbott does not like what government is doing to pensions: Liberal MP

MP Angus Taylor

Is a pension backflip coming?

It would be possible to retain the current indexation of pensions if budget savings can be found elsewhere, says Liberal MP Angus Taylor.

Prime Minister Tony Abbott "does not love" the government's plan to peg the age pension at a lower rate and if alternative savings can be found and the budget returned to surplus, a higher rate of increase could be reapplied sooner, a Liberal MP said.

The contribution to the debate on pensions by NSW Liberal Angus Taylor, a strong ally of Mr Abbott, comes amid a push by some Coalition backbenchers to force some kind of backdown on the policy.

Earlier in the week, Liberal backbencher Andrew Laming warned there were "large missiles and torpedoes" aimed at the pension plan that will see increases tied to inflation rather than wages growth from July 2017.

Mr Abbott, who promised to listen to the gripes of his backbench and has scraped away a number of barnacles, including the unpopular Medicare co-payment, in recent weeks, has maintained there are "no plans" to abandon the pension changes until the budget comes back into surplus.

The change in indexation is projected to save the budget $22 billion in the decade after 2017.

But Mr Taylor indicated the Prime Minister may be open to an alternative nonetheless, describing the lower rate pension as "not ideal".

"We don't love this measure, I don't think any of us, including the Prime Minister… love this measure," he said.

Mr Taylor reiterated that the inflation-pegged rises would only be in place until the budget returns to surplus and that was the existing policy as articulated by Mr Abbott this week, he said.

"Do we like that? No we don't like doing that. We would prefer not to. And in fact if we can get the budget under control via other measures then we won't have to do it," he said.

"I think we have to keep searching for savings opportunities in the budget."

"Ultimately, we have got to recognise that things like continuing to keep the pension growing in line with real wages, at a faster rate than the cost of living, is possible but only if we contain spending in other areas like Health and education and welfare. That's the only way we can do it."

On Monday, Mr Laming said: "I would just make the observation that there a couple of large missiles, exocets and torpedoes aimed at this policy and we're just hoping from the backbench that we will see some change," Mr Laming said.

Social Services Minister Scott Morrison said he was willing to negotiate with Labor and the crossbench to prevent the value of the pension nosediving but, like Mr Abbott, he has insisted the budget position would have to allow for changes to be made.