Shayne Neumann (Blair, Australian Labor Party) Share this | Link to this | Hansard source

I had nearly finished my speech last week in relation to this matter. The Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009 is important because it means that income, from whatever source, is used for the purpose of assessing entitlement for the Commonwealth seniors health card. It is important that income should be taken into consideration, regardless of how a person earned that income. The previous government did not adopt that attitude. They took the view that income from one source should not be taken into consideration for the calculation of the entitlement to the card. And they failed to engage in indexation—they abolished that during their tenure.

We have heard a lot of speeches from those opposite in relation to this particular matter, taking the view that somehow we are doing something which is inconsistent and that somehow we are doing something which is injurious to the livelihoods of so many people in Australia. But the truth of the matter is that we are being consistent and we are treating income in a fair and just way. We have provided enormously for those people who are earning an income and are taxpayers but who, as senior citizens, are receiving the bonuses under the Nation Building and Jobs Plan. Pensioners and senior citizens, many of whom actually earn incomes part-time, received bonuses last year as part of the Economic Security Strategy, which we handed down and announced in October last year. The Rudd government have provided significantly for our senior citizens. I also make mention of the fact that we plan, over the next four years, to inject something in the order of $41 billion into the aged-care sector to provide nursing-home care of $28 billion. HACC funding is included in that $41 billion, and that is a tremendous injection of funds to look after our senior citizens.

This particular legislation that is before the House today is important. I have dealt with seniors in my area. I have spoken at the Association of Independent Retirees in relation to this matter. I have spoken out, telling what our policy is in relation to these issues. I have spoken to pensioners groups and other seniors groups in my electorate to explain the government’s position. I think they understand that we are being consistent in this regard. Those opposite have made merry and made hay of what we are doing in this regard, but I think Australians understand that it should be taken into consideration whether a person earned an income digging ditches or sitting behind a computer in an office or from a superannuation or investment source. These things should be taken into consideration, as they are in so many areas of government entitlement—like pensions, taxation and child support payments. In the circumstances, this legislation is appropriate. It is responsible. We believe it is appropriate in all the circumstances. I commend the bill to the House.

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

The Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009 will effectively cut 22,000 senior Australians off their concession cards. The member for Blair may well say that he has spoken to those self-funded retirees and elderly people in his electorate and that they understand. May I submit to him and to the House that the majority of seniors are bloody angry.

The Prime Minister did not disclose this to voters before the election. Those voters—those self-funded retirees, those 22,000 Australians—have an absolutely legitimate right to feel ripped off. This is not the only thing that Mr Rudd failed to disclose to voters before the election. He failed to disclose a range of industrial relations instruments whereby union thugs can walk into businesses where there are no union members and demand to see the pay records, the medical records and everything else, just on a whim. That is what Labor failed to disclose to the Australian people. It failed to disclose the $22 billion in taxes, increased over the forward estimates they put in place in the May budget last year. The Rudd government has failed to disclose an enormous amount.

But this one is very personal. This one is 22,000 more elderly Australians that the Rudd Labor government said nothing to before the election. ‘Trust me: I am John Howard lite,’ the Prime Minister said. But, when he comes in, what we find is completely different. The Commonwealth seniors health card provides a range of benefits to people who do not qualify for the age pension yet have an adjustable taxable income of less than $50,000 for singles and $80,000 for couples. From 1 July this year, this government will change the Commonwealth seniors health card test to include in the income assessment growth income from superannuation income streams with a taxed source and income that is salary sacrificed to superannuation. It will also establish a compliance program to ensure that only people who meet its new guidelines will be entitled to retain the card. It will involve the Australian Taxation Office with Births, Deaths and Marriages for data-matching to further ensure compliance is complete. It will collect tax file numbers for future and existing cardholders, and there will be an automatic review of the assessable income for cardholders.

The Rudd government were provided with the final report from the Harmer review at the end of February this year, yet they have not released it publicly or outlined their final response. Far from strengthening the financial security of seniors, may I suggest that they are looking to roll back support to seniors. Twenty-two thousand senior Australians will be ripped off because of this government. We are deeply concerned that this is just the first of a range of duplicitous pieces of legislation that this government did not take to the election. They cannot claim the hallowed mantra of ‘We have a mandate to do it.’ They told no-one and kicked in the back door to put it in.

Let us look at the impact this legislation will have on those 22,000 Australians when it goes through. Under the PBS, Commonwealth seniors health card holders pay $5.30 per script for prescribed pharmaceuticals. After these changes, 22,000 Australians will pay $32.90 per script. With the Commonwealth seniors health card, a senior reaches the safety net threshold when they have paid a total of $318 for scripts. Prescriptions after that are free. Without this safety net, 22,000 Australians will see the threshold rise to $1,264.90, after which they will pay $5.30 per script. With the Commonwealth seniors health card, a senior is eligible to receive an annual allowance of $500 to assist with the payment of essential services for which pensioners are granted concessions. From 1 July, if this legislation goes through, 22,000 Australians will lose this entitlement. Commonwealth seniors health card holders will receive or have received a lump sum of $500 in the 2008-09 year. If any lump sum payments are to be paid in the future, 22,000 Australians will miss out. Currently, seniors health card holders qualify for a telephone allowance of $34.60 paid every three months. Twenty-two thousand Australians will now miss out on that allowance.

The seniors health card also allows holders to benefit from a range of concessions granted at the discretion of providers. These include medical bulk-billing and household, transport, education, recreation and entertainment facilities. Twenty-two thousand Australians will miss out on these. The Rudd government are happy to splurge $10 billion and then $42 billion, of which some $23 billion is in a cash splash; yet at the same time they will take a small amount from 22,000 Australians who can least afford to have it taken. Prime Minister Rudd needs to walk into this House and guarantee that no senior Australian will be worse off because of his pension review or his other changes, such as this legislation, that deal with senior Australians.

The Rudd government’s work on this bill stands in stark comparison to what the coalition were able to achieve in the previous 11½ years. In the Howard-Costello years, the government paid off $96 billion of Labor debt. Included in that was $56 billion in interest, making the total of that debt $152 billion. The coalition put aside $60 billion in the Future Fund—that is $212 billion—and left behind some $20 billion in the bank. That is some $232 billion. And all we have seen so far is the Rudd government looking to raise Commonwealth debt by $200 billion, plus the Ruddbank will have an initial $2 billion, and the legislation proposes a further $26 billion to follow. The comparison is simple: the Howard years paid off debt and put cash in the bank—a total of some $230 billion. The Rudd government is looking to borrow $230 billion. That is half a trillion dollars difference between the two sides of this House.

The Howard government worked hard to deliver. It linked pensions to 25 per cent of the male total average weekly earnings, it encouraged retirement savings, it improved aged care, helped older Australians receive more flexible care in their own homes, and it shared the prosperity with older people through lump sum payments. The coalition government improved eligibility for concession cards so that 85 per cent of people over pension age qualified for a healthcare card, a Commonwealth seniors health card or a pensioner concession card. The coalition significantly increased the income limits of the Commonwealth seniors health card in 2001 so that more self-funded retirees were eligible. Due to these measures, around 300,000 people held the Commonwealth seniors health card compared with just 35,000 when Labor left office in 1996. There is half a trillion dollars difference between the performance of the Howard-Costello government and the performance of the Rudd government. Nowhere is this more evident than in the case of the 22,000 senior Australians who are having their concession cards cut off through the miserly measures in this bill.

Damian Hale (Solomon, Australian Labor Party) Share this | Link to this | Hansard source

I rise today to make my contribution to this debate on the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009. The passing of this legislation will mean that, from 1 July this year, the adjusted taxable income test for the Commonwealth seniors health card will be expanded to include income from a superannuation income stream with a taxed source, income that is voluntarily salary sacrificed to superannuation and the net financial investment losses. The proposed changes will ensure that CSHC holders with similar levels of income will have the income test applied to them in a similar way because the test that is currently applied does not treat sources of income the same way, and that is what this legislation is all about. I echo what other colleagues have said before: this legislation will treat similar sources of income in a similar way. The change will provide consistency when applying the income test for cardholders. This legislation will bring the entitlement and qualification for the Commonwealth seniors health card into line with the age pension.

The heart of this legislation is about refining the adjusted taxable income test to make it fairer. It is not about disadvantaging senior Australians. Currently, the rules say that if you receive income from a defined benefit scheme—for example, Comsuper or some of the state government funds—it is treated as income. Until recently, my father did a bit of relief teaching. Other seniors I know help out at local shops. When it comes to qualifying for the concession card, the money they earn is counted as income. But income from private retail or industry based superannuation funds or from account based pensions is no longer taxable, so it is not counted as income when it comes to qualifying for the health card. There is a set of rules for one and a different set of rules for another. How is this equitable? How is it fair? We are adjusting the income test. The change means that the seniors health card will be better targeted to those in need of government assistance.

