Amanda Rishworth (Kingston, Australian Labor Party) Share this | Link to this | Hansard source

I have moved this private member’s motion on behalf of the many British pensioners living in my electorate of Kingston and throughout the nation. The issue of the indexation of the British pension has been raised regularly during my time in the parliament. British migration has played a central role in the creation of the Australian nation. Many British migrants have come to Australia and have contributed significantly to this country. I regularly speak with many British migrants who reside in my electorate, and they talk with fondness of their adopted country even though they acknowledge that by migrating to Australia they have been disadvantaged in the pension payments they receive from the United Kingdom’s National Insurance Fund. It is important to note that they are not referring to a system that is the same as the Australian pension system. Rather, British residents pay compulsory, regular contributions from their gross salary into the United Kingdom’s National Insurance Fund. Upon reaching retirement, Britons become eligible for an allocated pension from this fund. This means that the British scheme resembles more the Australian superannuation system than its social security programs. Further, British pensioners remain entitled to an allocated pension whether they are living in Britain or not.

Like most allocated pensions for most recipients, the British pension scheme is indexed for increases in the cost of living. This ensures in real terms that the pension remains the same amount over time. This indexation is applied to British pensioners residing in most countries. Unfortunately, this is not the case in Australia, where the British government refuses to honour its obligations to the national insurance contributors. Instead, the pension ceases to be indexed at the point that the pensioner migrates to Australia.

The inequity of this scheme is demonstrated by comparing the situation of two members of the British Australian Pensioners Association. These two British pensioners are the same age and have paid identical contributions into the NIF, and yet one receives a basic pension of £46 while the other receives £62. The difference in the pension is due to one pensioner immigrating to Australia before the other. This is clearly not a logical or an equitable system. The further inequity in this situation is that if either of these British migrants had immigrated to, for example, the United States, Israel or a country in the European Union their pension would have been fully indexed. However, because these migrants have chosen to settle in Australia, their pensions—which they have contributed to—have failed to keep up with the rising cost of living.

In my election campaign, I initiated a petition to gather the dissatisfaction of British pensioners in my electorate. The petition received widespread support and recorded hundreds of signatures from British expats. Of these I would like to formally acknowledge a number of people in my electorate who contributed to circulating this petition. Norman Woodend of Morphett Vale, Terrence D’Lima of Trott Park, Dennis Walter Docherty of Port Noarlunga and Jack Stoner, the Secretary of the British Australian Pensioner Association, have all been very actively involved in lobbying to correct this massive oversight.

And it is not just an issue in my electorate of Kingston; it is an issue affecting ex-Britons all around Australia. I have been contacted by an elderly couple, Mr and Mrs Waterhouse, living in Sippy Downs in Queensland, who have given me their support for this motion. The couple, now aged 83, moved to Australia in 1985, after making a lifetime working contribution to the British National Insurance Fund. They came, as did many others, to support a family member who had fallen ill and needed support. Astonishingly, Mrs Waterhouse has not had an increase in her British pension in 23 years, while Mr Waterhouse has not had an increase in 18 years.

As you can imagine, there have been rises in inflation and in the cost of living between 1985 and 2008, yet these pensioners have missed out. I have been informed that Mrs Waterhouse is now wheelchair bound and her husband is her registered carer, and they are both doing it very tough. The Waterhouses are not looking for a hand-out; they are looking for remuneration from the thousands of dollars they have contributed to the National Insurance Fund. This inequity highlights why it is imperative that the Australian government commence renegotiation with the United Kingdom on UK-Australian social security. I commend the motion to the House. (Time expired)

Luke Simpkins (Cowan, Liberal Party) Share this | Link to this | Hansard source

I rise in support of the motion before the Main Committee. This issue of UK pension indexation, or uprating, has been a problem for a very long time and has had a very negative impact on the lives of former UK residents for more years than they care to remember. We should not beat about the bush on this matter. We should not get lost in details, because the bottom line is that residents or now Australian citizens in Cowan and probably in every other electorate have had their UK pensions frozen by the UK government. I thank Jack Stoner of the British Australian Pensioners Association for contacting me about this issue.

