Pat Conroy (Charlton, Australian Labor Party) Share this | Hansard source

I rise to speak on the Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015. The measures in this bill cannot be separated from those in the 2014 budget, because we know that the 2014 budget was one of the most unfair, inequitable pieces of public policy in recent history. Pensioners were targeted by the government as an easy source of revenue, despite the promise of the Prime Minister that there would be no changes to the pension—a promise he made nine times before the last election and which he has most grievously broken.

Labor joined forces with the community and fought against the changes to pension indexation that would have seen up to $80 a week stripped from pension payment rates. In the electorate of Charlton, which I represent, almost 20,000 pensioners would have been worse off had these changes been legislated. They were not, because we won. Pensioners won, Labor won and the government lost. That policy is now off the table but not because the government has seen the error or the inequity in its ways; it is off the table because the government knows that it has been defeated.

However, we may have won the battle, but the war is not over yet. What is before us in this bill is the next phase of the government's push to unfairly target pensioners. The government says that these changes are to tweak the pension assets test. They defend the point by pointing to those with greater assets, who will lose their part pension, and those with more modest assets, who will receive an increase of up to $15 a week. They talk about the way these changes will impact on people right now, but that does not mean they are fair.

In the five weeks since the proposal appeared in the budget, Labor has examined these changes in detail. We reserved our right to take a position on these measures until we were clear on what the impact would be. We have looked at how it will impact people now but also how it will impact retirees in the future. We have worked through the policy details and consulted with the ageing and superannuation sectors to understand the true impact of these changes.

Here is our verdict: Labor will support some of the proposals in these bills but not the most grievous. We will support a 10 per cent cap on income from defined benefit schemes that can be excluded from the pension income test, a measure that will save over $465 million. We will not block the government's move to abolish the seniors supplement. This move will save over $1 billion over the forward estimates. However, we will not support the abolition of the pensioner education supplement, which supports pensioners, including those on disability support pensions and carer payments, with a payment of between $31 and $61 per fortnight as they undertake study. We will not support the abolition of the education entry payment, which supports recipients of Newstart, parenting payments and partner or widow allowances with a payment of $208 per year to assist with study costs.

This is an important point. Those on this side, the Labor Party, will not support removing a payment that helps widows and single parents to get an education. The coalition government is trying to take away assistance for widows and single mothers to get an education and improve their lives. We will not support it. We also will not support a reduction in the portability of the pension and we will fight with vehemence against changes to the pension asset threshold and taper rate. These changes will have a negative impact on those people who are amongst the lowest income earners in Australia, and the number of people adversely affected will significantly increase over time. This proposal in particular is not a fair one, nor is it commensurate with the spirit of the retirement income system.

The government wants to increase the asset threshold above which, with the exclusion of the family home, the value of those assets reduces pension payments. It then accelerates the rate at which payments are reduced, from a reduction of $1.50 in the pension payment for every $1,000 in assets above the threshold to a reduction of $3 for every $1,000. For those whose assets are above the current threshold but below the proposed new threshold, there will be a small gain. Those who will be most affected are single home owners with assets valued at over $250,000 or couples with assets valued at over $375,000. According to the government, there are currently 236,000 people in this category who will continue to receive a part pension but will be worse off by an average of $3,380 per year. A further 91,000 people will move off the age pension altogether, leaving them close to $5,000 a year worse off on average.

Let me repeat that: nearly 330,000 pensioners will be worse off because of this proposal, and the impact will be an average of between $3,000 and $5,000. Some of these pensioners are on incomes of less than $15,000 per year. These are not the millionaires the Prime Minister refers to. Let me repeat this point: nearly 330,000 people, part pensioners who have worked their entire lives, who have planned their retirement, will be worse off on average by between $3,000 and $5,000 because of this inequitable and short-sighted move by the government—a move which I sometimes think their backbench do not fully realise. I really think that their backbench, especially those in marginal seats, have been led up the garden path by their cabinet members in safer seats.

Let's be clear what we are talking about here. We are talking about part pensioners—those who have worked through their entire working lives and have their retirement income supplemented by the age pension. Some people do not receive a pension at all; their retirement income derived from superannuation and other wealth exceeds the level deemed by the government. So wealthy retirees do not receive a pension and are not affected by these changes. For some people the pension is their entire means of retirement income; their other income and assets are deemed by government as being not enough to sustain them through their retirement. So full pensioners are not affected by these changes either—their rate of payment will not change. It is those in between that are affected: those whose retirement income is derived from a mixture of superannuation, the age pension and other wealth. These people are in the centre of the spectrum of retirement income earners, but in comparison to average incomes overall they rank among the lowest income earners in the country.

Let me repeat: we are talking about people with $15,000 of income a year being negatively affected to the tune of $3,000 to $5,000 a year by this move. So let us dispel the idea that these changes are somehow designed to impact the wealthy; they do not. The wealthy do not receive the part-pension and will not be affected.

In the Hunter region, where I am from, more than 37,500 people receive a part-pension. Over 8,000 of them live in the electorate of Charlton. Each of these people will be affected in some way by these changes. Last week I met with Luis, a 74-year-old part-pensioner who lives with his wife in Maryland in my electorate. Luis migrated to Australia in 1968. He took work as a boilermaker and welder in the dockyards before joining the railways as a train driver. He did this job for 37 years, working up to the age of 71—a very high age for such an intense job. Rail work is shift work, mostly at night. He worked 10- or 11-hour shifts, often six to seven days a week. He had tears in his eyes when he talked about the time he missed with his in a new country because of his work commitments. By the time he retired he had close to $640,000 invested in his superannuation fund. He currently receives around $150 a week in age pension. He will lose all of this should these changes go ahead. Luis has an 18-year-old son who has recently started university studies. He says that he had hoped to help his son put a deposit on a house, but with this hit to his income he is worried he may not be able to do this or support his son's further studies. He says that this government is making the wrong choice—that they should not be penalising those who have worked so hard for so long.