It is worth noting the background of the Commonwealth seniors health card, because those opposite would like to suggest that we on this side of the House are not supportive of older Australians. The Commonwealth seniors health card was introduced in 1994 by the Keating Labor government. The intention of the card was to help those who did not qualify for the age pension due to a lack of residence qualifications or due to the value of their assets. Currently the card is available to all Australians over pension age—65 for men and 63 years and six months for women—who are not receiving income support payments from Centrelink or the Department of Veterans’ Affairs and who have adjusted incomes of less than $50,000 a year for a single person $80,000 a year for couples.

There are obviously a number of benefits you receive if you qualify for the Commonwealth seniors health card. I know it is a good thing for the seniors in Solomon and around Australia to have one because the benefits include discounts on prescription medicines through the Pharmaceutical Benefits Scheme, bulk-billing with participating doctors and reduced out-of-hospital medical expenses above the threshold set through the Medicare safety net. The CSHC also provides access to the seniors concession allowance, which is a quarterly payment to help with utility expenses. The telephone allowance is a quarterly payment that assists with telephone bills or internet connections. In many cases, the card also gives access to local, state and territory government and private provider concessions such as discount transport, education and recreation.

The latest ABS in census data show that the 12 months to 30 June last year the number of people aged 65 years and over in Australia increased by 67,600—a 2.4 per cent increase. The proportion of the population aged 65 years and over increased from 10.8 per cent to 13.3 per cent between 30 June 1988 and 30 June 2008. All states and territories experienced growth in their population of people aged 65 years and over. In fact, out of all of Australia, the Northern Territory experienced the greatest increase in the number of people aged 65 years and over—a 6.6 per cent increase. In Solomon, we have well over 5,000 vibrant and active seniors.

As we all know, a strong community is one that supports its members and values the variety of contributions that each of them makes. When older people are fully involved in the community there are extra benefits, including passing on cultural knowledge and building strong intergenerational relationships. Talking of strong communities, I will take this opportunity to thank and congratulate the NT finalists in this year’s Australia Day senior Australian awards. Julia Battison, for all her hard work over the years at the Palmerston markets, along with fellow Territorians Coralyn Armstrong, Max Tate and Bryan and Kathy Massey were announced winners of the awards. Lois from the Rapid Creek shops is a friend of mine. She sells socks. Lois is a beautiful lady and I buy my socks from her which supplements her income. I can tell you, Mr Deputy Speaker Adams, I can get you some good quality socks from Lois.

Jon Sullivan (Longman, Australian Labor Party) Share this | Link to this | Hansard source

What about the ones that go over your toes?

Damian Hale (Solomon, Australian Labor Party) Share this | Link to this | Hansard source

You can get those as well. I was an apprentice greenkeeper and, cutting my teeth as an apprentice at a bowling club and then later on at golf clubs, I came in contact with a lot of senior Australians. The lessons you learn around bowls clubs hold you in good stead throughout your life. It was also great helping out at the NT firies seniors Christmas party again this year. The Christmas lunch is an annual event that just keeps getting bigger and better, and I know it is something the senior Territorians look forward to each year. We have a strong representative group at this event. Senior Territorians do some great work.

COTA NT is led by the president, Mr Brian Hilder, the chief executive, Dr Graeme Suckling, and the very hardworking members of the board. They do a great job for the seniors in Solomon, along with the NT Advisory Council on Ageing and the Office of Senior Territorians. I know from getting around the electorate that seniors in Darwin and Palmerston are a lot happier with what our government has done for seniors after the 12 years of neglect from those opposite. It is not just the seniors in Solomon; you just have to look at press releases put out by the Council on the Ageing, the national peak seniors body, to see what they think of our government’s investment in senior Australians. A COTA press release headline from last year was ‘Broadband for seniors gets the thumbs up’, another headline in November was ‘COTA gives Rudd a tick regarding the pensioner bonus payments’ and another in December was ‘PM again delivers for seniors’. The last headline was in relation to the new transport concessions when seniors travel interstate. I will quote from the Executive Director of COTA Over 50s, Dr Geoffrey Bird, who said:

This means that seniors travelling interstate can now access cheaper fares on local public transportation.

Seniors from the Northern Territory can enjoy discount travel to Sydney, including a ‘seniors’ ferry ride around Sydney Harbour.

I know senior Territorians will enjoy the concession benefits when travelling interstate, just like so many other seniors who come to visit the Top End every year.

Australia’s age pensioners received a total of $2.5 billion through the Economic Security Strategy payments as part of the Australian government’s response to the global financial crisis. In December last year, through the ESS, the government made lump sum payments of $1,400 to singles and $2,100 to couples to provide a helping hand during the economic hard times. Four out of every five of the 2.8 million Australians aged over 65 benefited from those payments. Around 290,000 older Australians will benefit from the government’s $42 billion Nation Building and Jobs Plan. Self-funded retirees who paid tax in 2007-08 through investments or other income and part pensions—even $1 of tax—will get a tax bonus of up to $900. In total, excluding normal indexation, the Rudd government has provided an additional $2,337 in assistance to single pensioners and $3,537 to pensioner couples since coming to office.

The latest numbers show that there has been a significant increase in the number of people who are applying for the pension and the number of people who are eligible for the pension. The numbers went up to 3,000 per week in December compared to around 2,000 per week in October. This reflects the significant impact of the global financial crisis on our pensioners and self-funded retirees. That is why, more recently, our government is supporting senior Australians through other financial measures. For example, we announced the release of regulations that give effect to the government’s decision to halve the minimum payment amounts for account based pensions for the financial year. The regulations reduce the minimum payment amounts for account based, allocated and market linked pensions by 50 per cent for 2008-09. This temporary relief addresses concerns that the minimum draw-down requirement for the financial year was based on account balances last year, when equity values were higher. Part rate pensioners paid under the income test, with financial investments mainly in term deposits, shares, managed investments and other accounts, may receive an increase in their pension payments to reflect the reduction in their assessable income. These actions are a decisive move by the Australian government to ease financial pressure on senior Australians. I commend the bill to the House.

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

I rise to speak on the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009. It is a funny thing that when a lot of people see the word ‘entitlement’ in the name of a bill they think that it will actually increase entitlements, but this is not the case. It is exactly like previous bills brought into this House that mention jobs but do not achieve more jobs and, in fact, do not even stop jobs being lost.

In this bill there is an entitlement involved, the Commonwealth seniors health card, and some 22,000 seniors or veterans will have that entitlement—the health card—taken away. I will address the detail of the bill soon, but first it is important to note the issue of a mandate. Although the Labor Party never acknowledged the mandate of the coalition when we were in government, they are very keen to claim it now they are in government. Indeed, we have honoured that mandate when they have complied in detail with their pre-election policies. With this bill, however, there is not even that—there is no mandate. This attack on self-funded retirees and some veterans has no mandate accompanying it; therefore it is opposed by us on this side, by the Association of Independent Retirees and by the National Seniors Association.

The Commonwealth seniors health card helps senior Australians with the cost of certain health and other services. It helps with the cost of prescription medicines and other services if you are of age pension age but do not qualify for the age pension. At the federal level, these cardholders are entitled to cer-tain cash payments. The seniors concession allowance, which was increased in March 2008 as part of the government’s elec-tion commitments, is now $514 per year, paid quarterly. The telephone allowance is paid if there is a subscription to a telephone service and payable at a higher rate, $138.50, should the person also subscribe to a home internet connection. And there are other concessions such as medical bulk-billing, house-hold, transport, education and entertainment.

When the member for Warringah, Mr Abbott, asked the Minister for Families, Housing, Community Services and Indigenous Affairs, in writing, on 5 June 2008, ‘How many people will lose eligibility for the card as a result of the budget’s changes to the eligibility criteria?’ the answer was: ‘Around 22,000 customers will lose eligibility in 2009-10.’ It is highly concerning that the concerns this policy elicited over recent months remain unanswered. As recently as Monday, 9 March 2009 the Canberra Times reiterated the enduring concern of self-funded retirees that 22,000 of them fear for their continued access to the seniors health card. That is a hard thing to support, considering that some of those people are members of the community in our electorates and they are losing benefits they have had in the past and have now come to rely on, especially considering the current economic climate.