In Cowan, recipients of British pensions like Peter Evans and John Beyfus are literally going without money they are entitled to because the government of the United Kingdom do not want to pay them the same rate as they pay former UK residents that now reside in non-Commonwealth countries. It is a disgrace, and the government of the United Kingdom bear full responsibility for their heartless action and their terrible lack of loyalty. Mr Evans has supplied me with copies of letters and newspaper clippings going back more than 10 years. He is 75 years of age now and has been in Australia for 30 years. Twenty-three years of his working life was spent in the UK. Having been in receipt of a UK pension since 1997, he is now in receipt of a pension that is around 60 per cent of what UK residents would receive. He told me that Australia spends $288 million per year topping up the pensions of UK pensioners such as him, yet they can still suffer disadvantage where exchange rate differences undermine the money they do get from the United Kingdom.

I also spoke to Mr John Beyfus. Mr Beyfus has been in Australia since 1970. He arrived when he was 40 years of age, yet he continued to make contributory payments to the UK pension fund for another 20 years. They took the money—let there be no doubt about that. Mr Beyfus’s situation is a very interesting case. He served in the Royal Navy and receives a small pension from his armed service, as well as a 20 per cent disability pension from that same service as a result of a back injury. It is interesting to note that both those pensions are indexed. Mr Beyfus took the UK aged pension in 1995, and he estimates that the £80 that he got then has not moved since. It is estimated that he would be around £30 better off if indexation were paid.

For a long time Australia was the patsy for this mean and nasty trick. The UK was happy for Australia to top up the UK pensions while not trying to advance the issue at all. Having had enough of the lack of progress, the former federal government drew a line in the sand from 2001. That meant that new residents in Australia who were eligible for a UK pension would have to wait 10 years to qualify for any additional Australian pension assistance. Those already here under the previous arrangements would still have their UK pensions augmented by Australian taxpayers.

It is clear that British pensioners are highly motivated by this issue. Each time the cost of living rises, the inequity of their situation becomes starker. If you look at the price of rents, food and petrol, the injustice of the situation not only becomes rapidly clear but also can be seen as something of a crisis. The problem relates to the British government not indexing the pensions it pays to former UK residents who now live in Australia and a number of other countries around the world. Indexation is still granted to former UK resident pensioners in Europe and the United States, but UK pensioners who now reside in Australia, South Africa, New Zealand et cetera are not similarly supported, and this is in spite of most of their working lives being spent in the UK and their contributing to the UK pension fund.

The fault in this matter is clear. This is not about past Australian government decisions; it is about the government of the United Kingdom not fulfilling their responsibilities. I call upon them to do so and to end this national disgrace. They must show some loyalty to the people who built their nation, people like Peter Evans and John Beyfus. The UK government should do this and they should do it now.

Mark Dreyfus (Isaacs, Australian Labor Party) Share this | Link to this | Hansard source

I congratulate the member for Kingston for bringing this matter to the attention of the House. Until it was terminated in 2001, Australia’s social security agreement with the United Kingdom benefited thousands of Australian residents who have lived and worked in the United Kingdom. The agreement honoured significant contributions made by many Australians and Australian residents to the United Kingdom’s national insurance system. Many voluntarily gave up salary throughout their working lives in good faith that their contributions would be protected in retirement.

UK pensions are frozen in Australia at the time of immigration and are not indexed for inflation. UK pensions are similarly frozen in Canada, New Zealand and South Africa. This occurs despite the United Kingdom providing indexation in bilateral agreements with a range of other countries, including Cyprus, Turkey, Israel, Yugoslavia—or the former Yugoslav Republic—Bosnia, Mauritius and Jamaica. The former government allowed the UK-Australia social security agreement to lapse when it came up for renewal in 2001. This meant that the opportunity to negotiate indexation was thrown away. Given the historical links between the United Kingdom and Australia, and the ongoing close ties between our two nations, it is vital that a new agreement be negotiated.

