Speaking to a parliamentary committee, DSS deputy secretary Nathan Williamson said inflation had gone backwards, meaning if the payment was indexed as it usually is during the month of September, there would actually be a reduction in payments.

“Based on the calculation for indexation, if it’s negative, we don’t reduce the pension, but we also don’t increase it,” he said.

However, the consumer price index (CPI) only fell by 1.9 per cent in the June quarter, mainly due to the government’s introduction of the childcare subsidy.

The June quarter fall was mainly the result of free childcare (-95.0 per cent), a significant fall in the price of automotive fuel (-19.3 per cent) and a fall in preschool and primary education (-16.2 per cent), with free preschool being provided in NSW, Victoria and Queensland. 

Chief economist for the ABS Bruce Hockman commented: “Excluding these three components, the CPI would have risen 0.1 per cent in the June quarter.”

He also pointed out that the cost of living was still increasing for main items, including cleaning and maintenance products (+6.2 per cent); other non-durable household products, which includes toilet paper (+4.5 per cent); furniture (+3.8 per cent); major household appliances (+3.0 per cent); and audio, visual and computing equipment (+1.8 per cent).

Despite the next review being in March, Mr Williamson was unable to tell welfare recipients if they would receive a pay increase in March 2021.

“I’m not in a position to say that because we have to wait to see the broader economic outcomes,” he said.

JobSeeker, which is also linked to the CPI, will maintain its current rate, while the single parent payment will go up by $3 a fortnight from 20 September.

The base rate for the age pension in Australia is $860.60 per fortnight for a single person, or $648.70 for each half of a couple.