What this really sounds like is a Rudd Labor government plan to take the seniors health card away from many seniors and veterans by pushing their incomes over the threshold, which is currently $50,000 for singles and $80,000 for couples—in other words, change the rules and strip them of their right to a CSHC. As with other hidden proposed changes, like the means testing of the baby bonus, the family tax benefit part B means test or the introduction of a new test that would exclude families earning over $110,000 from receiving childcare benefit, I do not recall hearing about these proposed changes before the last election.

The Brisbane Times website, in late February, made mention of the case of retired schoolteachers David and Jeanette Flynn, who became eligible for the seniors health card in 2007. On 1 July this year they are likely to lose it. David, who turns 70 this year, estimates that he will be worse off by several hundred dollars a year as a result of the additional pharmaceutical costs alone. He says:

“I have mature-age diabetes and high blood pressure and I’m on half-a-dozen different tablets … I can afford to pay but it’s not an insignificant cost and we’re all getting older.

“When the Rudd Government was elected there was no mention in their campaign of a rule change but now your super and gifts to the kids will come into the equation and many retirees will lose the Seniors Health Card.”

So, no matter how much you look at it, it is taking benefits away from Australians, and now is not the time to be affecting anyone financially, particularly with the current economic climate. It is like hitting the core of the Australian family with all these changes. Or is this just the tip of the iceberg? On the one hand, you give a so-called economic stimulus and then, with the other hand, you take it away in another form, only costlier.

A very important point in this whole sorry matter is the recent effect on superannuation of the current economic challenges. Superannuation changes have been mostly on the negative side. Ask any of the self-funded retirees how their superannuation is going and you will get a graphic description of where that superannuation has gone. The only thing that would stop the loss of the Commonwealth seniors health card would be the collapse of retirement incomes. That being said, we should keep in mind what has happened to those retirement incomes—in particular, the circumstances of those on defined benefit pensions, members of self-managed super funds, who actually received a full or partial assets test exemption.

I have received correspondence from my constituents about these matters. I, like other members, have received correspondence from fund managers on behalf of their participants. The issue is about an anomaly in the Social Security Act. What has happened is that these pension funds will not meet the solvency required for them to continue. What needs to be allowed for is a rollover from the self-managed super system to a life annuity pension system. If this is not done then the assets test exemption would be backdated for five years, because that is the limit of time for recovery available to Centrelink. Thousands of dollars are involved in these cases of individuals, and this is a significant problem that the government now has the opportunity to address. It would seem that the government would prefer to take away the Commonwealth seniors health card from around 22,000 seniors and veterans as a priority rather than acting quickly to support those on self-managed super arrangements.

The legislation is in need of review to consider whether the assets test exemption is lost at the time of rollover. This would be as opposed to the backdating to the inception of the defined pension benefit. A review could consider how to allow pensioners to continue to receive the exemption if their pension is rolled into a life office annuity. There are challenges to this. Firstly, because many of the assets supporting the pension in these self-managed funds are frozen, it is not possible to transfer into life office annuity. Given that annuity rates are closely linked to prevailing interest rates, which are low, these provide a permanent, low, defined benefit return. These matters have been raised with me in letters by Ord Minnett and Tranzact Total Super. I thank them for providing me with this information. Their letters are pretty much the same letter, but they clearly represent an industry concern on behalf of their members.

We in this place are used to receiving correspondence on single issues, and perhaps it would not have had any greater meaning for me had this exact problem not been raised with me beforehand by my constituent Mrs Valerie Lowe. Tragically, her husband James recently passed away, and I offer my condolences for her loss. I remember that James and I had a good chat on the day of the state election at the Hawker Park Primary School voting booth last year. James was a good man in all respects. Towards the end of his life, James and, of course, Valerie had to deal with this exact problem. Mrs Lowe had come to my office to discuss the matter further. The position was that Mr and Mrs Lowe’s self-managed super fund was no longer making enough to meet the commitment in terms of income stream, due to the effects of the global financial situation on super funds and the share market. Although Mr and Mrs Lowe were quite happy to reduce the amount of income they received from the fund, that was not an option under the rules by which these funds were set up. Therefore they had to commute their self-managed super fund to an accounts based pension and, in the course of this, lost the asset test exemption on the assets underlying the income.

Mrs Lowe accepted the situation, with significant regret. But she is seriously concerned that, under the current social security legislation, once the asset test exemption is lost, it will be backdated for five years—which means that there have effectively been overpayments for the past five years, for which Centrelink will raise a debt. I understand that the figure would be around $14,000. It is little wonder that the situation has been a great cause of concern for the Lowes, and now for Valerie Lowe alone. A serious reduction in income due to lower returns from her superannuation, and now a significant debt raised by Centrelink—let alone her recent loss of her husband—is a lot for this lady to endure, and I think that this is worthy of immediate action. To that end, I have written to the Minister for Finance and Deregulation asking for a review.

I will now return to the inherent fault with this legislation. The availability of the Commonwealth seniors health card represents a little bit of welcome assistance to those who are fundamentally paying their own way. They have worked hard and have saved for their futures. They are not taking the age pension and they have payed taxes throughout their lives. It is not unreasonable for them to be given this small helping hand to take the edge off some of their medical expenses, particularly given how little they cost the taxpayers in overall terms. It should also be considered that, with the cost of private health insurance rising—certainly not helped by the government’s ideological stance against private health insurance—the assistance with the provision of the health card is right and appropriate.

This legislation really does represent discrimination against those who have saved for their retirement, as if, by such prudent action, they have somehow taken an unfair advantage over others. It is a telling sign that the Association of Independent Retirees and the National Seniors Association are aware of this legislation and both oppose it. The self-funded retirees do not stand alone on this matter, because we stand with them. We stand with them and oppose this bill.

I wonder where this will all end. Will the family house be included in the assets test in the future? Will that force seniors to sell their homes? Will the assets test taper rates be increased? That would reduce the incentives to save for retirement. Or, perhaps, will the income test taper rates be made harsher, creating a disincentive for people to earn additional money? It is hard to reconcile the action taken with this legislation—and the media reports that have suggested that the changes just mentioned are on the table for the government—with Kevin Rudd’s pre-election talk of ‘easing the cost of living pressures for senior Australians’. In contrast to that, I see only roll-backs from the financial security advances that were made by the Howard government.

The government can be sure that we will continually ask whether any senior will be worse off as a result of their pension review. We will never retreat from our strong support for age pensioners. We were the side that advanced the issue of an increase of $30 per week for age pensioners in September last year, and we remember that the government voted against it. I call upon the government to drop this legislation and to do it now.

Jon Sullivan (Longman, Australian Labor Party) Share this | Link to this | Hansard source

I rise to support the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009. At the outset I note that I, like most members of this chamber, have received correspondence from my local branch of the Association of Independent Retirees, which in my case is the branch from Bribie Island, whose correspondence to me included a newsletter from their secretariat. Essentially, the views that they are expressing are twofold. The first view is that we should oppose the change that is being made through this legislation to the way in which income is measured for entitlement to the Commonwealth seniors health card. Secondly, they want us to increase the threshold levels from those that exist. That increase in threshold level has not been dealt with in this bill. It was never intended to be dealt with in this bill, which is about determining eligibility by way of how we measure income. Interestingly enough, that has not been championed by members opposite in any of the speeches that we have heard thus far. Not one member of the coalition has come into this chamber and suggested that the plight of these independent retirees is such that we should raise the threshold to the levels that they want.

I think it is not a bad idea to look at some of the history of the Commonwealth seniors health card, and I thank the Parliamentary Library for the information that they have provided in relation to it. In the Bills Digest, they say:

The original purpose of the CSHC was to provide assistance to retired persons who were on low-income.

In fact, the initial upper income limits for eligibility for this card were the same as the earning level at which the age pension cut out. In July 1994 that was $21,460 for a single and $35,859 for a couple. That gathered a group of people who were denied access to the pension because of either the assets test or, as the member for Solomon mentioned, the residence test.

Interestingly enough, in the May 1998 budget there were some changes made to the eligibility levels for this card. In fact, in the May 1998 budget the single rate was raised to $40,000 and the couple rate was raised to $67,000. Those were exceptionally generous increases. In five years it was deemed by those opposite, when they were in government, that this card was such a good idea that it was worth raising the level at which people could claim it by 86 per cent. In his budget speech at the time, the member for Higgins, who was then Treasurer, indicated that this would enable a further 220,000 Australians to claim the Commonwealth seniors health card and benefit from this budget largesse—in an election year where 2,000 votes would have meant that the Howard government was a one-term government. Two thousand votes in 1998 is all that it would have taken for Prime Minister Beazley to be installed where I believe he rightly should have been. The member for Cowan indicated that these people received a little bit of welcome assistance. I am sure that Prime Minister Howard figured that those votes were a little bit of welcome assistance.