Since the termination of the social security agreement with the UK in 2001, Australian parents wishing to join their children in the United Kingdom no longer qualify for the United Kingdom pension. As over 70 per cent of Australian immigrants to the United Kingdom are between the ages of 18 and 34, choosing to spend your retirement with your children has become a much more difficult choice to make. Similarly, prospective migrants to Australia from the United Kingdom are no longer entitled to apply for early access to Australia’s social security system. Parents wishing to join their children in Australia must now accrue 10 years of qualifying residence before they will be eligible for the age pension. As many parents do not wish to be a burden on their children, this makes the decision to reunite the family in Australia all the more difficult.

In my constituency of Isaacs alone there are over 7,000 United Kingdom born residents, many of whom may be entitled to benefits. Among these are many pensioners who, like approximately half a million other United Kingdom residents, chose to retire in more temperate climes overseas. Retiring to a home by the beach in Mentone, Mordialloc, Bonbeach, Edithvale or Chelsea has obvious attractions against the harsh winters of the United Kingdom.

Groups in Australia, such as the British Australian Pensioner Organisation, have supported pensioners who have experienced the difficulties that I and other speakers have indicated. They have provided assistance to Annette Carson, who is currently involved in a legal action before the European Court of Human Rights. Annette is a British expatriate living in South Africa who has had her pension frozen, like the pensions of many Australian residents. When her case came before the House of Lords, Lord Caswell, in dissent, expressed in no uncertain terms the view that there was no justification at all for paying some expatriates in Jamaica and Cyprus more than others in Australia and South Africa.

I believe there are no grounds for discriminating against any Australian resident simply because they choose to retire here. It is to be hoped that Annette Carson’s case will be a catalyst for resolution for the many thousands of Australian residents who may be adversely affected by the freeze on their United Kingdom pensions that is preventing them from obtaining indexation on those pensions and that the return on lifelong contributions to the British scheme will be restored to full value.

For these reasons, the Rudd government is pressing for a new social security agreement between Australia and the United Kingdom. We would all say that it is vital that a new agreement is reached. The motion before the House emphasises the importance of indexing the British pension for those migrants living in Australia. It recognises that these pensioners have made personal contributions to the National Insurance scheme in the United Kingdom and it notes that indexation also occurs in many other countries around the world. I commend this motion to the House.

Stuart Robert (Fadden, Liberal Party) Share this | Link to this | Hansard source

I rise to agree with the content of the motion—that is, that the UK pension should be indexed. However, the member for Kingston just could not help herself with respect to the part of the motion which refers to the termination of the social security agreement with the UK in March 2001 and the ‘lost opportunity’ to negotiate the indexation of UK pensions. If she had just come out and said, ‘Let’s look at a motion to get indexation of UK pensions,’ there would have been widespread support. But she had to put the partisan bit in.

Let us look at the history of this so that we can really see where some of the fault lies, shall we, Member for Kingston? I support the indexation of UK pensions and I certainly call on the UK government to do so. But let us understand history before the member for Kingston tries to rewrite it. This host country agreement, like the agreement with New Zealand, means that the country in which the individual resides has primary responsibility for their income support. Host country agreements are different from the more than 19 reciprocal agreements Australia has signed with other countries since 1973. The major difference is the responsibility for support to be provided by the country in which the person spends the majority of their working life.

The Agreement on Social Security Between the Government of Australia and the Government of the United Kingdom of Great Britain and Northern Ireland was signed in October 1990 and was amended in 1992. It replaced an earlier agreement that entered into force in April 1958, with amendments in October 1962, March 1975 and February 1987. The 1990 agreement, as amended in 1992—negotiated by a Labor Prime Minister—does not provide for the indexation of benefits. In fact, report 27 of the Joint Standing Committee on Treaties, on page 6, paragraph 2.11, says, ‘Why indexation was not included in the 1990 agreement or the 1992 amendment is not altogether clear.’ So, in fact, the treaties committee could not work out why the Labor government did not include indexation of pensions. But apparently, according to the member for Kingston, it is the previous coalition government’s fault. Clearly the buck does not stop with the former Labor Prime Minister.

