Bert Van Manen (Forde, Liberal Party) Share this | Hansard source

I congratulate the member for Lyons on his motion. In Forde we have a large number of retirees, and their questions and concerns to me are very much along the lines of what the other members have spoken about here today. So I have no concerns with the raising of the issue; much more work needs to be done in this area. It is important to note that a recent report from Mercer, an Australian centre for financial studies—which ranks pension systems based on adequacy, sustainability and integrity—rates our pension system as still the fourth best in the world.

The report notes that the provision of financial security in retirement is critical for both individuals and societies, as most countries—as has been acknowledged here today—grapple with the social and economic effects of ageing populations. The question that then needs to be asked is: what part of that retirement income is going to be funded by governments and how much is going to be funded privately? It is necessary for governments at present to fund a significant component of a retiree’s income as the superannuation system is a relatively recent alternative, with certain exceptions. We have not really started to see the long-term benefit of that.

The ability of people to save for retirement, or for those in retirement to have their income keep pace with rising living costs, is an increasingly difficult problem, both from the perspective that a lot of people are not contributing themselves and from the perspective that the government does not have the ability to constantly increase pensions to keep pace with living costs. In my view, it is not appreciated that this problem is in part or largely created by government monetary and economic policies. For governments to constantly increase pensions to keep pace with cost-of-living or rent increases they have to do one of two things: either increase their taxes, which is a primary source of revenue, or go further into deficit to solve those issues. Those two issues are important in discussing pension increases. The reason for that is that the increase in supply of money is a true indicator of what inflation really is. If inflation is the increase in the supply of money, the CPI or other measures are only really a measure of those effects of inflation. It is therefore necessary to identify the true causes of this issue for pensioners struggling to maintain their lifestyle.

It not only applies to pensioners but also applies to families in relation to housing affordability. We have talked about rental affordability for pensioners. It also applies to families. It also applies to governments in trying to rein in or manage the costs of building infrastructure or maintaining health and education systems. The problem is not only local but also global. We have however been somewhat insulated in Australia due to the previous coalition government running budget surpluses and accumulating capital. We have also had a robust banking system, although it still has its concerns as well. Therefore, until governments are prepared to deal with those underlying fundamental issues of those massive increases in costs based on an increasing supply of money, we are not going to deal with the issues of keeping pace with the costs of living. In addition, if governments are going to continue to increase their deficits or their spending to fund these increased pension payments, we will have an ongoing problem because deficits by their nature create more money in the system and that creates that inflationary problem. So it becomes a cycle of the dog chasing its tail.

Seeking to pass this problem off to the state governments, as the motion proposes, is not the solution, because the state governments are suffering from the same issues. It is an acknowledgment by the federal government that they either do not understand the cause of the problem or, if they do understand, have no desire to really fix the problem. They would rather pass it off to someone else.

Pensioners are facing issues on a number of fronts. This is irrespective of whether they are solely reliant on the age pension, receive a part age pension and some investment or private pension income or are fully self-funded retirees. They are facing increasing electricity prices, in part as a result of chasing expansive green power as an offset to the supposed man-made climate change problem. They are facing increased local government rates, fees and charges as local governments struggle to deal with issues of keeping pace with infrastructure and the stuff they have to do. They are facing increased water prices as councils seek to recoup the costs of massive capital expenditure incurred in seeking to drought-proof towns and cities. That is a particularly relevant discussion in Forde and Queensland. They are facing increased food and grocery costs as businesses seek to pass on the increasing costs they face due to increasing input costs, including electricity, raw materials, interest rates, wages, rents et cetera.

The member’s motion seeks to link the state increases in rents and power costs with any rises in pension payments to limit state increases in rents in particular. This is also applicable to residents in nursing homes and retirement villages, where they determine fees on a percentage of the age pension received. It is also far-fetched to accuse utility companies—in this case, electricity companies—of increasing power costs as a result of pension increases. The motion seeks to pass the buck to the states for the federal government’s inability to manage its finances in a manner that maintains downward pressure on inflation and therefore cost-of-living increases. Pensioners do risk becoming impoverished, however—not through the actions of the state and territory governments but through the actions of the federal government and its management of finances, as noted previously. In order to deal with these issues on a long-term basis we need to encourage those currently in the workforce to save more for retirement via the superannuation system.

Whilst a number of speakers have mentioned the need to deal with that as well, the current government has recently reduced contribution limits, so it is reducing the incentive for people to save. It is also a longer term issue, because the superannuation system has not been in place long enough to see the flow-through effects of that savings capacity. There was a report in today’s media saying that a lot of people and even businesses do not fully understand our superannuation system. So we need to do a lot more work to educate them to accumulate that capital that is necessary for them to fund an adequate retirement. As all members here have touched on, the ageing population problem is going to result in a continuing greater impost on governments if we do not start to accumulate a larger level of funds through our superannuation system.

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