There have been criticisms similar to yours, expressed in the Canada section of the Brtish Expats forum.
With respect, a "Pensioner" is a person who has already reached retirement age. The Pensioners represented by the ICBP, the BPIA and other similar associations in other countries have already contributed to the British ecomony. Most of them did so for at least the 30 year mininum period required by the National Insurance provisions in the UK, which makes them eligible to receive the full amount of the British State Pension once they reach the UK's official retirement age, which is 65 for men and I believe that there is a sliding scale for women, in the same way as there is in Australia.
The British Government started off by saying that British Pensioners will only receive the annual increments to their State Pensions for as long as they live in the UK. The Pensioners living abroad, spearheaded by a lady called Annette Carson challeged this assertion by the British Government by arguing their own case in the Europeal Court of Human rights in about 2007 or 2008. The ECHR ruled that the annual increases must be paid to any British Pensioner who lives in an EU country or who lives in a country that has a reciprocal Social Securty Agreement with the UK.
This element of the issue is particularly felt over in the USA and Canada. If the British Pensioner lives in the USA, the annual increment will be piad by the British Government. If s/he lives in Canada, no uplift is payable. The difference is solely that the USA has a Reciprocal Socal Security Agreement with the UK but Canada does not. Half a mile can make a difference since the official Border is only about an inch wide.
For the British Pensioners in Australia, the issue is slightly different. What happens in Oz is that if a British Pensioner has been a Permanent Resident of Australia for at least 10 years then the Australian Government will pay the British Government the difference between his/her frozen British State Pension and the minimum amount of the Australian Age Pension.
The Australian Government are not happy about the fact that the Australian tax-payer can end up subsidising a British Pensioner who lives in Australia but the Australian Government believes that it would be fundamentally wrong to leave any Permanent Resident or Citizen of Australia to starve.
One of he witnesses who apeared before the ECHR to ullustrate the "Australian Issue" is an old gentleman who has lived in Australia since 1972. Before he left the UK, he had paid his full 30 years-worth of National Insurance Contributions. If he were still living in the UK, he would receive the State Pension of £97-odd per week GBP. Because he has been living in Australia for so long, he receives £6.75 GBP per week by way of his British State Pension.
Nevertheless, he had paid his full National Insurance Contributions before he left the UK, therefore he is actually sobsidising the annual increases for the British State Pensioners who live in the EU or in countries like the USA. Is it reasonable to require this man to do that, even though he does not get this annual increase himself? Your own argument says that it is reasonable for the man in Australia to starve in order to subsidise other British Pensioners who haveeither not moved away from the UK or who have moved abroad to a country where they will receive the annual increment. I don't know whether you have realised this but that is the inexorable logic of what you have asserted. The old gentleman whom I have described is in his late 80s or early 90s at the moment. It is not reasonable to expect him to work anywhere, with respect.
If the British Government had their own way, they would not pay these increases to any British Pensioner who does not physically live in he UK. That was their starting position but the ECHR overruled the British Government's stance and the British Government considers itself to be legally bound by the edicts of the Judges who sit in the ECHR (several of whom have no legal qualifications either in their own countries or elsewhere.) About 500,000 British Pensioners are believed to live outside the UK. About 1/4 of them benefitted from the first Judgenent handed down by the ECHR.
Ms Carson and about 13 others represented all of the remaining British Pensioners before the Grand Chamber of the ECHR in 2009. They were represented by Tim Otty QC, who did an excellent job. However the 17 Judges (some of them non-lawyers) from 17 different EU countries who together constitute a Bench in the Grand Chamber of the ECHR ruled that the ECHR has no hurisdiction to try the remaining issues. They say that the ECHR has no power to bind the British Government as regards the other countires involved, of which Australia is one - about 250,000 British Pensioners are believed to live in Australia.
If there were an International Court of the Commonwealth or if the UN had a similar International Court then Ms Carson and her allies would doubtless go to complain to such a Court. However, there is no other Court they can go to now that they have failed in the ECHR. The ECHR made no comment about "fairness" because the ECHR said that it has no jurisdiction to get involved with the matter on any level. Most of the British Pensioners who still receive no annual increment are believed to live in Commonwealth countries, of which Australia is oe, as are New Zealand and Canada. A few live in Malaysia, under Malaysia's MM2H retirement visa. Malaysia is also a member of the Commonwealth.
The Australian Government are hugely sympathetic towards this problem of disparity between different groups of British Pensioners and, obviously, they are particularly sympathetic towards the British Pensioners who live in Australia. The Australian Goverment have "made noises" saying that they do not approve of this on-going disparity but the Aussies cannot openly criticise the British Government, for the same reason that they would not put up with thatif it happened the other way around! So the Aussie Government are "silent supporters," if you like. If the British Government voted to end the disparity and to pay the annual increases to British Pensioners living in Australia, the Australian tax-payer's own financial burden would be reduced.
Because there is no further Court to appeal to, it now comes down to whether the ICBP can persuade the British Parliament to vote for a change in the Law. To try to do that, they need to get at least 100,00 signatures on an e-petition. If they can get a strong enough e-petition then the Back Bench Committee might agree that the issue should be debated in the House of Commons. That would be a start, because the British Government will not change the Law unless the MPs in Parliament insist that they must do so.
As a matter of interest, have you lived in Australia all your life or are you a skilled immigrant to Australia? My own mother has been a Permanent Resident of Australia since 2006. She has a Contributory Parent Visa, which cost $30,000 AUD at the time. This visa now costs about $50,000 AUD per person. The Aussie tax-pauer is not giving something but getting nothing in return, I can assure you. Mum has just turned 91. She'll be 96 by the time she is able to claim anything by way of the Australian Aged Pension - assuming, of course, that she might live to reacjh the age of 96, If she doesn't then the Australian tax-payer (including yourself, I imagine) will get a free windfall. However, we have been aware all along that this might be the case. I am not arguing about the actual money. I am arguing about the fundamental unfairness of the on-going disparity between British Pensioners.
Regarding your own point about "where would the money come from," the Daily Telegraph's investigative journalists looked into this very question a few months ago. They proved conclusively that there is plenty of money in the British Government's "State Pensions Pot." Presumably it is being used for other piuposes - such as paying for wars of doubtful legality in Iraq, Afghanistan and Libya.