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

The Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Bill 2009, which we are now considering, is legislation which implements the government’s budget pension package. It is an important package. It is perhaps the highlight of the budget and it is good that it receives the attention of the House over the next few hours. The most eye-catching feature of this legislation is the provision which increases the base rate of the single pension by $30 a week. This applies to all pensions except the sole parent pension.

I have to say that the government came late to the cause of increasing the pension. You might remember that in this parliament, in the middle of last year under the leadership of the member for Bradfield, the coalition called very consistently for recognition of the plight of the single pensioner and, in fact, moved legislation in this parliament—legislation that was carried in the Senate—to do just that. That legislation was not proceeded with by the government. So the government has come late to this but, nevertheless, it has come at last.

I would like to place on the Hansard record my conviction that this benefit for pensioners is a lasting tribute to the work of the former Leader of the Opposition, the member for Bradfield. All pensioners who get this large increase from September this year should say a silent prayer of thanks to Dr Brendan Nelson, the member for Bradfield, because I am convinced that without his work it would not have happened. That is the first thing.

The second thing is that this legislation changes the indexation arrangements for pensions. In future, under a new index which the ABS will prepare especially to reflect the circumstances of pensioners, the pension will be increased by CPI or 27.7 per cent of MTAWE—not 25 per cent—whichever is the greater. This is a beneficial change. It builds on the good work of the former government.

Third, this legislation consolidates the various existing supplements and allowances paid to pensioners and then increases them. It increases them by a little over $2 in the case of single pensioners and by over $10 in the case of couple pensioners. This is a sensible enough measure, although I should point out that it does replace, it seems to me, the one-off bonuses for seniors and pensioners that the former government paid in the last few budgets out of the massive surpluses that had been accumulated. Given that the surpluses have disappeared under the current government, presumably, but for this change, those bonuses would have disappeared, so pensioners will probably welcome this change.

Fourth, this legislation changes the withdrawal taper rates. In future the pension will be reduced by 50c for every dollar of additional income earned rather than, as was the case under the Howard government, by 40c. This is obviously not going to benefit some people who would otherwise be on the pension. Nevertheless, I note that the government will be grandfathering existing pensioners. I presume this will necessitate the maintenance of two scales for many years to come—in fact for as long as current pensioners continue to receive the pension. I imagine that it will create a certain amount of administrative complexity for Centrelink, but, nevertheless, if such a change is going to be made, it is a fair way of doing it.

Fifth, this legislation replaces the former government’s pension bonus scheme with a new work bonus scheme. It has been the object of public policy for quite a few years to try to encourage people beyond pension age to stay in the workforce. The former government’s scheme provided a lump sum of up to $30,000 to pension-eligible people who opted to delay their retirement. I regret to say that this scheme was not taken up nearly as widely as the former government had anticipated. It was anticipated when the scheme was introduced in the late 1990s that some 35,000 people a year would benefit from this pension bonus scheme. As things turned out, about 8,000 people a year was the maximum number achieved.

In principle it seems that the new arrangements ought to be more widely advantageous to people working past what might otherwise be a retirement age. It certainly provides an immediate benefit rather than a deferred benefit, and I hope that these new arrangements will in fact mean that many more people will keep working into their senior years, not because I want anyone to work who would rather not work—certainly anyone of senior years who would rather not work—but because I think it is very important that people be given every encouragement to keep working for as long as they can.

Finally, and most controversially, this legislation raises the pension eligibility age to 67, starting in 2017 and concluding in 2023. I have to say that this final measure embodies two characteristics which have come to mark the Rudd government. Firstly, the government did not take the public into its confidence before this decision was made. I think there is a secretiveness about the new government, which is regrettable. I think important policy innovations should be discussed publicly before they are presented to the people as a done deal. Secondly, as with all the allegedly tough decisions of the current government, the pain is deferred. This is a government that is very good at giving people goodies now while deferring any burdens they might have to bear to a time when the current Prime Minister is likely to be applying to become the Secretary-General of the United Nations, when he might be in some incarnation as Kevin Kevin Rudd.

Nevertheless, having made those observations, and having made the point as strongly as I can that this measure should have been discussed first and should not simply have been sprung on the Australian people on budget night, I do think that a strong case can be made for raising the pension age. The pension age was set at 65 back in 1908, when life expectancy at birth was under 60 years. Today, life expectancy at birth is over 80 years. In 1908, someone who was 65 years old could expect to live for a further 11 years. Today, someone who is 65 years old can expect to live for 19 years more, and it is anticipated that those life expectancies will continue to climb in the immediate future.

What this final measure is doing is tackling the demographic deficit, if you like, that was identified by the former government in its two intergenerational reports. At this time there are approximately five workers for every one person dependent upon social security. By 2040, without policy change, there will be just 2½ workers for every one person dependent upon the taxpayer. This is a very serious problem which has to be addressed, and raising the pension eligibility age is a significant component in doing so. I regret to say that we have in recent years had a situation where many Australians did not expect to start working until they were well into their 20s and yet expected to stop working when they were barely into their 50s and live financially very well indeed well into their 80s and even their 90s. This was simply unsustainable. The idea that there should be but a 30-year working window in people’s lives could not go on, and I think it is good that the government has addressed this.

The other point I want to make is that it really is important for us to break down the stigma against older workers. Discrimination on the basis of age is perhaps the last frontier of discrimination left in our society. I think that it is years since people have been actively discriminated against on the basis of race, religion or gender. But certainly there is active discrimination against people on the basis of age. It is not legal, but it goes on. It is disguised, but it happens. One of the great benefits, I think, of raising the pension age is that we as a society are saying to the public that we do not believe that someone is past it simply because he or she turns 65. I do not much like the idea of statutory senility starting at 67, either; nevertheless, at least it is not going to start at 65. So I think there is this very significant benefit in this proposal to raise the age of pension eligibility.