Under its domestic legislation, the UK does not index the cost of living for the benefits it pays to those eligible for pension benefits under its compulsory National Insurance system if they reside outside the UK in Australia. All such indexation benefits are frozen on the date the person leaves the UK for Australia or the date of granting of the pension, whichever comes first. UK pensioners in Australia are required to rely increasingly on Australian income support because the UK’s indexation policy means that the value of the UK pension reduces over time. I thoroughly disagree with that. I call on the UK government to change that and index the pension. I think that is clear.

As at December 1999, more than 140,000 UK pension recipients also received the Australian pension, including approximately 2,500 people who relied on the agreement to access Australian pensions. Supplementation for these pensions, which includes pensions paid under the agreement, is estimated to cost Australia about $100 million per year. Australian pensions paid to former Australian residents residing in the UK gained the benefits of increases to the CPI and MTAWE. This reduced the burden on the UK. The UK government did not do the same for the UK pensions paid in Australia. They were not indexed; thus, Australia is effectively subsidising the UK National Insurance system. Furthermore, the agreement allowed former UK residents to lodge claims for UK pensions whilst residing in Australia. But Australian residents living in the UK could not do likewise. This was a major bone of contention for the Australian government.

The UK has acknowledged the inequality of its policy. Former Prime Minister John Howard negotiated with four different UK prime ministers to persuade them to change their position and amend the agreement. The UK has refused, citing cost. One of the great reasons for the current situation is that in 1990 and 1992 the Labor Prime Minister and the Labor government could not negotiate an agreement on the indexation of pensions, yet somehow we are responsible for the inherent failure of the Labor government in 1990 and 1992.

Honourable Members:

Honourable members interjecting—

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The chamber will come to order!

Stuart Robert (Fadden, Liberal Party) Share this | Link to this | Hansard source

The Australian government terminated the agreement for a range of issues. The hide of the member for Kingston to come out and say it is somehow the coalition’s fault is staggering, when the Labor Party negotiated it, when you could not get it right and when the report on the treaty showed the ineptitude of the government.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

I remind the chamber that, while I was being a bit freer, when I cannot hear myself it is getting too loud. I expect the member for Wakefield will be heard in silence.

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

I rise to support the motion and to congratulate the member for Kingston for bringing this matter before the House. It is an incredibly important issue and deserves some respect. The previous speaker, the member for Fadden, included the same rank partisanship that he puts in all of his speeches, which is very sad because this is an opportunity for the House to address this issue in a bipartisan way—nobody made any sort of great point about the 2001 issue. It is a bit of a pity that he had to give such a flamboyant and inflammatory speech.

I would like to talk a bit about the strong links to the United Kingdom that our country has, particularly South Australia and particularly my area. Anytime the Central Districts Bulldogs play, you can go down to the oval at Elizabeth and see the Union Jack being waved every time they kick at goal. You can also see the flag of St George and other English paraphernalia in the crowd. That is testimony to the fact that so many people in that area, including myself, have relatives back in the old country, back in England—it is their heritage.

That heritage is part of a strong emotional and institutional link that defies geography and economic circumstances. It is an emotional relationship and it is a relationship that we have always treasured. It has been through two world wars. It meant that we paid our debts to British banks despite the Depression. It meant that we rationed petrol after World War II. Despite being orientated to different trade zones, Australia and the United Kingdom have a great deal to do with each other even today in terms of exchanging people back and forth. Indeed, my sister leaves for the United Kingdom in October.

That link is why the failure to index state pensions for UK pensioners living in Australia is such a disappointment. It is an insult to our shared history and the shared bond between our countries. There are many people in my electorate, as I have said, that were born in the United Kingdom. Elizabeth is a city built on English migration: 14.5 per cent of the residents in the city of Playford were born in the United Kingdom and, to its north, Gawler has 13 per cent. So there is a great bond between those two towns and the United Kingdom.

I want to speak briefly about one of the residents, Mr Michael Woodley, of Willaston, which is part of the town of Gawler. He started work in England at the age of 14. He worked in a blanket factory to start off with. Then at 18 he went into the army. He served his nation in the British Army for a number of years before leaving to work in a car factory, building the Hillman Minx. He later worked in the coal mines in the north of England and, later again, back in a car factory building Austin 1800s and the old Wolseleys. The entire time he paid his National Insurance contributions.

