Steve Irons (Swan, Liberal Party) Share this | Hansard source

I too rise to speak on this bill. I have listened with interest to the member for Rankin and the member for Dobell this morning, and it is good to see that we are getting some sort of support from the other side—even though it is not their full support. We are trying to fix the budget. The member for Rankin acknowledged this, but he did not acknowledge where the budget fell away—that is, under six years of the previous Labor government. Maybe the member for Rankin, who has now left the chamber, could listen in to hear these words: 'You had your chance for six years and you just messed it up. You took Australia in the wrong direction, and now it's our turn, and that is what the Australian people are looking for.'

During his speech he talked about sustainability. This is obviously an important word, particularly for governments of all tiers and persuasions, but it is a word that, for those six long years, did not just fall by the wayside, which would have been bad enough, it was completely forgotten by those opposite. Instead, what we saw was one unsustainable handout after another, one bad policy implemented after another and one economically burdensome and competition-destroying tax after another throughout the six long Rudd-Gillard-Rudd years.

What this coalition government is doing instead is developing and implementing policies that will put each area of government expenditure back on a sustainable path. We are getting rid of the waste and we are getting rid of the mismanagement, particularly when it comes to social services. And that, members, is exactly what this Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015 will achieve within our nation's social security and welfare system, which, for this financial year, will cost taxpayers $154 billion.

Despite every economist and every review recognising this need for sustainability, those opposite continue to grandstand in this place even though their argument against this bill's proposed changes have absolutely no basis. As members on this side of the House know, Labor's refusal to back our changes has been based on advice from consulting firm Rice Warner, which has just made a submission for the part-pension to be phased out as part of this government's tax white paper process. Rice Warner have also called for inclusion of the family home in the pension assets test if it is worth more than $1.5 million. So there you have it: the fact that those opposite want to try to claim that they are a friend of pensioners is, quite frankly, ridiculous, and we have just heard the previous speaker, the member for Rankin, confirm the Labor Party is coming after people's superannuation.

Rice Warner is not a friend of pensioners, and neither are those opposite. They are voting to deny an average $30 a fortnight pension increase to 170,000 Australian pensioners with modest assets. They are denying an increase to those who need this support most purely so that they can oppose this government's budget measures. You see, members, what is often forgotten in this lucky country of ours is that the government support services, and in particular our welfare system, were not created or designed to provide a wage for those who simply do not want to work—this is despite, as members know, some people viewing subsidies such as the Newstart allowance as just that—and they were not created to give more to those who can afford to provide for themselves.

What government subsidies are established to do is to provide support to those who, without these concessions or assistance, would not be able to uphold the basic standard of living that we as Australians expect every person to have—and those would be food, shelter, clothing. These are not wants, they are basic necessities, but, to put it simply, they all cost money. So when times are good, government can afford to provide additional assistance in the areas of welfare or infrastructure, for example; when times are not good, we as a society need to accept that belts must be tightened and those additional concessions must be reined in. But what appears to have happened in Australian society is this concept of entitlement overshadowing the need for sustainability. As a government, we cannot just focus on what is happening right now; we also have to implement policies that can be maintained in the future.

The reality for Australia's future is that we are faced with an ageing population, creating a situation where less people will be working and paying taxes in the future. And to put this concept into perspective: the number of Australians aged 65 and over is projected to double by 2055. This will mean there will be fewer people contributing to the government's spending measures in key areas such as health, education, infrastructure and the many welfare measures the government has in place, particularly for older Australians. So to ensure we can continue providing these services for our most vulnerable, we have had to make a number of policy decisions to create a welfare system that we can actually afford to maintain.

Before I outline the measures in the bill before the House that will achieve this, I do believe it is important to put on the record my appreciation and the appreciation of the coalition government for all of our partially or fully self-funded retirees. We appreciate the work these people have put in throughout their lives so that they are not reliant on government pension support, either at all in some cases or only in part in other cases. This is a significant achievement, which supports and reflects the true ideals of the pension system specifically and the welfare system more generally—that is, being a social safety net for those who need it and, in particular, for our most vulnerable. It is not an entitlement.

Before I go into the detail of these measures, I will also take this time to highlight that the government has listened to stakeholder and community feedback regarding pension changes and will no longer be proceeding with previously announced changes to indexation. Under the government's reformed welfare system, pension indexation increases will be determined by the higher of the consumer price index, the pensioner and beneficiary living cost index or the male total average earnings.

In terms of the measures outlined in the amended bill before the House, which I must say has been aptly named for being focused on fairness and sustainability, it makes a number of key changes to pensions that were announced in the 2015-16 budget with regard to the assets test threshold by which pension payments are assessed for eligibility as well as the taper rate that is applied to this assessment.

I recently discussed this measure in great detail with members of the Association of Independent Retirees Perth Southern District Branch, which is based in my electorate of Swan, to ensure the partially self-funded retirees in particular understood how these changes may affect them. As I outlined to members of the AIR, what the government has done with the assets test is to again refocus our welfare support toward those who do not have the means to support themselves, bringing it back in line with its original intent. We have achieved this by re-balancing the scale so that additional assistance is provided to non-homeowners and people with moderate assets and less support is provided to those who are better off.

I will, however, firstly highlight that, prior to these announcements being made, a number of interest groups were speculating about whether the value of a person's home would start to be included in the assets test. So I will very distinctly say now that, under a coalition government, a person's home will not be touched. This government views the family home as sacrosanct and it will not be included in the assets test. Pensioners worked hard for that home and we will not let its value whether that is $300,000 or $1 million or $2 million affect the pension they receive later in life.

Unlike those opposite who have now proposed it, this government also will not be taxing retirees' superannuation. Unlike those opposite, we, again, view superannuation as sacrosanct. However, under the changes that were announced rather than just speculated on by the media, more than 170,000 pensioners with modest assets will have their pensions increased by an average of more than $30 per fortnight from January 2017. More than 90 per cent of pensioners will also either be better off or have no change to their pension under the measure. This is largely because the assets-free area of the pension will increase. For example, for single homeowners with assets of $210,000, these people are currently not eligible to receive a full pension; however, under the changes which will see this asset-free area increase from $202,000 to $250,000, more people will therefore be eligible to receive a full pension and will be $1,540 a year better off under the changes at this threshold.

To continue with this single homeowner example, as a person's total assets increase, the rate of pension they will receive will gradually decline. Under current arrangements, a single homeowner will continue to receive a pension until their assets exceed $775,500; however, under the changes this will be reduced to $547,000. Again, to put this into context, we are therefore lifting the threshold for the amount of assets a person can have at the lower end to receive a full pension, so those people with less assets who need more assistance to make ends meet can be helped. And we are taking down the higher assets threshold at the other end so that the maximum amount of assets a person can have and still receive the pension is not as high.

The same concept will also be applied to pension payments for couple homeowners and couple non-homeowners. For those who own their home, the assets test-free area has been changed from $286,500 to $375,000, and the respective cut-out area has been reduced from $1,151,500 to $823,000. In terms of couples who are non-homeowners, this has been increased from $433,000 to $575,000 for the assets test-free area and the respective cut-out area has been reduced from $1,298,000 to $1,023,000.

To summarise these examples, all couples who own their own home with additional assets of less than $451,500 will therefore get a higher pension. Couples who do not own their own home with asset holdings up to $699,000 will also be better off. For singles, the maximum threshold point below which pensioners will be better off will be $289,500 for homeowners and $537,000 for non-homeowners.

The bill before the House also includes a provision to alter the taper rate applied to pension rates. Currently the taper rate applied to pensions is $1.50. As of 1 January 2017, this will increase to $3. The reason why this change has been applied is because, as I said earlier, we need to create a welfare system that is sustainable long into our future so that we can provide for the 23 per cent of Australia's population who are estimated to be over 65 years of age by 2050. This will reverse the lower taper rates which were introduced by the Howard government in 2007 when the budget was in surplus and we had $40 billion in the bank. Because, as members on this side of the House know, thanks to the former Labor government's cash-splashing policies this is no longer the case and this coalition government now has to work hard to reverse this downward fiscal trajectory. With the lower taper rate being applied, this currently costs taxpayers an additional $1 billion a year. Simply, this is no longer affordable. So just like every Australian taxpayer has to balance their budget books at home when their personal circumstances change, this government has also had to develop policies that will once again balance the welfare budget books based on Australia's fiscal standing today, not our fiscal standing from eight years ago. As members know, every pensioner's circumstances will be different. But I believe it is important to highlight to the House that in the very worst case scenario under these changes, those most affected would only have to draw down a maximum of 1.84 per cent of their assets to make up for the loss of their part pension if this were to happen.

For those people who will lose the part pension under these assets test threshold changes, the government has also ensured important safety nets in relation to access to medical concessions continue to be received, including eligibility for the Commonwealth Seniors Health Care or Health Care Card, which provide the same concessional access to pharmaceuticals as those who have a pension card. Once the changes come into effect, this will be automatically issued.

In terms of health care, I also believe it is important to highlight that the government also announced in the budget that we will be investing $1.3 billion over four years to list new medicines and vaccines. This includes the listing of new drugs to help Australians beat melanoma, breast cancer and blindness on the Pharmaceutical Benefits Scheme, as well as extending free vaccinations for the shingles virus to older Australians aged 70 to 79 on the National Immunisation Program. It is important to note that Commonwealth Seniors Health Card holders will, however, continue to receive the energy supplement under the changes to the seniors supplement.

Overall the measures before the House will ensure our nation's welfare scheme is sustainable in the long term and will make vital budget savings for the benefit of taxpayers. We do not want to be in a situation where the government simply cannot afford to provide these payments to those who most need them, so we need to work together to remove the concept of pensions and other subsidies being an entitlement in lieu of taxes paid when working, and instead as the safety net they were designed to be. This mentality and attitude needs to change in Australian society, and it needs to change in this place and the other by those who continue to knock back this government's budget savings measures. If we want Australia to continue to be a prosperous country with vital safety nets, then passing bills such as the one before the House is imperative. And that is why I will be joining with my colleagues in commending this Fair and Sustainable Pensions Bill to the House.

See this speech in context