I suppose the objection that has most commonly been raised since budget night is that there are quite a few people who work in the sorts of occupations where going on might be difficult. The example that has been widely cited is that of the 64-year-old bricklayer. To be honest, I would like to think that, as time goes by, there will be more and more Australians who will be capable of doing tough, vigorous work later and later in life. The truth is that we do not actually have very many 64-year-old bricklayers. Most people in those sorts of occupations have sought other work well before that age or, let us be blunt, have gone on to other forms of benefit.

I do not believe that this measure will result in very many conscripts in the workforce, because I think that people who are really keen to retire, who find it very difficult to work beyond the age of 65, will, in fact, be on a different government benefit. They will most likely be on the disability support pension. If you can work, you should; if you cannot work, there should be a benefit for you and that is the role the disability support pension should rightly play.

These are points on which we should have heard more from the government since the budget. At the forum on the budget changes which I attended with Minister Macklin, she understandably dwelt on the increases in the pension but left me defending the increase in the pension age. I am very happy to do the intellectual hard work, but I would like to see more allies from the government when it comes to talking on this issue.

The opposition will be supporting this legislation in the House. Because the rise in the age pension has not been sufficiently discussed and because the public ought to be more widely familiar with this before it becomes a done deal, we will be moving to ensure that there is a proper committee inquiry into at least this aspect of the government’s changes. People ought to have a chance to say their piece on this, even though, as I have already said, I think it is a good policy. It is good in principle and any practical difficulties ought to be accommodated in the sorts of ways that Australian governments over the years have become quite accustomed to.

I welcome the fact that we are now able to debate these issues and I look forward to contributions from members on both sides.

Annette Ellis (Canberra, Australian Labor Party) Share this | Link to this | Hansard source

I am really very pleased this evening to speak to the Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Bill 2009. It puts in place the key elements of the government’s secure and sustainable pension reforms announced in the recent federal budget. May I say in relation to the member for Warringah, who has just spoken—I do not in any way want to maliciously rain on his parade—I feel it incumbent upon me to point out that, had the previous government’s legislation gone through, it would have affected in a positive way single age pensioners and maybe some veterans, but it would have disallowed disability support pension recipients, carers and so on. I am really pleased that, as a government, we have had a thorough, proper and professional examination done of the whole pension system, which has led us to where we are now debating this bill.

These reforms will improve the adequacy of the pension system. They will make its operations simpler and more responsive to the needs of our pensioners and they will secure its long-term sustainability—one of the most important elements of the bill. We definitely face challenges into the future, as our population ages, and we must face these challenges directly. A secure and sustainable pension system, therefore, is essential.

Nationally our 3.3 million age pensioners, disability pensioners, carers, wife pensioners and veteran income support recipients will all benefit from increases in their pension payments as a result of this legislation. In my electorate of Canberra, for instance, those who will benefit include 5,559 partnered and 4,605 unpartnered age pensioners, 198 and 170 respectively carer payment recipients, 1,547 and 664 respectively carer allowance recipients, 790 and 2,608 respectively disability support pensioners, as well as around 2,000 veterans. That is just under 16,000 people in my electorate who will be positively affected in the longer term by this legislation. That is why I am so pleased to be here to support it this evening.

The history behind this legislation is worth noting. Last year the government initiated a significant review, the Harmer review into the adequacy of our 100-year-old pension system. The review found that the full-rate single pension was inadequate and that the ratio of full-rate payments between single and couple pensioners needed to be lifted from 60 per cent to between 64 and 67 per cent. Even in these difficult financial circumstances, we as a government were determined to respond to these findings. Every Australian knows that one day they may need to rely on a pension. A strong safety net is needed now and will be needed in future and the global recession highlights the importance of this very point.

I would like to expand a little on one particular provision, also mentioned by the previous speaker, which is the new qualifying pension age. I believe there may be a little confusion in some people’s minds in relation to this element of the legislation. The odd call to my office, where people have been seeking clarification, has led me to want to speak to this element in detail. Beginning in 2017, the age pension eligibility age will increase by six months every two years until it reaches 67 years of age in 2023. For example, on 1 July 2017, the new age pension age will be 65½. That will affect people born between 1 July 1952 and 31 December 1953, whose current ages are between 55½ to 57.

There is more detail—I could go through all of the four categories—but it is very clear that it is going to be a transition over a period of time. People who want more detail should seek it to make sure that they understand that this is not happening tomorrow. I have heard 62-year-olds ring up talkback radio and say, ‘I don’t want to wait any longer for the pension.’ They do not have to if they qualify now. It is very important that people understand that this is a grading proposal that will happen over a number of years and will gradually creep up to that new age qualification. These changes will not affect current age pensioners. Only new entrants to the pension system from 1 July 2017 will be affected. It must be noted that these changes affect the age pension age, the qualifying age for the veterans service pension will remain at 60 years and the official retirement age does not change at all.

The pension age was set at 65 years in 1909, but 100 years later Australia has changed. When the age pension was introduced, a man retiring at 65 would have expected to spend an average of 11 years in retirement. By 2017, it is projected that the average number of years in retirement for a 65-year-old man will have increased to 19½ years. A woman of the same age can expect to spend 23½ years in retirement by 2017. Australia will face some major demographic changes over the coming decades. By 2047 some 7.2 million Australians will be aged over 65, representing 25 per cent of the expected population—almost double the current 13 per cent. Currently, there are around five people of working age supporting every person aged 65 and over. This will more than halve to 2.4 people by 2047. Increasing longevity means that people are receiving the age pension for far longer periods than in the past. Demographic change means that the cost of a given pension increase today will almost double as a share of GDP by 2050.