When he left for Australia at the age of 42, he had an expectation that that work and that commitment would be recognised by the British government. Sadly, he now receives a frozen state pension of $180 per fortnight and his wife receives a frozen pension of $118 a fortnight. Every year the real value of those pensions drops. We know that the cost of living places an awful lot of pressure on pensioners and those on fixed incomes; it places even more pressure when those fixed incomes are not adjusted for inflation.

Mr Michael Woodley has had a bit of correspondence with the British government. I am not going to go into it in great detail, but he has received a reply from the ministerial correspondence unit of the Department of Work and Pensions. The subtext of this letter is basically that it costs too much—that it costs £440 million a year to unfreeze state pensions and the British government basically will not do that until they are forced to. I think this is a real disgrace and a real slur on our shared history. I hope that the British government addresses that matter fairly and reasonably for the sake of people like Mr Michael Woodley and all the other UK pensioners who live in my electorate and around Australia. I commend the motion to the chamber.

Andrew Southcott (Boothby, Liberal Party, Shadow Minister for Employment Participation and Apprenticeships and Training) Share this | Link to this | Hansard source

I would like to support the parts of the motion which deal with the indexation of British pensions but also express my disappointment that the member for Kingston has chosen to make a party political point on something which any honest observer of this would know has been a bipartisan position—that governments of both colours, of both stripes, have long been pushing Her Majesty’s government for indexation of British pensions. You only have to look to how it was reported when Jocelyn Newman made the announcement that we would be terminating this agreement. It was reported like this on The 7.30 Report:

After demands by successive governments that Britain index pensions to its former citizens living in Australia, the UK’s practice with almost every other country in the world, Community Services Minister Jocelyn Newman today decided enough was enough and cancelled the agreement.

Those were the words of Maxine McKew, now the member for Bennelong, a Labor member. That is how she reported it. The Joint Standing Committee on Treaties also looked at this and they said:

There is no doubt that the continuing refusal of the UK government to meet its indexation obligations has resulted in an unfair burden being placed on Australian taxpayers. The UK government has acknowledged the inequity of its policy but, despite extensive lobbying by successive Australian governments, the UK government has shown no signs of being prepared to change its policy. The only options left available to the Australian government are to continue to accept the UK government’s burden or to terminate the agreement. In principle, termination is the better option.

The committee made a recommendation supporting the termination of the agreement. There was no minority report; there was no dissenting report. That was supported by all Labor members of the Joint Standing Committee on Treaties in 1999, including Senator Joe Ludwig, the Minister for Human Services, and including former senator Chris Schacht as well, who I think would be familiar to some of the members in the chamber.

This is a serious issue. Of the British pensioners living overseas, there are about 330,000 who are indexed, in countries like the United States and many other European countries, but there are 608,000 whose pensions are not indexed. Most of those are in Commonwealth countries, 220,000 of them in Australia. As the member for Isaacs correctly said, there is at the moment the Carson case, which has been launched by a British pensioner from South Africa. This is awaiting a hearing before the European Court of Human Rights. At the moment the position of Her Majesty’s government is to await the findings of the Carson case.

In the time remaining I wanted to say that this is something that has had bipartisan support, and on a recent visit to the United Kingdom I took the opportunity to lobby a minister from the Department of Work and Pensions for indexation of the British pensions. This is not a Liberal position; it is not a Labor position. It is something we all agree on on behalf of our constituents.

Of this motion, paragraphs (2)(b), (2)(c) and (3) are elements that should be supported. Unfortunately, paragraphs (1) and (2)(a), I think, are incorrect and misguided. The problem was not the termination of the agreement; the problem was the agreement. It was an old-style host country social security agreement which does not provide for indexation of pensions. What we want is a newer agreement like the ones that we have negotiated with a whole range of countries, including most recently Greece, which does provide indexation of pensions.

In conclusion, this is an important issue, but I should also make the point that we have a whole range of Australian pensioners who are on $273 a week. The opposition have said that we want to see an increase in the base rate of the age pension and we want to see a look at the indexation that is used for Australian pensioners. We believe that the Rudd government should act in making a $500, one-off payment before Christmas.