It did not stop there, because they were probably a little bit worried about how the election in 2001 would go, having gone so close in 1998. So we saw further increases in the 2001 budget. The single rate was increased to $50,000 and the couple rate was increased to $80,000. Those were, in turn, 25 per cent and 19.4 per cent increases. From 1994 to 2001 the thresholds increased by 133 per cent for a single self-funded retiree and by 123 per cent for a couple of self-funded retirees, and that is not counting the money that they were allowed to earn over what their taxable income was. In the budget speech of 2001, the member for Higgins, the Treasurer of the time, indicated that 50,000 people were expected to benefit from these new levels. That is a total of 270,000 Australians put onto the card, at a rather interesting rate.

The Association of Independent Retirees have aspirational levels. They want the threshold for a single increased to $60,000 and the threshold for a couple increased to $96,000, and they would like them to be indexed. That comes to a 20 per cent increase on the current levels and, the way that the economy is going, I can understand why they are asking for it. It would bring the increase in the threshold level up to 180 per cent for a single self-funded retiree and up to 170 per cent for couple retirees. From 1994 to today, what has been the increase in the cut-out rate, or the upper level of income, that a person can receive a part pension from? In that period of time, that level has risen 88 per cent. From 1994 to today, age pensioners have been able to earn an extra 88 per cent and retain their benefits by holding onto a small part pension, yet some are seeking to raise self-funded retirees’ benefits to 180 per cent from where they currently sit, at around 130 per cent. Somehow or other that seems a little bit strange.

A single age pensioner earns $14,615, if they receive the full pension. Yet we have people whom I would not regard as wealthy—I would not regard self-funded retirees as wealthy—but who are earning $50,000 versus $14,000 who want and believe they are entitled to the same considerations from the government in assistance to live with dignity that a person receiving $14,615 is entitled to. I struggle with that a little bit, particularly considering that, as it stands at the moment, that $50,000 could actually be because of somebody’s capacity to have fairly high untaxed superannuation. They could be receiving health cards on income—money in their pocket—in excess of $100,000.

Let me give you another figure. The median household income in my electorate of Longman—that is the income below which half the households receive and above which half the households receive—is below $25,000. Of course, I have a large number of pensioners as well as a large number of self-funded retirees living in my electorate and that helps to bring that median down. Additionally, low-income earners can access a low-income healthcare card and get some benefits from the government. If you are to receive a low-income healthcare card, you have to have an income below $23,192 if you are single or $38,636 plus $34 for each child if you are a couple. Families need this assistance easily to the same extent as an elderly couple. I understand that elderly people have a lot of medications to pay for and that health is a major concern as you age. As I am ageing, I notice that myself. But certainly families also have health pressures on their daily budgets. We have a situation here where older people earning two and three times as much as couples trying to raise children today have benefits that those couples do not receive.

In fact, our situation on healthcare cards in Australia is this: if you are over 65, single and earning up to $960 a week or you are part of a couple that earns up to $1,538.00 per week, you will be eligible for a pensioner’s healthcare card, a senior’s healthcare card or a healthcare card. If you are under 65, single and earning $446 per week or if you are a couple earning $743 per week, you are eligible for the low-income healthcare card. So if you are under 65 it is $446 per week and if you are over 65 it is $960 per week. If you are a family—parents and children—receiving the maximum rate of family tax benefit part A and earning less than $42,560 per annum, you will receive a healthcare card. A family earning $42,560 and a single self-funded retiree on $50,000 get a healthcare card. I do not think it takes a great deal of intelligence to understand that this is somewhat skewed.

The member for Higgins, about whom we have been talking quite a bit lately, indicated while he was Treasurer that we needed to increase our Australian population. I think his phrase about children was ‘one for mum, one for dad and one for the country’. Yet people doing the job for the country that the member for Higgins wanted them to do receive less assistance from us than do self-funded retirees. I do not have any real beef with self-funded retirees. They have done a very good job to be able to look after themselves in their retirement. But I wonder if they are being fair in what they are seeking the government to do to assist them now. I cannot blame them for lobbying for an increase. I think anybody who knows how unions work knows that if you do not ask you do not get. I understand that the reality of their situation today is not as good as it was in 2001 when the current limits were set. But I am sure that if they are being fair they will concede that the increases that were given to them from the 1998-99 budget and in 2001 were very generous indeed. As I said before, those increases were offered in the context of impending 3 October 1998 and 10 November 2001 elections and they would have to be seen by any reasonable observer as vote-buying exercises that probably saved the Howard government in 1998 and would have gone close to making them look a little less shaky in 2001.

The increase that is being sought by the Association of Independent Retirees now would itself be very generous and out of kilter with the indexation that the AIR would like to apply. Since 1994 indexation has increased the rate of the age pension by 77 per cent. Had eligibility for the Commonwealth seniors health card been indexed in 1994 and not changed in 1998 and 2001, the amounts that self-funded retirees would be able to earn now—bearing in mind that in 1994 all income was counted and not just part of income—would be $37,985 for singles and $63,471 for couples, much less than the existing $50,000 and $80,000.

Like all members of this chamber, I acknowledge the contribution made to this country by all senior Australians—the wealthy and the not so well-off alike. I understand the extra pressures that are falling on all Australians as a consequence of the global recession. That is why I unreservedly support the Rudd government’s economic stimulus packages of last December and February this year, which have been designed to cushion the effects of the worldwide downturn on Australia—on our economy, on our wage and salary earners, on our businesses and on those whose vulnerability has been graphically demonstrated. While the situation confronting self-funded retirees has deteriorated, all reasonable people would acknowledge that couples with an annual income of around $79,000 are in better shape today than a working family with children earning around $42,500. Families with an income of over $42,500 do not qualify for assistance with medical expenses, whereas older Australians earning almost twice as much do get this assistance. Perhaps we should be concentrating our thoughts on redressing this imbalance rather than extending it.

I recently had a look at the ‘jobs vacant’ section of the Courier-Mail and at the MyCareer website—not because I am looking to change jobs any time soon but just to see what people get paid these days. In the Courier-Mail on 9 March I noticed the following job vacancies: transport salesperson, with a salary of $45,000; office administrator, with a salary of $40,000; registered nurse, with a salary of $39,000. On the MyCareer website, I noticed these vacancies: jewellery store manager, with a salary of $40,000; pharmaceutical manufacturing technician, with a salary of $40,000 to $50,000; automotive clerk, with a salary of $40,000 to $45,000; travel consultant, with a salary of $40,000 to $50,000.

These are responsible jobs, but all of the people who secure those jobs will earn less than some people whose income entitles them to receive a Commonwealth seniors health card. These people are contributing now, through the tax system, just as retired Australians did in the past. What they have in common with retired Australians is an expectation that they will be able to provide for themselves, through work, a standard of living better than that enjoyed by Australians on government support—after all, it is their taxes that the government uses to provide income support and other welfare measures for those in need. Many of them will be the self-funded retirees of the future, thanks to compulsory superannuation, which was introduced by Labor. Like their counterparts today, they would hope to have a standard of living superior to that provided to welfare recipients by future governments. Like today’s self-funded retirees, who are ineligible for the CSHC because of their income, they enjoy a standard of living better than that of many working families, not to mention those receiving income support.

While I am talking about healthcare cards and self-funded retirees, it is important to note that there are many self-funded retirees with very low incomes indeed. The number of people applying for the age pension rose to about 5½ thousand per week in December and settled back to about 4½ thousand per week in January, which shows that an increasing number of people are becoming eligible for a part pension. And when they become eligible, it is entirely appropriate that they avail themselves of that payment and the additional services that accompany it.

Things do go in cycles, however. In the mid-1990s, people were encouraged to retire early to give younger people access to jobs. But today we are asking people to work beyond retirement age because of skills shortages. We may again be asking people to retire early in the future. A consequence of having asked people to retire early in the mid-1990s is the existence of a number of self-funded retirees who have not yet reached age pension age. I received an email from a constituent in that group in relation to his own circumstances. His income from an allocated pension is at a level whereby he is eligible for, and has availed himself of, a low-income healthcare card—that is, his income is less than $38,600. Remember that he has not yet reached retirement age. He pointed out to me, though, that he and his wife have not been assisted by either economic stimulus package from the government despite their parlous financial situation. The point he made—and it is hard to reject—is that, surely, assistance from the government should be based on individual need. (Time expired)

Scott Morrison (Cook, Liberal Party, Shadow Minister for Housing and Local Government) Share this | Link to this | Hansard source

When it comes to the debate concerning self-funded retirees, independent retirees, clearly the government just does not get it—and clearly they did not get it when they were in opposition either. The issue here is a question of recognition, a question of acknowledgement, for people who have worked hard and made sacrifices all of their lives and provided for their retirement. They have asked for nothing over that time. But in their advancing years, when they are continuing to make contributions to our communities and support their families, the government’s answer is basically to give them a kick in the guts. The government’s answer is to bring forward a bill—at a time like this—which seeks to ‘disacknowledge’ an incredibly important and valuable section of our community.

The Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009 will introduce changes to the adjusted taxable income test for the Commonwealth seniors health card. It seeks to include in that income test income from a superannuation stream with a taxed source and also income being salary sacrificed to superannuation. The change will apply to Commonwealth seniors health cards issued under the Social Security Act and the Veterans’ Entitlements Act. Currently the income thresholds applying to the seniors health card are $50,000 for singles and $80,000 for couples. These changes to the way eligibility is assessed will push up to 22,000 seniors over the income limit and strip them of their Commonwealth seniors health card. Some 22,000 Australians—some of whom, I am sure, will be listening to this debate tonight—are about to have one of the few things provided to them, in return for their decades of work and a lifetime of sacrifice, stripped away by a government that considers itself compassionate and acknowledging of the services of older Australians.

This amendment to the rules governing access to the Commonwealth seniors health card was announced by the Treasurer in the May budget. At the time, he claimed that these changes would realise savings of around $85 million over the four years of the forward estimates. That is the 30 pieces of silver for the betrayal of self-funded retirees that is presented in this bill.

The Commonwealth seniors health card provides access to concessional pharmaceuticals under the Pharmaceutical Benefits Scheme. It allows bulk-billed GP appointments and access to a range of discounted healthcare services. The Commonwealth seniors health card is available to Australian resi-dents who are of age pension age and who qualify because their income is below the relevant threshold limit. The current income thresholds are not indexed, although they can be increased at the discretion of the government. In 1999 the Howard government changed the income test limits for the Commonwealth seniors health card to criteria based on taxable income. At the time, the reason given for the change was to allow more self-funded retirees to access pharmaceutical concessions. The Howard government also increased the income threshold in 2001. The current income thresholds have applied since that time.

I heard an earlier speaker say that he considered it is a somewhat generous arrangement that is provided—that there is some act of generosity, that somehow there is something undeserved about these concessions that are provided to independent retirees. According to those speaking opposite, this is some undeserved payment that is just handed over, and Commonwealth seniors health card recipients who are independent retirees should be grovelling in thanks for the meagre things provided to them. Quite differently, the Howard government saw support for self-funded retirees as an appropriate acknowledgement. It is an insufficient one, frankly, but it is a very important acknowledgement. The measures in this bill seek to strip that away, to remove that all-important acknowledgement.

These changes will hurt a lot of self-funded retirees. These people have set aside a part of their income all their working lives in order to provide for their own retirement. After all, isn’t that what we are trying to encourage in this country? Aren’t we trying to encourage people to stand on their own two feet? Aren’t we trying to encourage them to be self-sufficient, whether it is in their housing, their employment, starting businesses, providing for their family or supporting their communities? Aren’t we trying to send a message to those outside this place whom we represent to say: ‘If you do the hard yards, if you do the work and provide for yourself, then we will acknowledge that. We will value that as a great service not only to you, your family and your wellbeing but to this country’? But you will not find that acknowledgement in this bill, Mr Deputy Speaker.

These people are not wealthy. There is some bizarre view among those opposite that the people who will be subject to these changes are driving around in flash cars and taking long, extended overseas trips and somehow we need to rob from the rich to pay the poor. You find that theme through all of what we are seeing from this government—outdated class warfare and ideological battles, which simply have no place in considering a measure such as this. ‘We need to rob from those incredibly wealthy self-funded retirees who have all their money tied up in investments. They’re doing pretty well, so we should slug them so we can pay for our spending sprees, our cash splashes, our payments that are being sprayed all around the country.’ Who is going to pay for those cash splashes? In this bill, self-funded retirees are going to pay for them. These are everyday self-funded retirees who have prudently planned for their own retirement. I repeat: they are not wealthy; they are just looking for some support and acknowledgement of the costs that they face as they move into their advancing years.

These changes will force many self-funded retirees to lose their card from 1 July of this year. The impact of these changes will be significant for many of my constituents. I have been contacted by many of them in the past few weeks as they have become aware of this bill. They are worried, and for good reason. Representations made to me by my constituents state that retirement savings will be depleted at a faster rate due to increased medical expenses as a result of the card being stripped away from them. Others have told me that many senior citizens require many more prescription drugs to retain a reasonable standard of wellbeing. One constituent told me that his wife required $130 worth of medication a month before she was granted access to this card.

Denying seniors these savings on medicines could have detrimental consequences. Many self-funded retirees in my electorate have concluded that they and others in their position will be disadvantaged when the Treasurer withdraws their right to the card this year. There are 3,277 Commonwealth seniors health card holders in my electorate of Cook, in Sydney’s Sutherland shire. That is the sixth-highest number in the 150 electorates represented in this place. I would say to you, Mr Deputy Speaker, that self-funded retirees—along with the two million small businesses that we now have in this country, courtesy of the economic policies of the Howard government—are the new forgotten people of the Rudd government. They are not acknowledged, have become invisible and have simply slipped off the radar.

Let us think about some of the benefits that they will be denied as a result of this measure—and they will be proactively denied them. This is not an unintended consequence of this bill. The government knows that 22,000 self-funded retirees, who have worked hard all their lives, are going to be denied these benefits. That is the purpose. It is to strip benefits away from these people. They will lose pharmaceuticals obtained under the PBS, currently costing Commonwealth seniors health card holders $5 per prescription. After those people lose their cards, these same medicines will cost them around $31.30 for each script. Cardholders also benefit from the PBS safety net with the Commonwealth seniors health card. Seniors reach the safety net when they pay a total of $290 for prescriptions. After that point is reached, prescriptions are free. Without a Commonwealth seniors health card, the safety net rises to $1,141 and a fee of $5 per script applies. Seniors with a Commonwealth seniors health card receive the benefit of the seniors concession allowance, currently amounting to $500, to assist with the payment of essential services for which pensioners are granted concessions. After 1 July, many seniors will lose this.

Seniors in possession of the Commonwealth seniors health card are also eligible for an $88 per annum telephone allowance for their home phone service. Many self-funded retirees will no longer be eligible for this allowance. There are also concessions offered by state governments and local governments to holders of the Commonwealth seniors health card, and those affected by these measures will be denied those benefits. That is the design and the purpose of this scheme.

This bill would be bad enough in good times, but in times such as these, with the losses that independent retirees have faced, they are, frankly, inexcusable by this government. Many of those self-funded retirees have seen the value of their retirement savings significantly decline due to the effects of the global economic downturn and more specifically the economic downturn here in Australia, and because of measures pursued by the current government. Superannuation funds have reported significant losses during 2008 and even now in 2009. Many self-funded retirees are going back to work. After working all of their lives for their retirement, because of the impact on their incomes as a result of the losses sustained to their investments, they are now going back to work. That is what we saw in the unemployment figures released last week. We saw an increase in the participation rate not for good reasons, not for reasons produced by good policy, but for reasons produced by the need for self-funded retirees to go back to work. After working their entire lives and finally being able to realise that dream of spending time at home with their families, pursuing their interests, supporting their community and doing all the things that they had denied themselves for their entire lifetime, they are now going back to work because of the conditions we are now faced with.

These self-funded retirees are hurting and this government is not acknowledging that hurt in this bill. Many suffered when the Rudd government imposed its unlimited bank deposit guarantee, the bungled guarantee, because the fund managers froze their investments. I remember standing in one of the many retirement villages in my electorate hearing story after story of people whose funds were frozen simply because this government could not get its act together on the bank guarantee. In their haste and their bungling and their misunderstanding they rushed through a measure, one of the most immediate consequences of which was to freeze the retirement savings of independent retirees. Two hundred and seventy thousand of them had their funds frozen as a result of the bungled decision of this government, and we saw a stampede from investment funds to other places as a result of that ill-considered and ill-timed measure.

The ill-conceived decision by the Rudd government has affected tens of thousands of everyday Australians. What did the Treasurer have to say? I think the Treasurer’s sentiment is also reflected in this bill. When he was confronted by these 270,000 Australians who had had their funds frozen as a result of his and the Prime Minister’s bungling, the Treasurer said, ‘If they needed help they should go and line up at Centrelink.’ That is the answer. He has no conception that these Australians have spent their entire lives in ensuring that they should never have to line up at Centrelink. That has been why they have worked so hard, because they have felt they should carry their own burden and try to carry the burden of as many other people as they possibly can, particularly in their own circle, within their own family and certainly in their own community. So it is wrong for a Treasurer to now say to them after all these years: ‘You know what? Why don’t you just go and line up at Centrelink? Why don’t you go and do the thing that you have worked your entire life to not have to do?’ His comment on that was equivalent to that quip which I think will live in the minds of most who have an interest in politics in this country when the then Prime Minister, Paul Keating, said to them, while unemployment skyrocketed, ‘Go and get a job.’ That is what he had to say, and this is what the Treasurer is now saying: ‘Go and line up at Centrelink. Yes, I know your investments are frozen and I was responsible for that. I know that your retirement savings have been depleted as a result of this economic downturn. But go and line up at Centrelink; just get in the line.’ These people worked hard not to get in that line and what they are looking for is an acknowledgement of their situation and not to be forgotten by this government.

Other self-funded retirees have had their savings tied up in shares and other equities and have found, in addition to the declining value of their portfolio, that the income stream derived from dividends has also dried up. Blue-chip companies have announced that their dividends will be reduced, and many self-funded retirees are heavily reliant on dividends from their investments for income. The average super fund lost 6.6 per cent in November 2008 and losses continued in 2009, losing a further two per cent in value in January. The value of the median fund fell by 16.2 per cent in the first seven months of the 2008-09 financial year. Australian super funds have lost $160 billion since the start of the global economic downturn. Figures published in the Weekend Australian in early January showed that 2.3 million retirees were 20 per cent poorer than they were a year earlier. One trillion dollars has been wiped off the value of Australian shares in the 12 months between November 2007 and November 2008. The Australian Stock Exchange closed at 3,244 points on 11 March 2009, which was 2,111 points down since March 2008.

This is all about recognition and it is all about an acceptance of the plight being faced by independent retirees. We have a government that is quite prepared to splash cash around with no thought of the consequences for the burden of debt it is going to impose on future generations. We are at $200 billion and counting. We are yet to face a budget with this government going through the current economic storm and the consequences that have been wreaked upon our economy because of their decisions. We are going to see that budget in May, and let us watch the debt skyrocket then. This will be a terrible thing. One of the groups that have been most affected and forgotten in the midst of all this by this government is independent retirees. The Association of Independent Retirees said that the economic downturn is starting to bite heavily in the living standards of many self-funded retirees. Their president, Theresa Kot, said in December, ‘With interest rates plummeting and the value of investments in free fall, self-funded retirees are alarmed to watch their efforts over the years in building an asset base to secure their retirement continue to dissipate with no relief yet in sight.’ Not only is there no relief but there will be a big kick coming from this government on 1 July. There is no relief, but a further burden is going to come onto them as this measure takes effect. Taking away the Commonwealth seniors health card from many of these self-funded retirees will only add further worry and anxiety to the lives of these Australians, who frankly do not deserve it.

In May, following the announcement of the government’s budget, the Association of Independent Retirees said it had no idea how many self-funded retirees would be disenfranchised by this decision. We now know that the number is well over 20,000. It called for the eligibility threshold for the seniors health card to be adjusted upward to an appropriate level—we heard from an earlier speaker that he thought it should be further revised downwards—but the government has ignored this request.

The coalition has a strong tradition of giving support to older Australians. It kept faith with those who contributed so much to the building of our country. The coalition improved eligibility for Australian government concession cards to reach a point where more than 85 per cent of people over age pension age qualified for a health card, a Commonwealth seniors health card or a pensioner concession card. That was a proud boast of the coalition government when it was in office. We delivered. We delivered for independent retirees, and I will tell you why we delivered for them: because we get it. We understand it. We understand their sacrifice. We understand their contribution.

The sacrifices and contributions of independent retirees, at least in my mind, are summarised by a constituent who came to see me the other day. This is a bloke who built his house in the forties in Como. He lived in a tent with his wife for seven years while he built his house. He worked in his own businesses over the course of his life, and he set himself up for his own retirement. That story is repeated many, many times around this country. It is a story of sacrifice. It is a story of commitment. It is a story of perseverance and dedication. These are stories we should be celebrating and acknowledging in this place, but in this bill we are not doing that. In this bill, we are treating these great Australians as undeserving, as overcompensated and as people who, frankly, do not warrant even our thought, let alone our support. So I ask the government to seriously reconsider this measure. Self-funded retirees do not deserve it. They deserve greater respect, greater recognition and greater acknowledgement, particularly in these economic tough times. They should no longer be the forgotten people within Australia under this government.

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

I rise in support of the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009. The bill before the House introduces a fairer system for eligibility for the Commonwealth seniors health card. The card was introduced by the Keating government in 1994 to assist those who did not qualify for the age pension and reflects the Labor Party’s long-term commitment to looking after the aged members of our community. It is available to people who have reached age pension age with an adjusted taxable income below $80,000 for couples and $50,000 for singles. It is not asset tested. It does not apply to people who receive a social security pension or benefit or a service pension. The card enables many seniors on lower incomes to access health care and medicines which they could not otherwise afford.

It is certainly a very popular initiative. Certainly, in my meetings with the Moorooka senior citizens association in my electorate and my visits with the Salisbury senior citizens association and also with other seniors in my electorate, I have heard people say time after time how important it is to structure your finances wherever possible just to get one dollar inside that threshold so that you are able to access the health care and medicines. I have here a copy of my latest newsletter, Mr Deputy Speaker, which I am sure you would be keen to read. There are two photographs here: one is of Jean Burns from the Salisbury and District Senior Citizens Welfare Association, receiving a medal, and the other is of Cheryl Nott, also from the Salisbury senior citizens association, receiving an award. Cheryl Nott is receiving an award from Lady Killen, James Killen’s widow. It is an award I initiated this Australia Day, recognising people who work in the community. Certainly, in my talks with the people at the Moorooka senior citizens association and the Salisbury senior citizens association, they often say how important it is to structure their finances just a dollar below the 80 grand or $50,000 to be able to access these benefits.

I understand that there are currently about 280,000 cardholders who are able to receive much cheaper medicines, with scripts filled for $3.60 through the Pharmaceutical Benefits Scheme. Cardholders are also entitled to bulk-billed GP appointments and transport and education concessions in some states. They also have access to the seniors concession allowance, a payment of $128.50 every three months to help with regular utility bills; and a telephone allowance of $23 every three months.

The bill before the House amends the Social Security Act 1991 and the Veterans’ Entitlements Act 1986 to implement the budget measures to change the means-testing criteria for the Commonwealth seniors health card. It is expected to generate around $84 million in savings over four years. Some superannuation incomes from a defined benefit scheme, such as for Commonwealth public servants, and some state government funds are treated as income. However, income from some super funds and account based pensions are no longer taxable and so are not currently counted as income for the Commonwealth seniors health card.

This bill ensures that all seniors are treated the same, no matter how they receive their income. For example, the income test for the card will be changed to include income from a superannuation income stream with a taxed source and income that is salary sacrificed to superannuation. It is a much more common-sense approach. It would be like tapping a millionaire on the shoulder down at the soup kitchen and saying: ‘Hey, mate, you don’t really belong here. This is not geared for you.’ It is really about closing a loophole, and obviously the line has to be drawn somewhere. This is about making sure that the line is accurate.

For the purposes of Commonwealth seniors card eligibility, these income streams—such as income from super and salary sacrificed income—will be treated the same as taxable income, employer provided benefits, foreign income, net rental property loss and net financial investment loss. As is now the case, no asset test will apply to the Commonwealth seniors health card eligibility. That would mean that, if you were, say, a retired merchant banker living high in a penthouse at Point Piper, it would not be considered when making a decision about your healthcare card and being able to access those requirements. Importantly, an individual of age pension age who receives less than $50,000 and a couple of age pension age who receive less than $80,000 a year from superannuation will continue to qualify for the card. For example, a single person of age pension age who receives $22,000 gross employment income and a gross annual superannuation pension, with a taxed source of $27,000, will be assessed as having an adjusted taxable income of $49,000 and will continue therefore to qualify for the card.

These changes are important to ensure that the eligibility-testing system for the CSHC is fair and equitable. It also ensures that the Commonwealth seniors health card is available to self-funded retirees on lower levels of income, those who need it most. As I said earlier, it is certainly reported to me regularly that seniors ensure, if possible, that their affairs are restructured so that they can access this health card—and good luck to them. I commend them if they are able to do so.

I think most people would agree that people who derive their income from different sources should have the income test applied to them in a similar way. I note the comments of MLC’s head of Technical Services, Andrew Lawless, who told the Australian the other week:

In a broad sense the legislation is trying to level the playing field so that when it comes to government assistance programs, tax offsets and various levis like the Medicare levy, that people will be treated equally.