The critical elements of the pension reform package include increasing the single pension. Single pensioners will receive an increase of $32.49 per week, comprising a $30 a week increase in the maximum basic pension rate and a $2.49 per week increase in the pension supplement. The effective male total average weekly earnings benchmark for the single rate of pension will increase from 25 per cent to 27.7 per cent. The single pension rate will increase as a proportion of the combined couple rate from 60 per cent to 66.3 per cent of MTAWE. A pensioner couple combined will receive an increase of $10.14 per week, with no increase in the maximum basic pension, and a $10.14 per week increase in the pension supplement. Income test rules will change to better target pension increases. A work bonus for older Australians who continue to work past age pension age will also be introduced. With regard to the pension supplement, the government will combine the GST supplement, the pharmaceutical allowance, the utilities allowance and the telephone allowance at a higher internet rate, and increase assistance into an a single, easily understood pension supplement which will be paid fortnightly. As the figures show, that is to the financial advantage of all the people who receive the supplement.

I am very proud to be a member of a government that recognises the need for reform in these important areas, a government that undertakes a proper and professional review of the policy requirements that are to be considered, and introduces a bill of this kind. There is no knee-jerk reaction to this, there is no hysteria in the streets and there is no abuse of the vulnerability of our older Australians in running a campaign to scream loudly for more money for these people as obviously they need that income. But it could not have been done unless it was done properly and comprehensively. My criticism of the previous government’s attempts in pushing a bill through in the life of their government was the very nature by which it was done. It removed out of the equation other members of the community who were on Centrelink or support payments who equally deserved careful examination of their financial requirements. The people on a disability support pension, the carers and all of the other people who are now included have been included in a proper and a very measured way. The Harmer review did an enormous amount of work and considered very carefully the best way to establish a pension reform package that is sustainable in the future. It was not to wave around a pension increase for next week but to actually understand the requirements of our community in the future and to structure a reform package accordingly. I congratulate the Minister for Families, Housing, Community Services and Indigenous Affairs and the Harmer review for all the work done on this piece of legislation and the benefits that are going to the flow from it. I am very proud to be part of this government that does this sort of work. I commend the bill to the House.

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

Amongst other things, the Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Bill 2009 bill gives effect to the need to increase the level of pension, particularly the single base rate pension. This need for an increase was forcefully argued by the former Leader of the Opposition, the member for Bradfield. With due respect to the member for Canberra, I take the point she made about the wider range of people that this needed to target, but it was patently obvious that many people on a pension in this country were simply struggling to remain financially viable and it was causing a great deal of pain and heartache. Day after day in this place the member for Bradfield eloquently argued the case for an increase in the pension, graphically highlighting the financial struggle that many pensioners faced. The need was certainly evident in my electorate of Pearce. In the course of my regular visits to various parts of the electorate the hardship faced by pensioners, including disability pensioners and in some cases veterans, was abundantly clear. The pressures on pensioners were exacerbated by the rising cost of housing and fuel. The increased cost of fuel sent food costs soaring as farmers battled a sharp increase in the cost of farm inputs, particularly fertiliser and fuel crucial to food production.

During the lead-up to the election, we saw the Prime Minister, the then Leader of the Opposition, promising to ease the cost-of-living pressures for senior Australians by looking at the adequacy of pensions by Fuelwatch schemes and by Grocerywatch schemes. But we saw all of them fall on infertile ground; it was not until this pressure came on from the member for Bradfield that we saw some real action happening here. The Prime Minster, when he came into government, had a $22 billion budget surplus left by the former coalition government, and he still failed to act. I have to say that the coalition, by paying off Labor’s $96 billion debt that we inherited when we came to government in 1996, were able to deliver real benefits to older Australians, including pensioners and self-funded retirees.

I know that one of the issues for pensioners at the time was the fact that the pension was just indexed to the consumer price index; it was not related to the male total average weekly earnings or, as it is commonly known, MTAWE. That was one of the first things that the Howard government did when it came to office. So we were able to make some real changes and provide some real gains for pensioners and self-funded retirees right in that first term of our government.

The new Rudd Labor government, by contrast, was a reluctant starter when it came to increasing pensions, and used stalling tactics to delay action on a decision to increase pensions. As I said, it was patently obvious. We did not really need the Harmer review to tell us about the pain and the hurt that was happening out there in the electorate. Eventually the public pressure, largely due to the then opposition leader’s consistent call for urgent action, forced the government to implement these changes. We all owe a vote of thanks to the member for Bradfield, for his untiring efforts on behalf of pensioners. I certainly welcome this legislation, which will go some way toward improving the living standards of pensioners in the electorate of Pearce. When in government, the coalition did make some important changes. As I said, one of those was to link the pension to MTAWE.

I welcome some positive improvements, though, to this measure which, from September, will ensure that the pension will be adjusted in line with either the consumer price index or the new pensioner and beneficiary living cost index, whichever is the higher. Pensions will continue to be benchmarked, I am pleased to say, to the male total average weekly earnings. From March 2010 a new pension benchmark for the maximum combined couple rate of pension will be introduced. The change will mean that it will be 41.76 per cent of the annualised amount of the male total average weekly earnings. For a person being paid a single rate of pension, the maximum rate payable to that person will be set at 66.33 per cent of the maximum rate payable to a combined couple. The new benchmark for the maximum single rate of pension will be 27.7 per cent of MTAWE, an increase of more than 10 per cent from the current 25 per cent benchmark, which, again, will be welcome.

