Bernie Ripoll (Oxley, Australian Labor Party) Share this | Hansard source

I will take it on the member for Lyons’s word that these are the biggest reforms in 100 years. I have been out in the community saying that at the very least they are the most significant reforms in terms of retirement incomes and pensions in at least three decades. They are very significant.

We took on board the view that at some point in time a government must step up to the plate and make these significant changes. The cost, while it is significant—and it is not something that should be looked at lightly—is something I see as an investment in the future of this country. In some small way it is a repayment for the years of service that many people now in their older years made to this country in a time when superannuation did not exist for them unless they were in a very few privileged positions either in the Commonwealth Public Service or, perhaps, in the military. It is quite significant. I will just place on the record the cost to the budget—it is about $5 billion a year and about $20 billion over the forward estimates. As I said, it is a good investment in the people of Australia

We went further, though; it was not just about a dollar amount increase, important as that was. It was also about indexation and about making sure that, whatever the rate was for pensioner incomes, that was matched to what was happening in reality: when they went shopping, had to pay their bills or had to meet any of the bills like those that everybody else has in their lives. It is also significant to say on indexation that the two indexes that we use, the CPI, the consumer price index, and the MTAWE, the male total average weekly earnings, were not sufficient indexes to give a true reflection of the cost of living for pensioners. So we set about not only fixing the indexation issue in terms of the timing and how much was actually indexed but also creating a new index, which is the pensioner and beneficiary living cost index, the PBLCI. These are the appropriate three indexes to use for pensioners. With those three now in place, they truly reflect the real indexation needed and the cost of living that pensioners and others who receive some sort of other payment have.

I think there could be no further evidence than the last three increases. When we look at the last three times that these pensions were indexed, two of those three times used the pensioner and beneficiary living cost index. I will just put on the record how much of a significant difference there is. We can look at the highest percentage of price increase, in the area of food—which I would say represents the largest percentage of cost to any pensioner. It went up 20.55 per cent as compared to using the CPI, which was 15½ per cent. So it is a significant increase in difference.

The other most significant area was household contents and services, which increased under the PBLCI by 10.2 per cent, compared to the CPI, the consumer price index, at 9.6 per cent. Then, in descending order, health, clothing and footwear and communication were at substantially lower and closer indexes.

This means that this Labor government has taken on board the real issue of raising, once and for all, the base that pensioners get and the supplements, not playing games with the supplements as bonuses or treating them as some sort of small windfall every once in a while—particularly before elections—but actually setting them in concrete. It has the two pillars of pension income: a base rate, which was substantially lifted, and the supplements rates, which was substantially lifted. Then the total package—those two bases that form what pensioners receive—has been linked to proper indexation with the three indexes, taking whichever is highest. I think that those substantial reforms are quite well understood out in the community and have made an enormous change. What that represents today for people receiving pensions is that if they are single and on the pension they receive $716.10 per fortnight, and couples receive a combined $1,079.60 per fortnight. It is a lot of money, and at the same time it is barely enough.

From a federal government perspective, we want to make sure that pensioners do not end up being on the poverty line as a result of poor indexation or poor structures within the pension system. Where this kicks in hard is particularly for those people who are a pensioner, receiving some sort of pension, and who also have to pay public rent through a rental scheme where those rents are then increased by the states and territories in line with CPI. I can understand the requirements of states to keep pace with costs associated with that rental accommodation, but it is important that that does not have a bracket creep effect and minimise the increases that pensioners actually receive. I know that the minister is doing a very good job in this area and has written to the states and territories, asking them to become part of what we are trying to do for pensioners—that is, to raise their amount of their disposable income and to give them a little bit extra in their pockets at the end of the fortnight. We ask them to partner with us to make a commitment to ensure that they either quarantine the rental portion of their increases or that there is some sort of agreement about making sure that we do not have a bracket creep type scenario. I look forward to a positive working relationship with the states and territories in this particular area.

I also want to take the opportunity to say another thing about pensions more generally, and that is that there is great fear in the community that, at some point in time, a government—any government—might take away the pension. I assure all those either listening to or reading this that it certainly will not come from this side of government and it will not come from the other side of government either. In all fairness to everybody in this place, I think we all support and would protect the pension for everything that it does for people. But there are some things to acknowledge, including the ageing population. The fact is that by 2050 there will be twice as many 65-year-olds, and half as many people in the workforce for every one of them to actually fund those, and four times as many 85-year-olds—some significant issues. With the lifting of the pension age, we need to look at increasing the ability and flexibility for people of retirement age to continue to work or to continue to provide for their own retirement, and ensure that the superannuation system also matches what we are trying to do in those areas, through lifting the superannuation guarantee from nine to 12 per cent. In all, this motion represents an acknowledgement of the continuing good work that has been done by this government but also an acknowledgement that we need partners in the states and territories to assist us. (Time expired)

See this speech in context