He went on:

When you look at it, why should someone who has the ability to package their income better get more family assistance and pay less tax than someone who doesn’t have that ability to package?

That is the same question before the House. We on this side of the House believe that all income should be treated the same. It is very important that, in 2009, we get the trajectory right. We need to get the proportion right in determining such things. As I said, it requires drawing a line somewhere. If we are going to have an economically sustainable future—and obviously both sides of the House would be supportive of that—we need to consider the situation very carefully.

Mr Deputy Speaker, I will take you to some figures that I have in front of me. These figures look at a number of factors. One factor is where the costs are for health care. By way of a round-up, if you were under the age of 15, back in 2002-03, it cost about $1,000 a year for health care. If you were aged, say, 15 to 34, it cost about the same, $1,000 a year. If we move on to age 55 or 64—I am not sure whether there is anyone in the House of that age—it was getting close to costing about $3,000 a year in healthcare costs. If you move on to age 65 to 74 then it got close to $5,000. From age 75 to 84, it cost up to $7,000 and age 85 and over, up to about $8,000 a year. Obviously, that reflects common sense, that most healthcare costs occur towards the end of someone’s life. Incidentally, one of the reasons why I am so opposed to euthanasia is that I am always worried that people might tap grandad on the shoulder and say, ‘The medical bills are going to start piling up, Grandad; maybe you could do us all a favour.’ That is what I mean when I say that we have to get the trajectory right. Some other data here says:

Ageing alone is estimated to push up health expenditure from $170 billion to $210 billion by 2045, an increase of 25 per cent.

That reflects those figures: the older we are, the more health costs we have at the end of our life. I would like to quote from a source, which I do not have in front of me, obtained from Guy Woods, a senior researcher in the Parliamentary Library, which says that, as a proportion of GDP, the increase is from 8.1 per cent to 10.3 per cent. That is why it is so important that we get this trajectory right. Maybe I should declare a self-interest here. In 2045, I will be 79, so it is important that we have a health system that is able to be supported. Looking at some other data that summarises it much more simply, when I was born in Australia in 1966, approximately 100,000 people were over the age of 85. By the time I am 85, in 2047 or so, there will be more than 1.6 million people over 85. These are phenomenal figures, demonstrating an incredibly ageing and changing society. That is why we need to get this trajectory right.

I am aware that around 20,000 self-funded retirees will lose their Commonwealth seniors health card as a result of their superannuation income and that a further 2,000 will lose their qualification once their salary sacrifice contributions to superannuation are added to their income. Obviously, I understand that that is very tough for such people. They certainly have my sympathies when they have structured their finances with different considerations. However, as I have stated, it is important that we do get the trajectory right. I understand that these people will be disappointed with the change. However, to be fair and to ensure that government assistance is going to where it is most needed, we must take into account that they receive ongoing tax-free treatment of their super payments after the age of 60. I do apologise to these people, especially those living in my electorate. Obviously, good government is about making the right decisions, not just the easy decisions and the easy political calls. We do need to make some tough and right decisions.

These new income assessment criteria ensure that everyone is treated equally. Ironically and unfortunately, in deference to my former boss, Michael Quinn, with the onset of the global financial crisis and the sudden fall in superannuation funds, many self-funded retirees who have suffered a drop in income may now be entitled to the age pension or Commonwealth seniors health card.

This legislation before the House is difficult legislation to talk about, especially in the light of many of the speeches that have come already from those opposite. It is easy to run the old class war spiel and say that that is what has motivated this. Obviously, that is not the case; it is about treating the Australian public sensibly rather than running away from a political problem. I thank the Minister for Families, Housing, Community Services and Indigenous Affairs for introducing this legislation. It is a fair and balanced approach, and I commend the bill to the House.

Louise Markus (Greenway, Liberal Party, Shadow Minister for Veterans' Affairs) Share this | Link to this | Hansard source

The Commonwealth seniors health card is an important form of assistance for non-wealthy self-funded retirees in Australia. These are people who genuinely want to take care of their own affairs, as much as they reasonably can, without relying on government welfare. Currently, the card provides for access to discounted pharmaceuticals through the Pharmaceutical Benefits Scheme, the seniors concession allowance, the telephone allowance and access to the seniors bonus, which for 2008-09 is $500. In addition, Commonwealth seniors health card holders might also benefit from other concessions, such as medical bulk-billing and household, transport, education and entertainment facilities—these being at the discretion of the providers. In effect, Commonwealth seniors health cards are extremely important to those who possess them, both in financial support and for peace of mind. So what is the purpose of the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009, which we are debating today? This legislation is a way that the Rudd Labor government is trying to save money. This is why we are here today. The government is making savings at the expense of seniors.

Currently, income threshold limits for the Commonwealth seniors health card are $50,000 for singles and $80,000 for couples. But the Rudd Labor government is introducing this legislation, which will push people over the income thresholds. The government is proposing to make changes to the income test for the Commonwealth seniors health card, such that it will now include income from self-funded retirees’ superannuation and income that is salary sacrificed to superannuation. The threshold limits will remain the same. It is also of note that the income from private taxed superannuation funds is not included as income for taxation purposes; however, these drawings will be added to a person’s adjusted taxable income for the purposes of assessing eligibility for the Commonwealth seniors health card. The consequences for seniors right around Australia are stark. It will directly affect people from different backgrounds and all walks of life. Seniors are feeling significant pressure in the current economic climate.

I also point out that there will be members of the veteran community who will be caught up in these changes—former service personnel, those who have worn Australia’s uniform with pride and distinction. This Rudd Labor government action will, for some of these people, remove access to the Commonwealth senior’s health card. First, let me state that not all veterans will be affected. For those receiving the age service pension there will be no impact from the government’s proposed changes. They are issued with a pensioner concession card which provides access to subsidised pharmaceuticals under the PBS. Other veterans, those who do not qualify for the age service pension as their income or assets are too high, might lose eligibility for the Commonwealth seniors health card. I point out that, of these, veterans aged 70 or more with qualifying service will already be issued with a gold card. Gold card holders aged over 60 years will also not be affected, as they can access concessional pharmaceuticals under the PBS with their gold card. It is the group in this population—not on an age service pension and whose adjusted taxable income is currently less than $50,000 for a single person or $80,000 for combined with a partner—who may lose their Commonwealth seniors health card with the proposed income test changes. It will be some of those with salary sacrificed superannuation and/or amounts of superannuation from private taxed superannuation sources that take them over the $50,000 or $80,000 limit who will lose access to the seniors health card.

We do not know how many veterans will be affected, but, for some, these changes will come as a rude shock. We must ask: is this something we want to do to people after they have served our nation in the Defence Force—people who have worked hard and paid their taxes? Is this a message we want to put into the minds of people considering a career in the ADF? When we want to encourage people, particularly young people, to join the Australian Defence Force, why is this government introducing another disincentive? Why is it that those who have worked hard and saved all their lives will be penalised? Unfortunately, this is what we increasingly see from this government: savings made at the expense of a small number of people.

Often people are not at an age in their life where they can make career changes or adjust to changing circumstances. These changes were not flagged before the last election—an election where Labor promised much and implied they would do even more. Unfortunately, this penny-pinching is not a one-off. In the veterans affairs portfolio we have already seen savings made. Of particular note were the changes to the partner service pension. Initially, the government planned an increase in age eligibility, for some, for the partner service pension—which previously was 50 years—to 58.5 for females and 60 for males. This was intended to save the government $34.6 million over four years.

The government also planned that those who were separated but still legally married to a veteran would cease receiving the partner service pension 12 months after separation or from the beginning of a new marriage-like relationship for either the veteran or the former partner. This measure was expected to lead to an overall saving of $33.9 million over four years. It was to the credit of many outstanding members of the veteran community that they took the fight to the government and, with the opposition, put enough pressure on the government to back down that the government recognised the meanness of some of these changes and amended them. Despite this, the changes to the partner service pension will still mean that some 475 to 500 recipients are expected to lose entitlements after 1 July this year. This will lead to a net saving for the government of $28 million over four years.

We have a Prime Minister who is keen on symbolism and on crafting a legacy. It is a fact that one legacy of the Rudd Labor government is that they took partner service pensions away from around 500 people. At present the Rudd government is sending mixed messages about spending. On the one hand we have the Rudd government spending $42 billion dollars as part of a stimulus package, including individual payments totalling $12.7 billion. This will impose a huge debt, a huge burden, for our children to repay. On the other hand, they penny pinch from partners of service personnel and from the self-funded retirees we are talking about here today. They deny the Commonwealth seniors health card to senior Australians who just happened to try to do the right thing and plan for their retirement. The government intend to move an estimated 984,000 scripts from the concessional category to the general category in 2009-10. An estimated 22,000 Commonwealth seniors health card holders will lose eligibility in the same year. The savings from these measures is $84.8 million over four years.