In addition, the range of supplementary payments and allowances currently paid to pensioners will be simplified and made more flexible through the introduction of the new pension supplement. The supplement pulls together the existing GST supplement, pharmaceutical allowance, utilities allowance and telephone allowance at the higher internet rate. An increase of $2.49 a week for singles and $10.14 a week for couples combined will be paid on top of the value of the existing allowances. The pension supplement for a single pension will be about two-thirds, or 66.33 per cent, of the pension supplement for a couple combined. This is consistent with the new single to couple ratio for pension rates. It was important to address the disparity between single and couple pension rates and supplements. Many single pensioners complained to me that they still had to pay rent or maintain a household and that those costs were fixed whether for a couple or a single person. Many pensioners found it impossible to manage finances when a partner died and their income was reduced to the single rate. These changes go some way to rectifying this disparity, a matter consistently raised by the member for Bradfield and other coalition members.

From 20 September 2009, the pensioner supplement will be worth up to an estimated $1,462.70 per annum for singles, or $28.13 per week, and $2,199.60 a year for couples, or $42.30 per week. This is an estimated amount, as the impact of indexation is not yet known. The pension supplement will be included in the pension payment rate and subject to income and asset testing. Once the base pension rate is reduced to nil, the pensioner supplement will decrease until it reaches a minimum payment of an estimated $790.40 a year for singles, or $15.20 a week, and $1,190.84 for couples, or $22.90 a week. The payment a person receives will not fall below the minimum amount of the pension supplement until the person’s income or assets reach a level that would otherwise reduce the payment to nil. From July 2010 pensioners will have the choice of receiving around half the pension supplement in quarterly instalments. This flexible part of the pension supplement will be equal to the minimum payment of pension supplement. While the coalition welcome the long-overdue changes to the pension rate, we note that when we tried to secure a similar increase for pensioners last year this was bitterly opposed by the government. Had our bill passed then, many senior Australians would have already been receiving additional income.

One of the significant changes in this legislation is to raise the age for the pension—that is, to raise the retirement age. The Minister for Families, Housing, Community Services and Indigenous Affairs spoke with great pride about the legislation earlier in question time. However, it is quite amazing when one considers her opposition to raising the age pension previously. In the lead-up to the 2007 election an independent think tank recommended the pension age be raised from 65 to 67 by 2015 to deal with the ageing population but the minister, then in opposition, rejected the proposal saying that senior Australians ‘deserve to be able to retire’. That is certainly true. We do not have any problem with that. She went on to say:

If people want to work beyond 65 it should be their choice, no one should be forced to work beyond retirement age.

But less than two years later the minister has introduced the same policy that she had formerly rejected. In this week—a week in which the honourable member for Higgins announced his retirement from parliament—it is very pertinent to acknowledge the incredible work the former Treasurer did in having the vision to recognise the challenges that an ageing population would bring, and having the leadership ability to do something concrete about addressing those particular issues. In a speech the former Treasurer delivered on the paper Australia’s demographic challenges, he said:

… we do not face an insurmountable crisis. But we do face a significant challenge. The longer we leave our response the greater the changes we will need …

So he recognised this very early on. That paper was delivered in 2007 but in fact the member for Higgins recognised the challenge when we first took government back in 1996. He began by preparing an intergenerational report and, indeed, had the Productivity Commission begin to examine some of the productivity issues around an ageing population. As part of the 2002-03 budget he released the Intergenerational reporta report that explored the Commonwealth’s fiscal outlook over the long term and identified emerging issues associated with an ageing population.

In 2004, as I said, he had already asked the Productivity Commission to do a report, but he asked for a further report to undertake complementary studies on the ageing of Australia’s population. In a speech in February 2004, the member for Higgins said:

Our society, the way we live, the opportunities available to us, and indeed our own aspirations, will change dramatically over the next 40 years, just as it has over the past 40 years.

The fact is that one in four Australians will be over the age of 65 in 50 years. This was according to a projected population growth study, and these figures were recently presented at the Financial Review Australia’s Ageing Population summit which was held in Melbourne. So the member for Higgins was certainly onto something there.

While the coalition support the increase in the age eligibility to qualify for the age pension, we believe it must be coupled with a strong safety net for those who may be unable to continue, for some reason, to remain in the workforce. Any changes to the pension must be supportable, sustainable and carefully implemented. In releasing the government’s paper Australia’s demographic challenges in 2007, the member for Higgins established three policy areas that could lift labour force participation. These included improvements in the capacity for work through better health and education, better incentives for work and improved flexibility in the workplace. I would commend the speech to anyone in this House to read because I do not think I have time to detail some of the very wise counsel he gave in that paper in relation to those policy matters. But there is no doubt that the former Treasurer was already planning for Australia’s future many years ago when we first came into government back in the late 1990s.

This is in contrast to what we are seeing from this government and its lack of capacity, it seems, to provide this House with any concrete details pertaining to this particular aspect of the bill—that is, the aspect of the bill that will require Australians to work longer before they can retire. As the member for Warringah, the shadow minister, said here earlier tonight, the Rudd government must release details of these plans, because they had the Harmer pension review report well before the budget and that should have been released so that we could have proper public discussion about this particular issue. While we do support this, as the shadow minister indicated, we think that there is more work to be done. I am pleased that this legislation is likely to go to a committee hearing to flesh out some of these issues that may give rise to concern to some Australians about the possibility of having to continue in the workplace to the age of 67.

There are issues for people working in the trades sector. One of the issues that the member for Higgins addressed in his paper Australia’s demographic challenges was the importance of training and retraining. This is the kind of issue that needs to be fleshed out. It is important that the Australian public, and older Australians in particular, have an opportunity to comment on this. It would have been preferable if that had been done before this bill came to this place. Notwithstanding that, none of us in this place would want to see this bill delayed and the benefits of increased pension payments delayed for those in the community who have been facing considerable hardship.