This week I received a letter from a constituent which tells the story of Doug, a 79-year-old widower who shares a home at Wallsend with another widow. Both Doug and his partner receive a part age pension. Doug left school at the age of 15 and went to work in the BHP steelworks, which were the foundation of Newcastle. He worked for the company for 45 years and he did his fair share of overtime. Marrying at an early age, Doug and his wife built a home at Waratah West and raised three children. During his working life, he paid his tax and performed his two years of compulsory military training. Later he nursed his now-late wife of 51 years in their home during a prolonged illness until her death from chronic obstructive pulmonary disease.

Doug receives a monthly payment from a rollover pension and a small amount of age pension. He has a modest lifestyle, usually eating out once per week. He does not own any significant assets, apart from his four-year-old Mazda 3. Doug and his partner have always been honest and open with Centrelink. Although they each receive a small part age pension, it is not a significant amount—just enough to help with the council rates and utilities. According to the Prime Minister, the Treasurer and the entire coalition government, Luis and Doug should not be entitled to the modest retirement income that is provided to them by the taxpayers of Australia.

Let us not forget that this is not just a debate about the pension. It is about retirement incomes—principally our superannuation system in this country. Industry Super Australia estimates that between now and 2055 about half of all Australians will not have enough income from their super, their pension and other accrued wealth to live comfortably. In the next 10 years, over 17,000 in the electorate of Charlton will reach retirement age. In the 10 years after that, a further 20,000 or so will also reach retirement age.

These people will have spent their working life accruing superannuation; many of them will have started work around the time compulsory superannuation was introduced by the Keating government in 1992—opposed by the coalition. Superannuation guarantee aside, the government actively encourages people to save for their retirement. The age pension is one mechanism and superannuation tax concessions are another by which the government directly boosts the retirement income of working people. Yet, according to Industry Super Australia, over 40 per cent of people who retire between now and 2055 will be negatively affected by these changes. For couples due to retire in the next ten years, the largest impacts are felt by those earning just under the average wage today, or around $62,000. They stand to lose $8,500 a year between them. For those between 45 and 55 years of age now, who are set to retire in a decade, the impact is even greater. Those earning as little as $45,000 a year today will find themselves $1,500 a year worse off as a result of these changes. Let me repeat that: people on $45,000 a year today, well below the average income, will be significantly negatively affected by this change. This is a measure that is not affecting millionaires; it is affecting the vast majority of working Australians, some of whom earn barely above the minimum wage. In fact, studies have shown that nearly a million people will be affected by these changes in the next 10 years. The coalition government and their lackeys in the Greens are targeting the retirement future of over a million Australians, and they will pay a price for that.

This stands in stark contrast to their agenda on superannuation, because those on the other side are effectively saying, 'We're going to target people on as little as $15,000 a year while preserving vastly unsustainable taxation concessions for wealthy superannuation holders. The government's own budget figures show that in a couple of years time the cost of superannuation tax concessions will outstrip the cost of pensions, they will cost taxpayers over $50 billion a year, and 40 per cent of those concessions will go to the top 10 per cent of wealthy Australians. This is a system that is not only unsustainable but grossly inequitable. That is why the Labor Party has put together a modest proposal to reduce the tax concession on those who receive more than $75,000 a year in income from superannuation.

So let us contrast this. The coalition government and the Greens are attacking those with $15,000 worth of private income and yet they are opposing modest changes that say that if you receive more than $75,000 worth of income from super—typically that means you have more than $1.5 million of superannuation assets—you will have a small reduction in your taxation concession. Despite all the bluster from the Prime Minister, despite all his crude references to 'trousering' things, this is not attacking people's superannuation assets. This is saying that a concession granted to superannuation holders by the government of Australia on behalf of the taxpayers of Australia needs to be reduced slightly in order for it to be sustainable. I think that is a much more equitable and efficient way of reforming the retirement system in this country—a change that actually targets those who can afford the modest change rather than part-pensioners surviving on $15,000 a year.

In the time remaining, I would like to reflect on the role of the Greens in this process. The Greens, yet again, have combined all their hypocrisy about who they protect with doing a dodgy deal with the coalition. Just as they put petty politics ahead of a true solution on the Malaysian resettlement deal, they have put their narrow political interests ahead of a really comprehensive look at the retirement system in this country. They have done a dodgy deal under their new leader, and they have been sold a pup by the minister, Scott Morrison, who must have thought this was the deal of the century. In return for getting $2½ billion of inequitable savings through this parliament, he promised to continue consultations on a taxation white paper for 30 days. What a great deal! It reflects incredibly poorly on the Greens and their attitude to public policy, where they have sold a million retirees—a million retirees in the next 10 years—up the river for short-term political gain. They were truly atrocious in this process.

I am proud to be a member of the Labor Party. I am proud to stand up for part-pensioners. I am proud to stand up for those who have worked their entire life and deserve dignity in their retirement, while the coalition government and their Greens lackeys are attacking them.

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