Graham Perrett (Moreton, Australian Labor Party) Share this | Hansard source

I rise to speak on the Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015. A tip for the listeners out there: as soon as you hear a title such as 'fair and sustainable' your red flag should go up and your radar should ping. Whenever there is an Orwellian title like that—it is sort of like Work Choices—you know you should listen carefully to what is going to follow and you should be very careful about what the government has proposed.

Pensions: we need to get a few things straight about pensions. Firstly, 'pension' is not a dirty word. It is not the dirty word the government would have us believe. The social services minister said just a few days ago:

The pension is a welfare payment, it is there for people most in need, it is a safety net payment.

I, and the Labor Party, see the pension as a recognition of the service that pensioners have given to this nation—for those doing the hard yards and those who have paid their taxes and then been provided with a secure and adequate system of support. The Queensland MP and Deputy Prime Minister, Warren Truss, told a breakfast in Brisbane:

Increasingly the lifestyle—and the savings for superannuation—are being seen as the opportunity to enjoy a few cruises and the luxuries of life—

as if our pensioners and our superannuants are living an incredible life of luxury. These statements are further evidence of a government that is out of touch with ordinary Australians, particularly our retirees. Labor understands that ordinary people rely on their pensions but are not living a life of luxury, particularly those who are paying rent and do not have their own home.

It was the Labor Party that first introduced the pension system to Australia. Take your minds back. At the turn of the century there was no social security system beyond churches and benevolent organisations. Once the colonies federated on 1 January 1901, charitable relief was provided to needy persons by voluntary organisations and in some cases with a limited amount of government assistance or government grants. The main areas of need which attracted charitable assistance were the sick poor, neglected children, old people who were destitute and women who had been deserted or who had fallen pregnant. These people who I have just described were living a horrible hand-to-mouth existence of high mortality rates and subject to the whims of employers and society. The unemployed were assisted by grants of wages or rations in return for relief work provided by the government. It was a Labor government that created our pension system in 1909, only eight years after federation, where we attached intrinsic dignity to humanity. Rather than seeing them as economic burdens to society, we saw people who were doing it tough as having intrinsic value.

In June 1908, Labor exercised the power granted to the Commonwealth upon Federation contained in the Constitution to legislate with respect to age and invalid pensions. Labor introduced means tested flat-rate age and invalid pensions. The new pensions which were financed from general revenue came into operation in July 1909 and December 1910 under Andrew Fisher's Labor government. The new pension was paid to men from age 65 and it was paid to women at age 60, but women did not receive the pension until December 1910.

Obviously our standard of living has improved significantly since 1910. Our health care has improved. Our mortality rates have improved, to a large extent due to Medicare—another Labor initiative—and obviously our life expectancy has increased. In 1910 our life expectancy at birth was 55 years. If you were lucky enough to reach 65 years, your expectation was to live only for another 11.3 years. A male child born in Australia today can expect to live to 80 years. Sorry; it would be higher than that. I beg your pardon. A 65 year old man today would be expected to live for another 18.7 years, and the ratio of workers from 1909-10 to people on the pension has changed significantly. So, as people live longer, the period of retirement has increased. Labor recognised that and we increased the end of life working age to 67. The coalition government has increased it out to 70. Obviously it is difficult—I understand—if you are in a blue-collar job; even a job like an electrician that involves crawling around in the ceiling would be difficult when you are 70 and even worse if you are digging holes or a builder's labourer or something like that.

It now costs more to sustain a person through their retirement, and there are many reasons why people have not accumulated enough savings to do that adequately. That is why Labor took the tough decision along with unions and employers to forgo wage increases for future returns by bringing in superannuation. Industry-wide compulsory superannuation was introduced by the Keating government in July 1992. Prior to that date, unless you had an income substantial enough to allow you a nest egg—and there were many people and families in particular who did not—people were destined to eventually end up on a pension. It was how the system worked prior to compulsory superannuation. Every worker paid taxes, and that allowed the government to look after those who could not afford to adequately look after themselves in retirement. People worked hard and people saved hard, but that did not always guarantee that they would have enough money to see them through the years when they could no longer work. That is why Labor introduced compulsory superannuation. The superannuation guarantee system was part of a major reform package addressing Australia's retirement income policies. Labor anticipated that there would be a major demographic shift in the coming decades which would result in an increase in aged pension payments and would place an unaffordable strain on the Australian economy: the baby boomers generation moving through to retirement. This decision was a precursor to that document called the Intergenerational report. The first one of those came out in 2002. The Labor government made a political decision in the nation's interest that we had to change because of this population that was shifting through.

So Paul Keating's Labor introduced a three-pillar approach. The first pillar was a safety net consisting of a means-tested government age pension system. We understand that. The second one was private savings generated through compulsory contributions to superannuation. The third was voluntary savings through superannuation and other investments. Think of those as three legs on a stool. The stool falls over if we do not make sure that they are all there—the pension, the private super savings and the voluntary system.