The other issue in relation to that is that the government has not released any details of the savings this measure will create, as we have not seen any clear economic modelling. If individuals are being shifted from the age pension onto other income support benefits such as Newstart or the disability support pension, it is clear that the benefit to the budget bottom line is minimal if not zero. Any lift in the age pension age must take into consideration employment opportunities for mature workers. Again, that is an issue raised by the member for Higgins in Australia’s demographic challenges.

Again, in the community, the reality is that many employers do not want to employ older people. There are barriers there. These are issues that we need to seriously get to the heart of and address. We need to make sure that people nearing retirement age have other options, for part-time work as well as for full-time work. There are many issues there to be further discussed in the community as we move toward a policy of increasing the retirement age.

The government should be consulting very closely with industry and with small business. When we were in government we removed some of the age discrimination in the workforce within the government, and that was a very important step forward. But there are questions that remain to be asked. What impact will this bill have on those working in the trade sector in the heavier industries? As I said, for many people this will be problematical. What further toll will this have on their health and on Australia’s health sector? Again, health issues were raised in the member for Higgins’s speech. What retraining facilities are available for older workers, what are we doing about making sure that older workers have access to retraining facilities and does the infrastructure exist for retraining these people and future generations? What about making sure that more flexible work options exist? These are the kinds of questions, as I said, that have been posed by the member for Higgins. I would like to quote again from the member for Higgins’s speech on that paper, where he said:

The Government has already legislated to remove any age discrimination that exists for employment by the Australian Government, and provides leadership in promoting community understanding of the economic and social imperatives of greater participation by mature age people.

He went on to say:

Mature-age workers are vital to our workforce—they are important in our workplaces and we need to support their ongoing participation and the choices they will want to make about work and leisure. This will be more important as Australians grow older and live longer.

These are questions which are yet to be answered. It is vital that they are answered. I am pleased that there will be an opportunity for this bill to go forward to a committee process that will perhaps answer some of the unanswered questions that arise from this particular part of the bill.

The coalition will always fight for a fair deal for senior Australians; we always have. As I said, we did significant things when we were in government, from early on. These are the people that we can all acknowledge have been nation builders and have contributed to the prosperity of this country. They deserve our respect and our thanks. We should not see them battling the way that they have been in the past couple of years. I am pleased to support, along with my colleagues, the main thrust of this bill and look forward to seeing the results of any further committee inquiries into the raising of the pension age.

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

I rise tonight to show my support for the Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Bill 2009. I do this knowing that the pensioners, carers and people with a disability in my electorate of Franklin have been doing it tough. I want to put on record that I recognise and acknowledge the financial pressures being faced by the many older Australians and that the Rudd government is committed to ensuring they are adequately supported over the long term. That is why I support this legislation, which will facilitate long-awaited pension reform. I commend the Minister for Families, Housing, Community Services and Indigenous Affairs on her efforts to support Australian pensioners and carers in introducing this legislation in the House and the work that she has done to achieve that. This government has taken a tough decision to support pension reform. It is responsible reform to ensure that pensioners are well supported over the longer term. With more than 17,000 pensioners living in my electorate of Franklin, it is a package that I can fully support.

But we need to look a bit at the history and why this pension reform is so necessary. The age pension system has been in use for over 100 years. The age pension was first paid in 1909. It is the largest spending in the Commonwealth’s own purpose program. The Australian government spends around $28 billion per annum on the age pension, so we understand the importance of getting this reform package right. The legislation will introduce a range of measures that are included in the Rudd government’s 2009-10 federal budget. These measures will form a secure and sustainable pension reform package.

But this bill is about much more than simply increasing the pension rate. The amendments included in the bill represent our commitment to pensioners and carers and to ensuring that those who are doing it tough are truly given a fair go. These measures will ensure a sustainable pension system well into the 21st century. This reform process was not something we did overnight. It has not been a knee-jerk reaction. It has been a considered and robust review process. The Harmer review put our 100-year-old pension system under the microscope. It was a significant review that put forward a number of recommendations. There is no doubt that this review has underpinned this pension reform package and there is no doubt that the report done by Dr Harmer and given to this government in February was a critical document that helped shape this government’s secure and sustainable pension reform package. As a starting point, the review found that the full single rate pension was inadequate and that payments to single pensioners needed to be lifted from 60 per cent of the payment to couple pensioners to between 64 and 67 per cent.

All this looking into pension reform was done in the context of a global financial crisis and a global recession, but it was done acknowledging that pensioners and those in our community who are doing it tough need support during this time. We certainly have not used that as an excuse not to act. In these difficult financial circumstances we are responding to the review findings, and we have acted. We have acted to increase the pension rate. We are also acting in terms of the income test rules that will change to better target these pension increases. The rate at which the pension is withdrawn for each dollar of additional private income will be increased. All existing pensioners will have their existing entitlements retained in real terms. And, as the demographic changes across our society, we are changing the qualifying age for the age pension. It will progressively increase, beginning in 2017.

The reforms continue for those pensioners that will benefit from paid work. We are introducing a work bonus for older Australians—those Australians who wish to continue to work past the entitlement age for the age pension. This new work bonus will help age pensioners keep more of the money they earn from continuing to work. It will provide concessional treatment of employment income under the income test once they get over the pension age. Under these new rules, employment income will be assessed fortnightly for a pensioner over the age pension age and then half of all the employment income, up to a maximum of $500 a fortnight, will be disregarded in the income test. This is great news for all those Australians who continue to work and choose to work, contributing and making their skills and knowledge available to society and their local communities.

This government is providing an additional $14.2 billion over five years to underpin this financial security for pensioners and to address these increases. From 20 September 2009, the new pension package will deliver the following increases: $32.49 per week for single pensioners on the full rate of the pension and $10.14 per week for couple pensioners on the full rate of the pension. These increases lift the ratio between single and couple pensioners from 60 per cent to 66.33 per cent. These provisions apply to the recipients of social security benefits including age pensioners, disability support pensioners and those on wife pension, carer payment, widow B pension and bereavement allowance.

