Jenny Macklin (Jagajaga, Australian Labor Party, Minister for Families, Housing, Community Services and Indigenous Affairs) Share this | Link to this | Hansard source

by leave—One hundred years ago today, landmark legislation was introduced into a young Australian parliament that was to put Australia at the forefront of social policy reform and forever entrench the notion of a fair go in the national conscience. On this day in 1908, the House of Representatives debated, and passed, the Invalid and Old-Age Pensions Act 1908. Considered something of a social experiment it had its genesis before the turn of the century when it was raised by a forward-thinking South Australian, JH Howe.

Back then the pension was modest in both its reach and its rate. Ten shillings a week was paid to 34,000 customers—the equivalent of 12 per cent of male total average weekly earnings. It was paid at age 65 for men and women, at a time when men had a life expectancy of 55 and women 59. Aboriginal people, Africans, Pacific Islanders and New Zealand Maoris were excluded. But it was a start and widely considered to be long overdue.

Andrew Fisher, a day after losing the prime ministership but still leader of the Labor Party, said on 3 June 1908:

This parliament, on three different occasions, has been pledged to secure the passing of an old-age pensions bill at the earliest moment. How can we get away from that pledge? How can we, as honest men, decline to carry out that duty? Shortly after I had the honour of being appointed the leader of the Labor Party, I submitted a motion drawing the attention of the Government to the urgent need of a Commonwealth system of old-age pension.

His frustration was born of the difficulty his party, our party, had faced in achieving what was then the second key plank of an infant federal Labor’s platform—a Commonwealth old-age pension. He said:

The problem, though difficult, is not insuperable. I have before said in this Chamber that if the interests of the great and powerful factions—of merchants and similar classes, who are well able to claim their own rights—were involved, the question would not have been allowed to lie in abeyance for seven years after the mandate of the people had been given.

A passionate King O’Malley, the member for Darwin, declared that if the Labor Party had received earlier assistance in placing an old-age pensions act on the statute books:

... thousands of old, honest, hard-working soldiers of industry who have passed away would perhaps have been living now or would have died surrounded by a few of the comforts of life.

For many years, pensions were regarded as a privilege rather than an entitlement. It was up to special magistrates to decide whether an applicant was a person of good character and deserved a pension. This provision was not formally removed until 1974.

By the 1950s, pensioners had moved from having to report to their local post office to receive a cash payment to receiving a handwritten cheque. In 1962 the residency test was halved to 10 years. In 1966 Aboriginal Australians were granted full rights to the pension. In 1975 the right of appeal was introduced. And the Whitlam government’s introduction of bench-marking the pension to workers’ earnings has seen a doubling of the pension in real terms since 1972. In his landmark 1972 policy speech at the Blacktown Civic Centre, Whitlam committed Labor to ‘raise the basic pension rate to 25 per cent of average weekly earnings’. This benchmark was first achieved in 1974.

In 1983 the Hawke government’s statement of accord agreed to maintain the basic rate of pension at or above 25 per cent of average earnings, a commitment reaffirmed by the then government’s statement Better incomes: retirement income policy into the next century, released in 1989. A series of increases achieved this benchmark over the life of the Labor government. Under the Hawke and Keating governments, the pension increased from 24 per cent of male total average weekly earnings under the Fraser Government in 1982 to 25.8 per cent when the Keating government left office in 1996. In 1990 the Hawke government introduced the bereavement payment, equivalent to 14 weeks pension payable to the surviving member of a pensioner couple. In 1994 the Keating government introduced the Commonwealth seniors health card.

Australia’s age pension has endured through most of the 20th century and now into the 21st century—100 years of profound social and economic change, two world wars, a depression, recessions and booms. Today it continues its vital role in providing income support on the basis of need to older Australians. The changes have been enormous but the principle of giving older Australians security, support and dignity remains the cornerstone of the system. This is the Australian way and it has certainly been the Labor way. We appreciate and acknowledge the extraordinary contribution that senior Australians have made, and continue to make, to the Australian community through their experience and insight, through the care they provide for partners, friends and relatives, and through their mentoring and volunteering.

The government knows that many pensioners are finding it tough to make ends meet. Cost of living pressures like groceries, bills and petrol make it harder and harder for them. While there is more to do to get this right, we have made a start. The recent budget changes will give many age pensioners an additional $900 this year on top of their fortnightly pension. This includes a bonus payment and a permanent increase in an important pension supplement—the utilities allowance, which we have increased from $107 to $500 a year. These budget initiatives, worth $5.2 billion over five years, are the latest changes in a century of ongoing reform to the pension—a fundamental pillar of Australia’s social and economic infrastructure. There is also help with dental and aged care, and we are making it cheaper to travel interstate through national travel concessions for seniors.

Individually it is true that these are modest measures to assist with cost of living pressures, but together they demonstrate this new government’s commitment to continuing the Labor tradition of protecting the financial security of retired Australians. The government knows that much more needs to be done and we are determined to get this right for the long term.

Fixing the system is much more complicated than it appears at first glance. The age pension intersects with the tax system and a range of payments and allowances. We need to evaluate where to make changes in the system to have the greatest impact. To deliver security to age pensioners and carers, the system needs to be reformed and strengthened. The government is determined to get this right and to not perpetuate the short-term quick fixes of the former government which saw one-off payments made only when an election was around the corner.

In fact the previous government only offered bonuses to seniors in the months before two elections. Just before the 2001 election seniors received a $300 one-off payment, and in the lead-up to last year’s election they again offered a one-off $500 bonus to senior Australians. In the 12 years of the Howard government there was no improvement to the base rate of the age pension. Those opposite claim credit for legislating the 25 per cent of male earnings benchmark in 1997, but, as I have already outlined, this Labor policy had already been delivered consistently over the period of previous Labor governments.