Our superannuation industry is a great system—in fact, it is the envy of the world—but we have to remember that that superannuation system was not available broadly until 1992. People reaching the current retirement age of 65 this year were already 42 years old when the superannuation guarantee came in, so half of their working life had already passed by. People who are currently receiving the pension had even less working life to accumulate superannuation. There are other reasons people may not have been able to accumulate enough superannuation to see them through retirement. People may not have had steady employment during their working lives—for example, seasonal workers or, particularly, women, who may have had time out to have children. There were also those greater pay gaps, where women were making less than men on average. I think we have just had the first year ever where the pay gap stopped going down and actually started to go back up again. There are many other factors that would have taken people out of the workforce.

It is arrogant of the coalition government to assume that everyone has had the opportunity to accumulate enough superannuation to live comfortably in retirement. Most pensioners, including part-pensioners, would quantify living comfortably as being able to afford safe, secure housing, eat nutritious food and occasionally see family and friends. That is the Australian lifestyle that we have come to expect—not that turn-of-the-century lifestyle; I would hate to see us take steps in that direction.

There is absolutely no doubt that the superannuation guarantee was a great Labor policy success. It was a difficult solution to a future problem. It was an elegant intergenerational solution. Through Labor's initiative, Australians have accumulated more than $2 trillion in superannuation assets, and this is rising. How did we do that? As I said, unions, employers and the government got together and arranged it. People decided to forgo wages for some of those superannuation commitments—three per cent, six per cent, nine per cent, 12 per cent. Keating's plan was always to get to 15 per cent. Every time we brought in those changes—three per cent, six per cent, nine per cent—those opposite, the coalition, voted against those increases. We have seen, as soon as they have got into government, that they have frozen those increases we would need to get up to the 15 per cent.

The balance sheet for Australians would look a whole lot better if the Howard government had not abandoned the Keating government's 15 per cent superannuation guarantee way back in 1996. That decision has cost the average Australian worker about $250,000 of accumulated superannuation. I again condemn the government's decision last year to abandon the previous Labor government's increase of the superannuation guarantee to 12 per cent, because that decision further eroded the retirement savings of Australians. The rate is now frozen at 9.5 per cent until 2021. I think Wyatt Roy will be in his early 40s by then, almost! This is not a decision that is in the best interests of the nation.

The Labor architect of the superannuation guarantee, former Prime Minister Paul Keating, has described that decision by the Abbott government as representing:

… nothing other than the wilful sabotage of the nation's universal savings scheme. And sabotage for reasons only of prejudice.

The three-pillared approach introduced by the Keating Labor government, vandalised by the Howard government and the current government, is now a bit of a wobbly stool. Remember the three legs—the pension, the private super savings and the voluntary savings. The government's response to their own destruction of it is to hit those who can least afford it. What a surprise! Three hundred thousand pensioners will now have their pensions cut as a result of these changes, and 90,000 pensioners will lose their pension altogether. And remember that other weapon the government had in their armoury, introduced in the 2014 budget—changing the way that the pension increases.

In real terms, this proposal before the chamber will bring $8,000 less for a potential single pensioner with $500,000 of assets that generate income of around $26,000. A pensioner couple would lose $14,000. These are people who have worked hard all their lives. They have saved hard. They deserve better from our government than to be stripped of a pension that would make their life not lavish, not extravagant, just adequate. It is the difference between being able to have some heating in winter and being cold; the difference between eating a healthy diet of good-quality, fresh food and eating cheaper, poor-quality food; the difference between taking part in a range of regular healthy activities and taking part in very few, infrequent social activities.

It was Labor that created our pension system in 1909 and built universal superannuation in 1992. Labor did not stop there. Between September 2009 and 2013 there was an increase in the maximum rate of pension of around $207 per fortnight for singles and $236 per fortnight for couples combined—the biggest increase to the pension in its history. Labor did that, and it is Labor that will continue to protect retirement incomes for all Australians and ensure their financial security. The three-tiered system, the three-legged stool, designed by Paul Keating is starting to look wobbly due to its destruction by the Abbott government and the previous Howard government. They have taken a hacksaw—and the tenon saw is out there—and they are cutting away at one of the legs. It needs to be fixed, but attacking the people who can least afford it is not the answer. It will never be the Australian way as far as Labor is concerned.

Let us have a look at that superannuation system. The reality is: we have around 400 people who have more than $10 million in their superannuation account. That shows that there is a bit of a loophole there and people are exploiting it.

The top 10 per cent of Australians receive more tax concessions than the bottom 70 per cent of Australians combined. There is something seriously wrong with those figures. The superannuation system was not designed to facilitate wealthy people to get tax relief on their millions of dollars of savings. In fact, the Treasurer's own budget papers show the total cost of superannuation tax concessions, earnings and contributions actually outstripping the cost of the age pension by the end of the forward estimates period. That is in the Treasurer's own budget papers. The growth in superannuation tax— (Time expired.)

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