The bill introduces a new pension supplement to simplify the number of other payments currently available in order to provide pensioners with more flexibility in managing their own budgets. The pension supplement will make pension payment arrangements simpler and easier for pensioners to understand. The government is combining the GST supplement, the pharmaceutical allowance, the telephone allowance and the increased assistance into a single, easily understood pension supplement, which will be paid fortnightly.

The bill also introduces a new seniors supplement, a payment to replace the existing seniors concessional allowance and the telephone allowance currently available to holders of the Commonwealth seniors health card and veterans eligible for the gold card. The single rate of the seniors supplement will include an extra $129 a year.

The government have undertaken this significant pension reform because we know that pensioners are doing it tough. It was a commitment made by our government and we have acted and delivered quickly on this commitment. As I said, there are more than 17,000 pensioners in my electorate who will benefit from this reform and across Australia there are more than 3.3 million pensioners who will benefit.

We heard earlier from the previous speaker about the demographic changes, about the pension increases and about the cost of the pension increases as the demographic changes occur. I was astounded to hear a speaker on the other side say that this was really all their idea—that even though there are issues with it they are going to support it but that it was really all the idea of the member for Higgins. I find that astounding because, if it were his idea and they are committed to it, why did they not do it in the 12 years during which they were in government? Why in the boom times was it never a priority to increase the age pension and to look at long-term pension reform? They talk about the Intergenerational report, but they did nothing about that report; they did not implement it and they did not look at the issues. This government has. We had a review—the Harmer review—and we have acted in 18 months and in the midst of a global financial recession.

To ensure that the pension continues to provide that strong safety net and that it remains sustainable, this government is introducing these reforms now. This is because we know that in this global financial recession pensioners are doing it tough. In order to make sure that the pension age is sustainable, we are gradually lifting the qualifying age for the entitlement to the age pension from the current 65 years to 67 years and starting this gradual process in 2017. We are also increasing the income test, as part of this pension reform, from $0.40 to $0.50—this is part of the findings of the Harmer report.

I have been talking about the demographic changes and the long-term sustainability of this pension reform and there are some statistics that have been the basis of this decision which I would like to put on the record. By 2047, some 4.7 million Australians will be aged over 65 years. This represents around 25 per cent of the expected population at that time. Currently, there are around five people of working age to support every person aged 65 years and older. This will more than halve to 2.4 people by the year 2047. Australians in the future will receive the age pension for far longer periods than in the past, as our life expectancy continues to grow. Demographic change means that the cost of the pension increases today will double as a share of gross domestic product by 2050.

There are a couple of things we can do when faced with these types of demographic changes. We can do what those on the other side chose to do—which, as I talked about, was not to do anything for 12 years—or we can make a decision and act, as the government have done with this legislation. Building a sustainable pension system requires that the demographic changes be taken into account. It requires leadership. It requires that pensioners be provided with a standard of living. It requires that the future cost of these reforms be taken into account over the longer term. That is what the government have done—we have looked at all these issues, we have made decisions, we have acted and we are doing what is in the best interests of Australia’s long-term future.

This is not a cheap exercise, but we know that pensioners out there have been doing it tough and we know that they deserve this and that is why we are doing it. There has been much debate in the media and in communities around this reform measure—we know that. But it is an approach that will work hand in hand with the work bonus scheme, the change of the age pension, the increase in the age pension and the increase in the age of the age pension over time. This is a range of measures that form a complete package of reform.

I also want to talk about carers. I have put on the record several times in this place my support for carers, and carers have not been forgotten. In fact, we have made a commitment to supporting them, as I have put on the record. I want to note that the Treasurer in his budget speech described Australian carers as ‘the unsung heroes of our community’. I certainly could not agree more.

The budget also provided more assistance to carers. It is an investment that I think is worth making—that is, helping those people who are caring for the most vulnerable people in our society. It introduces a number of important measures, such as the $600 a year carer supplement for all carer payment recipients. This is obviously on top of the increase in their pensions. Recipients of carers allowance will also receive an additional $600 per year for each eligible person in their care. This will mean that some people will be eligible for the increase in the pension plus both bonus payments. They certainly deserve that and I think that everybody in the Australian community believes that carers deserve that support at this time as the costs of caring for people have increased over time.

As a member of the House of Representatives Standing Committee on Family, Community, Housing and Youth, whose recent report Who cares …? looked at better support for carers, I am really pleased that we have support from the government and the minister in relation to support for carers. I know that many people on this side support carers in their plight. I look forward to further reforms for carers on some of the issues that they are facing in our community.

Many of the carers I have spoken to talked about the previous budget bonuses and how they provided no certainty and no security. This budget also locks this in as an annual payment that will be made, and I think that that is worth putting on the record. It replaces the ad hoc style that existed previously. There are more than 3,500 carers in my electorate of Franklin, so it will certainly be well received by the recipients and also by the other members of the community in my electorate.

In conclusion, the strong safety net that we talk about in terms of pension reform is obviously needed. It is required now and for the future. This is the reality as this is what the future holds for Australia and we need to deal with it. With this in mind we are laying down a strong foundation of pension reform. We are delivering a long-awaited increase to Australian pensioners as part of that reform. We are increasing the pension, we are increasing the long-term sustainability of the pension system, we are ensuring that pensioners benefit from continuity and we are also simplifying the payments. This government has acted to ensure that the pension system remains adequate and sustainable into the future and that it tackles the reality of the aging population in Australia and the challenges that this presents.

We have listened to pensioners and other people in the community and we have acted with care and responsibility. We have also listened to carers, as I mentioned. With so many Australians relying on income support and pensions to survive in their day-to-day activities, I commend this bill to the House.