Julie Collins (Franklin, Australian Labor Party) Share this | Link to this | Hansard source

I rise this evening to commend the member for Kingston for moving this important motion and to acknowledge the points made by my colleagues on this side of the House. After hearing the contribution from the previous speaker, the member for Boothby, one thing that I think we can all agree on is that a reciprocal arrangement between the Australian and United Kingdom governments does need to include provision for the indexation of British pensions. I think the previous speaker actually admitted in his contribution that when they terminated the agreement they removed the ability to continue negotiations, which is what we are asking the governments to do. By my calculations, 2001 to 2007 means there were another six years in which they could negotiate and they did not.

To give a bit of history on this issue, UK pensioners living in Australia have been paid at the same rate since the date they became entitled to receive contributions from the UK government, and there is currently no entitlement or provision for an annual increase in their retirement pension.

Earlier this month I received a letter from a married couple living in my electorate of Franklin who are approaching retirement age. They have lived in Australia for the past 25 years and are British expatriates. These are their concerns, and I read directly from their letter:

We were horrified to discover recently that when we claim our British pensions, which we have continued to pay for while living in Australia, they will be frozen from the first payment. That is to say, if things remain as they are now, the British State age pension we will receive from the British Government will not be indexed.

My constituents are really concerned that there is no universal approach to the indexation of UK pensions. For example, British expatriates living in the USA or any country in the European Union benefit from the indexation of their British pension, as do retirees in Britain. The married couple in my electorate are set to lose thousands of pounds that other British expatriates receive as a matter of course. In this instance, the decision not to index their pensions is based solely on where these British citizens choose to reside. Currently, over 500,000 British expatriates who call Canada, New Zealand, South Africa or Australia home do not receive any annual increase—no indexation.

I support this motion to reform the status quo and to bring about a more equitable arrangement for all British expatriates, no matter where they live. Many British pensioners, like the married couple who wrote to me, have made substantial contributions to the United Kingdom’s national insurance system throughout their working lives. They did this to ensure that they would have access to adequate funds for when they decide to enter a new chapter of their lives and begin retirement. What they did not bank on was frozen pension payments. This has had real financial implications for them during their retirement, or in their pending retirement, as the pensions payments will fail to keep up with the cost of living. These people have made significant financial contributions—in many cases over decades—and should rightly have access to indexed social security payments to ensure their pensions keep stride with the rising costs of living. The Australian government is concerned about the UK’s indexation policy, which I believe is inequitable and adversely affects 250,000 UK pensioners in Australia.

The purpose of this motion is to seek rectification of a former social security agreement with the UK government so that it includes provision for indexation. The previous government—that is, the Howard government—had a window of opportunity to address this issue for, as I said earlier, more than six years but they failed to do anything about it. The Rudd Labor government is taking a keen interest in this serious matter. We have already re-established communication channels with the UK government representatives and concerned UK pensioners now living in Australia. In fact, earlier this year the Minister for Families, Housing, Community Services and Indigenous Affairs, the member for Jagajaga, wrote to her counterpart in the UK to raise the matter again and to suggest that officials meet to discuss the possibility of a new social security agreement. I have been assured that the Australian government will, at every opportunity, continue to press these matters with the UK government. In July this year the minister also met with UK pensioner representatives in Australia to discuss the matter and we are considering what other action the government might take. We are also monitoring the legal actions mentioned by previous speakers. A case is expected to be heard at the end of 2008 or early in 2009, and I am sure we all await that outcome.

As you can see, the Australian government and UK pensioners are seeking to change what I and they believe is an unfair and inequitable social policy. In supporting the member for Kingston’s motion, I feel that it is important we move forward to commence negotiations for a new social security agreement that includes provisions for the indexation of pensions. The Australian culture is underpinned by a fair go for all, and we want a fair go for all, including the British expatriates. I commend the motion to the House.

Mal Washer (Moore, Liberal Party) Share this | Link to this | Hansard source

Order! The time allotted for this debate has expired. The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting.