David Gillespie (Lyne, National Party) Share this | Hansard source

I rise to speak on the Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015. So much of what goes through this House affects people in their everyday life—that goes without saying—but this legislation is acutely important in the Lyne electorate because a very large number of my constituents are indeed pension dependent. There have been a lot of conversations about who is getting what and what is changing. Unfortunately, through life situations do change. We have a shifting demographic, we have a massive debt that we inherited and we have a responsibility to the generations to come. When you have that formula, you have to think about the generations of people, like the generation now, who will depend on the pension. Also, the generation of people who will depend on the pension in the future will probably be double the size in some areas. In the Lyne electorate, because we are a coastal community, a couple of generations of proud Australians have decided to migrate up the coast in their retirement. They want to have that period of their life where they can sit back and look at what they have done and what they have achieved. However, many of them are not high-earning retirees. Many of them are pension dependent.

Those on the other side of the House have focused on some of the difficult decisions that the government has had to make, but there is always a quid pro quo. Basically, 90 per cent of the 3.7 million pensioners in the country are going to either be better off or have no change to their pension under this measure. In fact, in the Lyne electorate, the 170,000 people at the lower end of the assets range will be better off to the tune of $30 a fortnight. Some, about 50,000 people, will qualify for a full pension. There are levers being pulled here. We can slice and dice things, but to cut to the chase: some people will be better off. The changes are focused on people who have not much of an asset base to look after themselves in their retirement. They will be in a more secure position.

There are changes to the way assets are assessed and the tapering system. And here you have to keep in context what the members on the other side have proposed in their changes, which are far, far worse and far more draconian. At the moment, with these changes, couples that own their own home, with additional assets of less than $451,000, will get a higher pension as opposed to couples who do not own their own home and have asset holdings of up to $699,000. If you are dependent in your retirement age on having to rent premises, you will be better supported. You can have assets up to $699,000. 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. A lot of people in my area live in retirement villages and do pay weekly rent for the space where their relocatable home, caravan or annex is placed. These people will be more secure in their retirement.

We were criticised in the last budget for changing the method of indexation: the highest of MATAWE or CPI. We chose CPI. The pension has gone up twice a year since the coalition has been in government, and double pensioners are up to $78 better off. So the pension will continue to go up twice a year, but by the same system of the higher of the various indexes rather than CPI. So we have listened to people's concerns and maintained the current system. I do note that, with the pension increases that have happened since the coalition has been in charge of governing the country, the index which has gone up the most has been CPI. In retrospect, there was high wages growth during the mining boom, but since that has gone off the boil the exponential wages growth has slowed. So, in effect, the CPI will probably be chosen in the foreseeable future as the index that is moving up the most.

The assets free area is also being changed. The value of assets that you can have in addition to your family home in order to qualify for the full pension will change, and that is an increase from $202,000 to $250,000 for single homeowners and $286,500 to $375,000 for couple homeowners. This is quite a significant change.

The controversial bit is about the assets taper. It is changing. People who currently have significant assets can have their family home and $1.15 million in assets to draw on. People who have that amount of assets will have a change in their circumstances. There is no way to escape that reality. As I said, we are left with an enormous debt, we have an increasing number of Australians who will require support during their retirement and we have to make it all marry up.

If you are losing part of your pension, it will then necessitate you to draw down on your savings. When you think about it that is why you worked hard and made all your savings—to look after yourself in your retirement. The calculations reveal that those who are affected will be able to replace the reduction in their part pension or their pension by drawing down on their savings by 1.84 per cent of their capital. That will maintain their current income stream. A lot of people would like to preserve their assets and hand them on to the next generation. I totally understand that, but we have a dilemma. The fiscal mess of the nation's finances we have inherited has necessitated these changes.

I have been approached by several members in my electorate about changes to defined benefit superannuation funds and how they are calculated as part of your assets. A defined benefit superannuation scheme is quite different to an accumulated benefit superannuation scheme. Defined benefit schemes deliver much more than accumulated benefit pension schemes do. Some of these were in retrospect very generous. They were designed at a time when wages for people like judges and teachers were not really high. They did a good job for the government teaching or working in the judicial system or in the state public service and they got a pension. That has not changed. What has changed is the amount. Depending on your years of service in the various schemes it can be anything from 50 per cent to 90 per cent of your finishing wage. I admit that that is really quite a great pension. I add for the record that people who have come into parliament here are no longer in a defined benefit superannuation scheme. That is a popular misconception.

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