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

I rise to support the Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Bill 2009. As I move to make some brief comments about the bill it is important to reflect upon where we have come from. The member for Franklin seems to suggest that for the last 10 to 12 years the coalition government did nothing on this, putting aside the indexation of the pension to the male total average weekly earnings, which increased the pension in gross terms by about $78. That does not sound like nothing to me.

More importantly, in 1996, we came in facing $96 billion worth of debt and, when the member for Higgins and the coalition government had paid it off, $56 billion worth of debt had also been paid off in interest alone. The $96 billion in debt plus $56 billion in interest amounted to $152 billion. Let us consider for a second what this nation could have done with $152 billion. What could the Howard government have done to reform the nation? What infrastructure could have been built? What pension increases could have been made? The mind boggles when you think of the $152 billion that we were not able to spend on this nation because we were retiring Labor’s debt. Over 10 or 11 years, that is $14 billion a year in gross aggregate terms of Labor debt that we were retiring.

May I say to the member for Franklin: do not walk in to the House of Representatives and say that the coalition government did not achieve outcomes for pensioners, because we started $152 billion behind the eight ball, excluding the amount of money required for future superannuation liabilities, for which we left behind $60 billion in the Future Fund. That is where we started. That was ground zero for the Howard-Costello years and it is arrogant of this government to demand to know why we did not meet all of these social obligations. Let me make it very clear to the government: when you look at what the Howard-Costello years achieved, after starting $152 billion behind the eight ball, you should join with the rest of the world in saying what an economic miracle that government was. Perhaps deep, deep down in places you do not speak about at parties you will concede that the economic miracle of Australia was indeed the wonder down under.

I come here this evening to support a bill that delivers $32.49 per week to singles and $10.14 per week to couples as an increase in pensions. I do it recognising that the new weekly pension plus the added supplement will be an estimated $336.68 for singles and $570.50 for couples, notwithstanding that pensions are of course indexed twice annually, in March and September, and the September indexation will affect those numbers. We welcome this long-overdue change to the pension rates and we note the impact and the changes we made to the pension system notwithstanding the $152 billion worth of handcuffs shackled behind our backs left by the previous Hawke and Keating governments.

I note with interest that last year the coalition put forward a bill to increase the single pension by $30 and the government knocked it back, yet at a doorstop on 13 June 2007 the now Prime Minister said, ‘When I speak to age pensioners in my own electorate they are doing it tough.’ Surprise, surprise, Prime Minister: they are. So why didn’t you accept our legislation for an increase of $30 for single pensioners when we put it forward last year? Why has it taken you two years to achieve the same outcome?

New indexation will also be introduced. A new pension and beneficiary living costs index will be calculated by the Australian Bureau of Statistics. This new index will measure increases in the living costs faced by pensioner and beneficiary households, which can be different to those faced by other households because of the stage in life that they are in. This was a coalition 2007 election promise matched by Labor. Yet the irony is that Labor committed to this in their first budget but failed to ever introduce it. I remind the member for Franklin again against coming here and saying what a poor job the coalition did. Next time, follow the Prime Minister and at least bring in a placard that says, ‘We’re sorry that we left you $152 billion behind the eight ball.’ I can only imagine the response when the country wakes up and finally tosses the Rudd government out and realises that it is $300 billion the eight ball.

As question time today showed, the current 10-year bond rate on borrowing is 5.25 per cent. Well, 5.25 per cent by $300 billion is, give or take, almost $16 billion in interest per annum that this government is looking to saddle the nation with. It does not take a rocket scientist to work out what a nation could do with $16 billion that was not being paid on Labor interest.

It is good to see that pension rates will continue to be benchmarked to male total average weekly earnings. But I note with interest that the Labor Party promised to introduce a living cost index for age pension householders if elected. I look across at Parliamentary Secretary Gray and ask, ‘Have you delivered that yet?’ The answer would be no, it has not been delivered. Like so many of Labor’s headline-grabbing announcements, it has not been delivered. That is not surprising, considering that the Prime Minister said three times—clearly, patently and unambiguously—that he would not touch the 30 per cent health rebate. The current health minister, Minister Roxon, said it four times. So seven times on the public record they said that they would not touch the 30 per cent health rebate, and yet it is being means tested. I guess it is very difficult to take this government at face value.

This was confirmed at Senate estimates on Tuesday 2 June. Senator Boyce asked:

Was the ABS living cost index for age pensioner households used to index pensions last year?

The response from Mr Whitecross during estimates was:

No, it was not.

Senator Boyce said:

I am just looking at the note from last year’s budget papers, 2008-2009, which says:

‘The Government also recognises that many seniors are concerned that their cost of living may rise faster than the consumer price index. To address this, the Government will guarantee that the Age Pension will increase in line with the higher of the consumer price index, increases in male total average weekly earnings or the living cost index for age pensioner households.’

That did not happen?

Mr Innis replied:

The timing of that was just prior to the announcement of the Pension Review, so the government decided to hear the results of the Pension Review before moving to legislation.

It is always good to hide behind a review. Considering that since coming to power this government has commenced 163 reviews, inquiries, commissions, talkfests and summits, it is not surprising, as 163 of them are a lot to hide behind. The coalition certainly welcomes this second new indexation and is pleased that in September of this year pensioners will finally have access to the additional indexation that was promised at the last election. I also note that the taper rate for the pension income test will increase from 40c to 50c. The government gives with one hand and indeed taketh away with the other.

