Pension rules for household solar energy panels

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MADONNA KING: Changes are being announced this morning to the Rudd Government’s solar electricity policy. Thousands of Australians have solar polars on their roof. They’re able to sell any excess electricity they generate back to the grid, in exchange for a tariff. The tariff means that many Australians treat solar panels as a green investment. You’ve asked me to explore this, because if you’re a pensioner, what you’ve earned will be counted as an income. Minor changes this morning.

Jenny Macklin is the Minister for Community Services. Good morning.

JENNY MACKLIN: Good to be with you.

MADONNA KING: What changes are you announcing this morning?

JENNY MACKLIN: We’re clarifying the way that feed-in tariffs from household solar panels are assessed for the purposes of the pension income test. So if you’re a pensioner feeding in electricity into the grid and you’re getting money back as a credit on your electricity bill, that credit will not be assessed as income under the pension income test.

If – and we understand that the use of tarif… of credits to reduce the total of a pensioner’s electricity bill is the way that most state and territory feed-in tariffs schemes work. If, however, it is the case that power is sold back to the grid, in return for cash, or a cheque, or a direct deposit into someone’s account, then that will be counted as income, because we need to be fair to pensioner’s who are getting income from other sources. So…

MADONNA KING: That does reduce its value as an investment.

JENNY MACKLIN: Well most people are receiving credits on their electricity bills and we understand that’s the way most systems work. You’d also know that pensioners are able to earn money. If I give you the amounts; single pensioners are able to earn up to $142 a fortnight, without affecting the amount of pension they receive. And if you’re a couple, you can earn up to $248 a fortnight. I think it’s very unlikely we’ll have too many people earning more than that from electricity income as a result of selling electricity into the grid.

MADONNA KING: But would you concede this isn’t the sweetener to go solar that it was painted out to be?

JENNY MACKLIN: I think the clear sweetener is that if pensioners are receiving a credit on their electricity bill – and as I understand it that is the way most of the systems work – then that will not be assessed as income under the pension income test.

MADONNA KING: So they get to pay their bill, in essence, as their investment?

JENNY MACKLIN: That’s right.

MADONNA KING: And anything earned above and beyond that, they must report to Centrelink?

JENNY MACKLIN: That’s right. Just like they do for any other income earned, whether it’s from superannuation or rent that they might have for an investment. Money that they earn on interest. We need to make sure that the system is fair to pensioners. But where pensioners are receiving credit on their electricity bill, it won’t be assessed as income under the pension income test.

MADONNA KING: So that I understand this, won’t this mean though that pensioners will just use as much electricity as they like, because that part of it’s free. But beyond that, they’ve got to actually count it as income?

JENNY MACKLIN: I think most pensioners are pretty sensible when it comes to using electricity. And, of course, if they can get a credit off their electricity bill as a result of having solar panels, that will be in their interests.

MADONNA KING: Things have changed constantly in these areas haven’t they? We’ve had insulation changes. Changes to solar hot water rebates. Can you guarantee this will not be changed again?

JENNY MACKLIN: Well this is an area where we have responded where a problem was raised. Of course, when issues get raised with us, we look at them and we make sure that we address them as quickly as we possibly can. We certainly have in this case. You’d be aware that we made very, very substantial improvements to the pension last September and that flowed through to very good increases in indexation for pensioners in March this year

So if you count the total increases from both September and March, we’ve seen an increase of just over $100 a fortnight for single pensioners. So…

MADONNA KING: But that’s not a reason to then penalise them…

JENNY MACKLIN: I think some of it…

MADONNA KING: …in another way.

JENNY MACKLIN: I think Madonna, if you’re going to be fair, some of the changes have actually been pretty positive.

MADONNA KING: Yes, but people are making decisions on whether to insulate their house, or whether to get solar hot water, or whether to get solar panels on their roof, based on a policy announced by the Government, and which it gets good publicity for. For the Government then to find big problems with each of them, you can see that pensioners or people in general might become cynical.

JENNY MACKLIN: Well I think pensioners understand that if they earn income they have to report it to Centrelink. So that’s not a change. That’s been a policy that’s applied by many governments over a very long period of time. What we’re doing here is clarifying the rules. Making it plain to pensioners that if you receive credit on your electricity bill, then that won’t be counted as income against the pension income test.

MADONNA KING: All right.

JENNY MACKLIN: So that’s a positive.

MADONNA KING: Green rebates and bonuses have changed a bit. There are rumours circulating in the industry certainly suggesting some states might slash their grid fee tariff later this year. Do you have any knowledge of that?

JENNY MACKLIN: I don’t. They’re really matters for the states, so I’m not familiar with those. But certainly any of those rebates that people get to put to help them with the costs of putting solar panels on their roofs, are not counted for the pension income test.

MADONNA KING: So if grid fee tariffs were slashed by any state, would the Federal Government step in and offer a tariff.

JENNY MACKLIN: Oh, I’m not getting into any of these hypotheticals. As you said Madonna, a few minutes ago, they’re just rumours. So let’s see what decisions are made.

MADONNA KING: Jenny Macklin, thank you.

JENNY MACKLIN: Thank you.