Consider the consequences for a person losing access to the Commonwealth seniors health card under the government’s proposal. Let me paint the picture. First, under the PBS, Commonwealth seniors health card holders pay $5.30 per script. After losing it they will pay $32.90 per script. Second, with the Commonwealth seniors health card a senior reaches the PBS safety net threshold when he or she has paid a total of $318 for scripts. Prescriptions after that are free. With-out a Commonwealth seniors health card, the safety net threshold rises to $1,264.90, after which a fee of $5.30 per script still applies. Third, with the Commonwealth seniors health card, a senior is eligible to receive an annual seniors concession allowance of $514 to assist with payment for essential services for which pensioners are granted concessions. At 1 July 2009, many seniors will lose their entitlement. Fourth, Commonwealth seniors health card holders will receive a lump sum payment of $500 in 2008-09. Previously this payment has been $300 and, under the government’s recent package, it was $1,400 for a single person. If a self-funded retiree loses their Commonwealth seniors health card because of eligibility changes, they might not participate in any further bonus payments. Fifth, Commonwealth seniors health card holders qualify for a telephone allowance of $138.40 per year for a residential service. That will be lost.

What is the total cost to a senior? Firstly, when combining the seniors concession allowance and the telephone allowance we have $652.40 annually. Secondly, if we factor in a possible future seniors bonus payment—which, as I just mentioned, is $500 for 2008-09, a self-funded retiree could be losing in excess of $1,000. Lastly, we come to pharmaceuticals. Each person has different needs so figures vary, but someone who lost their Commonwealth seniors health card would now have to find $32.90 for each script instead of $5.30. If a person required numerous scripts, they would reach the safety net threshold of $1,264.90. This is far above the $318 safety net threshold they would still have been on with a Commonwealth seniors health card. And they would be paying $5.30 for each additional script over the safety net threshold; whereas before, once the safety net threshold was reached, scripts were free. The difference in thresholds is $946.90.

There are two distinct sides to the Rudd Labor government. One moment they tell us they must borrow billions to pay Australians as part of a stimulus package, and the next moment they penny pinch. They take from many self-funded retirees, who have planned for their retirement with minimal dependence on government support—with the exception of the reassurance of the Commonwealth seniors health card. Self-funded retirees should not be considered an area that can be squeezed for savings. These are people who are among the hardest hit in the current economic situation. They potentially have falling funds in their superannuation accounts and now they might face a second blow by losing their Commonwealth seniors health card. They should not be the victims of a government trying for credibility as ‘economic conservatives’. Stripping the Commonwealth seniors health card off people in tough times does not make a government or a prime minister an economic conservative; it just shows a mean spirit.

How many veterans will be caught up in these changes? We know some will, but it is too early to know exactly how many. Such is the awful shock awaiting some of those who have worn our country’s uniform. Along with my coalition colleagues, I am opposed to these changes. In these tough economic times, people should not be punished for trying to prudently plan for their retirement. They deserve the peace of mind that is the Commonwealth seniors heath card. This is hardly the action of a compassionate government.

Judi Moylan (Pearce, Liberal Party) Share this | Link to this | Hansard source

I am pleased to have the opportunity to speak on the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009, because the welfare of older Australians and our veterans is of particular concern and interest in my electorate of Pearce. It is clear that the current economic situation is having a great impact on everyone in society. It has created an atmosphere of uncertainty and pain for those who have seen their superannuation nest egg and assets disappear. This is especially true for those older Australians who have spent their entire working life saving for retirement and have in recent times watched as their savings and investments declined rapidly. For those people on fixed, often low, incomes, the situation is especially dire. I think there really is a disproportionate impact on retired folk—people on pensions or self-funded retirement benefits—in the current economic climate because these are people who do not have an opportunity to regenerate income. It is very difficult indeed, and I think this is causing a great deal of distress and a great deal of pressure for many older Australians.

The Commonwealth seniors health card is available to Australians over age pension age—65 years for men and 63 years and six months for women—who are not receiving an age pension and who have adjusted taxable incomes of less than $50,000 a year for singles and $80,000 a year for couples combined. In this day and age, it is not an overgenerous threshold. The bill before the House proposes to amend the income test used to determine eligibility for the Commonwealth seniors health card. The test will be expanded so as to include income from a taxed superannuation fund and income that is salary sacrificed to superannuation.

It is estimated that these measures will cause some 22,000 older Australians to lose their eligibility for the Commonwealth seniors health card. At this point, I think it is important to imagine what it would be like to be one of those 22,000 Australians. These people have worked hard. They have actually been the nation builders and they have saved hard to make sure that they can retire and live independently from government, and not to become a burden on their families. Having contributed to society for many decades, they retire and budget to live off assets and savings that they have accumulated. Then, through no fault of their own, these assets and savings begin to devalue at an alarming rate. Suddenly, their future starts to look uncertain. There are a number of aspects to this I could go into, but it is probably not the forum for detail. In my electorate office and outside the office, I have seen people who are severely stressed because of the decrease in the value of their assets. Then, on top of that, they hear on the news one day that yet another blow is in store: the government, their elected representatives, are looking to take away one piece of assistance that they have enjoyed over the last few years—their Commonwealth seniors health card is going to be taken away from them. This means their medication and doctors bills will skyrocket, they will lose out on countless numbers of concessions and they will have to lead a life trying to balance the books, which will invariably become much harder. As economic commentator Nick Bruining highlighted in this morning’s West Australian, retirees have already been battered by declining investment returns and will be hit even further following a one per cent decline in the deeming rate. Deeming rates have been reduced for the third time since November and it reflects the lower returns available to pensioners.

The Commonwealth seniors health card was introduced in July 1994. It was one of several measures taken by the coalition government to try and give greater equity to people who had saved for their retirement. This card soon provided access to concessional prescription medicines under the Pharmaceutical Benefits Scheme, free hearing aids and certain free basic dental services. The Commonwealth seniors health card was available to people of age pension age who were not eligible for age pension for reasons other than the income test—for example, insufficient length of residence or assets exceeding the asset test cut-off limits. We must remember the original purpose of this card was to provide assistance to retired persons who were on low incomes and, when introduced, the income limits for the card were the same as the income test limits that applied for the age pension. So the vast majority of retired persons issued with a CSHC were those who were asset rich but income poor. Many of these people, such as farmers in the electorate of Pearce, face this problem every day. It is not easily resolved, as you would appreciate, Mr Deputy Speaker Scott.

For those who have been involved in farming all their lives, sometimes it is simply impossible to continue to live on the farm and qualify for any kind of assistance. Also, if they wanted to carve off a small piece of the farm to meet the income and asset test to qualify for a pension, it is made impossible by the planning regulations in the state. So they are caught between a rock and a hard place. For these people, this deals them another blow. These are the nation builders and I do not think we should be making life so much harder for them. This is a significant aspect in the discussion of this bill, in my view. The electorate of Pearce like much of Australia has a vast and diverse range of agricultural and horticultural industries, and the farmers in my electorate, I believe, will be made to suffer again under this new legislation. After working the land tirelessly for decades, helping to build this nation, many will be penalised for the one true asset they have.

When this measure was first announced back in May 2008, it was described as a way to increase fairness. I fail to see that it increases fairness in any way at all. While I could never accept that penalising self-funded retirees in this way could be fair, it does demonstrate just how much the financial context has changed since then. During the last budget, the government assured us that it would still be in surplus—and this is clearly not the case. Just as the government assured us that this would be a fair amendment, the current context means that nothing could be further from the truth. I think the other point to be made is that, back in May of last year, the government estimated that the measure would save $84.8 million over four years. It has become abundantly clear now that this figure is grossly outdated. Anecdotal evidence would suggest that many self-funded retirees have since qualified and started receiving the age pension and there are many seniors who would have been above the threshold in the past but, due to the decline in the value of their assets, should now be entitled to the CSHC.

The National President of the Association of Independent Retirees, Theresa Kot, recently articulated the pressures on self-funded retirees, saying:

The triple whammy of an interest rate cut by the Reserve Bank, falling values for share portfolios and superannuation funds and revised company profits does not give an optimistic outlook for a retiree depending on their retirement nest egg to deliver an income that keeps pace with the cost of living.

This quote is a very good summation of what is facing older Australians in the current economic climate. Back in 2007, while those opposite were throwing around promises—

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

Order! The debate is interrupted in accordance with standing order 34. The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting. The member for Pearce will have leave to continue speaking when the debate is resumed.