This new government wants pensioners to be able to rely on more than just the electoral cycle to give them financial security. The Prime Minister announced a review of retirement incomes, including the age pension, as part of the inquiry into Australia’s future tax system. This kind of inquiry was the key recommendation from the recent Senate inquiry into the cost of living pressures on older Australians. A key component of the inquiry will be to look at the adequacy of existing support for seniors and carers, and to suggest measures which could strengthen their financial security in the long term. Other issues being considered will be the effectiveness of lump sum payments and achieving a balance that targets those with the highest need while retaining incentives for people to keep doing some work if they want to.

We are determined to make this review as inclusive and comprehensive as possible; we want older Australians to be involved in telling us how we can make the system work better for them. The review of support for seniors and carers is being led by Dr Jeff Harmer, the secretary of my department, and will report by February next year. And to make sure Dr Harmer hears people’s life experiences I will be setting up a reference group to advise him. This reference group will meet regularly until February next year. From July, we will be calling for public submissions following the inquiry’s initial discussion paper. There will be an opportunity for further public contribution on draft outcomes before the review is finalised.

One hundred years on, the age pension remains the bedrock of Australia’s income support system. Key elements established back in 1908 remain in 2008: the age pension is paid to everyone entitled to receive it, regardless of past earnings; it is non-contributory and funded from general revenue; and it is means tested to ensure it is targeted to those most in need. But just as we all understand that the needs of older Australians have changed significantly so we acknowledge the need for comprehensive reform of the pension system—reform that gives our seniors the certainty and security they deserve. I ask leave of the House to move a motion to enable the member for Warringah to speak for 12 minutes.

Leave granted.

I move:

That so much of the standing orders be suspended as would prevent Mr Abbott speaking for a period not exceeding 12 minutes.

Question agreed to.

Tony Abbott (Warringah, Liberal Party, Shadow Minister for Families, Community Services, Indigenous Affairs and the Voluntary Sector) Share this | Link to this | Hansard source

I certainly do not want to be rude about the Minister for Families, Housing, Community Services and Indigenous Affairs, who is just following orders in this matter. Those orders, as we have seen frequently this year, are for ministers to make as many ministerial statements as possible in order to create the impression that this is a very busy government. But I want to say to the House—and I suspect from the Newspoll today that the Australian public want to say to the government—that making statements is not the same as solving problems. Talking is not acting. Announcing a review is not changing anything. Feeling our pain is not doing something about it, and featherweight ministerial statements such as the one we have seen today are no substitute for good government policy.

What have we actually heard from the minister today? Essentially, we have heard three points. The first is that the Labor Party somehow created the old age pension this country, even though it was actually instituted by the Deakin government. Alfred Deakin is one of the political and philosophical forebears of this party. In addition, what the Deakin government was doing was lifted from the early actions of Winston Churchill, no less, as part of the then British government. The second thing we heard from the minister is that the Labor Party is responsible for enshrining pensions as 25 per cent of average total male weekly earnings. In fact, under members opposite it was 25 per cent of average weekly earnings—quite different from male total average weekly earnings—and in any event it was the Howard government that ensured that this was a legislative requirement, not just something that was done at the whim of the government of the day. The final point that we heard from the minister opposite is that it was in fact her new government that has put $900 a year into the pockets of pensioners thanks to the budget. Let me just remind the minister that those particular policies were direct lifts—absolute direct steals—from the election policy announcements of the Howard government.

Mr Deputy Speaker, I put it to you, and through you to the Australian people: which government has given the best deal to pensioners—a government which keeps wages low and inflation high or a government which keeps wages high and inflation low? Let us look at the record. The Hawke government increased basic award wages by just one per cent. Under the life of the Hawke-Keating government, inflation averaged 5½ per cent. Under the Howard government, average weekly earnings were up by 22 per cent—a lot better than one per cent—and inflation averaged 2.5 per cent.

Let us look at the overall benefits that were delivered by the Howard government. According to the University of Canberra’s National Centre for Social and Economic Modelling figures, under the Howard government, thanks to changes to the tax system, the transfer system and the wage system, the bottom fifth of our country advanced their net financial position, their total annual income, by 24 per cent in real terms. So the bottom fifth were 24 per cent better off over the life of the Howard government. The top fifth were better off to the tune of 19 per cent under the Howard government. So, yes, the rich got richer under the Howard government but the poor got richer faster. In other words, the Howard government did a better deal for the pensioners of this country than it did for big business.

What did we hear from the minister at the table, the Minister for Families, Housing, Community Services and Indigenous Affairs? We heard that there would be a review. Big deal—another review! And not only would there be a review but today she announced there would be a review within a review. Not only would Ken Henry, the departmental secretary to Treasury, do the review but there would be a subreview by Dr Harmer, the departmental secretary of her own department. Let me remind the minister opposite and the Australian public, including pensioners, that Dr Henry was the same person who wanted to take away the pensioners and carers bonus. He was the same person who wanted to see this thing cut from the budget and he is the person into whose care and consideration the pen-sioners and carers of this country are now delivered. Let me also point out to pensioners of this country that a $500 bonus built into the basic rate of pension means less than $500 for part-pensioners and for seniors. Let there be no doubt among the pensioners of this country that building the bonus into the base rate of pension means less money for part-pensioners and for seniors.

Let us look not at what this government says but at what this government does. Almost the first action of this government was to take away the Medicare dental scheme, which was benefiting tens of thousands of people, mostly pensioners. I say to members opposite: if they have something that is really worth saying, say it, but, if they do not have something that is really worth saying, do not waste the time of the parliament with empty statements, particularly in a week when they claim they need to pass 22 bills. This is a statement that was not worth making. It is a statement which, frankly, has wasted the time of the parliament today.