As part of the reforms that the government is putting through, the age pension eligibility age will increase from 65 to 67 years, that being done on a gradual basis, with full implementation on 1 July 2023. The eligibility age for the age pension for veterans will not be increasing as a result of these changes, which at the very least is pleasing to see. While we provide tentative support to the increase in the eligibility age for the age pension, it must be coupled with a very strong safety net for those who are unable to continue to remain in the workforce. We have a deep affinity for the aged in our community. The strength of a nation, its moral capacity, indeed, its compass can be defined by how we treat those who are elderly, disadvantaged and disabled in our society. It is the heart of a nation and how a nation could well be judged. It is important that we care for these groups of people and, through this piece of legislation, especially those who are elderly. Budget estimates on 2 June confirmed that around 130,000 people each year will have to work longer because of these changes. This is of concern to us.

But what is more concerning is the lack of dialogue with the Australian people. There was no discussion of this; there was no communication; there was no listening to Australian voices on whether they want to see this occur. It was sprung on the Australian people. What happened to the Prime Minister who said, ‘I’m going to be open and transparent’? Did his transparency and his openness die once he reached the Treasury benches? I can only assume, based on the facts that we have, that it did.

This government should have been open with the Australian people. It should have released the Harmer pension review report well before the budget to allow a proper public discussion to occur. The Rudd government must release details of any savings measure that they are attaching to the move of the eligibility age for the age pension from 65 to 67. The economic modelling that allegedly supports it must be released. Any lift in the eligibility age for the age pension must take into consideration employment opportunities for mature age workers. There needs to be a conversation with the Australian people. This is a significant change. The rules have been changed. People planning for retirement need to have the opportunity to plan well without retrospective action. It is important that that dialogue with the Australian people commences now and that Australian voices are able to be heard. While we provide support for this bill, we have a range of concerns. We look forward to the government addressing those as expeditiously as possible.

Kirsten Livermore (Capricornia, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Bill 2009. As I rise to speak on the bill, I can only think that for many pensioners this legislation must feel like it has been a long time in coming, but here it is before the House and I am very proud to be part of a government that has delivered on this important measure. The government has been committed to pension reform and, importantly, to ensuring a fair and equitable pension system for all our pensioners since we took office in 2007. We have known since well before then how greatly that pension reform has been needed. I remember that it was the Labor Party, while in opposition, that initiated the Senate inquiry into people living in poverty in Australia. We all took the message from that that this was something that needed to be addressed for those people who rely on income support payments to survive. Since then we have seen the groundswell of community support behind the push for this particular measure and this legislation.

We said from the outset that we were committed to getting it right. That is why we commissioned the Harmer review into pensions and that is why we are acting on this legislation today which builds on many of the recommendations of the Harmer review. As we have been saying to pensioners since last year’s budget, this is not something that we were able to do overnight. It is an enormous task to reform Australia’s pension system, but I believe that through that process we have ensured that we are getting it right. As I say, these reforms are underpinned by that very comprehensive Harmer review, a review that included many, many consultation sessions right around the country—and I am pleased to say there was one in Rockhampton, in my electorate, as well—to listen firsthand to the views, the concerns and the experiences of those living on the pension.

These measures introduce long-term security and certainty and also ensure that over time the pension system remains both adequate and sustainable. Of course, that has been the whole essence of what we have tried to do through the Harmer review process and with these reforms—to take the time to get this right and to make sure that it can be sustained in the long term. In this legislation we are introducing the first step of a program that will tackle the challenge of an ageing population and the increased life expectancy among Australians. Laying these foundations now is critical to ensuring an adequate and sustainable standard of living for aged people, carers and people with disabilities, both now and into the future.

As we learned so compellingly through the Harmer review, and particularly that consultation process, so many of our population who are 65 and over rely on these income payments and rely on the pension to survive. They told the Harmer review and they have told members of parliament that they have worked hard all their lives, they have earned their retirement and they deserve to spend those years in retirement with dignity and some security. That is why this bill is so important and that is why I want to speak in this debate and support the bill.

We are making changes to the pension that could have been made in the last 12 years. They are things that the former government could have taken on board, could have tackled and could have put in place to relieve some of the pressures on pensioners as the cost of living rose, certainly throughout the final years of the Howard government. But, of course, they did not do that. The current opposition, the then government, were good at talking and commissioning reports, but they failed where it matters—when it came to following through with actual reform. Instead, the best that the former government could do was to take this very scattergun approach of bonuses. While of course the money was welcomed by pensioners, by the recipients of those bonuses, that approach ran the risk of turning the question of payments to pensioners into a political football. Even the title ‘bonus’ really underlines the ad hoc nature of the bonuses, and they certainly did not amount to any kind of reform of the system.

Let’s not forget that all of this inactivity and the failure to take on this challenge came at a time when the country was experiencing tremendous growth through the resources boom. Today our government is not facing the economic lucky streak of the Howard government, yet I am proud to say that we are nonetheless tackling pension reform and giving our seniors and carers and those on disability pensions the extra support that they deserve.

This year, 2009, marks the centenary of the age pension. To put that into perspective, the year 1909 was the year that we first had passengers travelling by tram down William Street in my home city of Rockhampton. In 1909 Don Bradman was just one year old and a long way from striking fear into the hearts of English bowlers. So that is how long it has been since there was broadscale and forward-looking reform of this magnitude when it comes to the pension. When the pension first began, the maximum rate was about 10 shillings. The estimates are that there were about 34,000 eligible recipients back then, in 1909, at a time when the average life expectancy was 20 years lower than it is today. The life expectancy then was actually lower than the pension age that was set.

Today we are getting older and living longer, and of course that is good news, but it also presents challenges. The government spends about $28 billion per annum on the age pension, supporting about 3.3 million age pensioners, and then there are also disability pensioners, carers, wife pensioners and veteran income support recipients. In the Capricornia electorate alone there are about 19,700 people receiving some form of pension. This includes 7,175 on the age partnered rate and 6,234 on the unpartnered rate. On top of that, there are carers and disability support pension recipients. That just gives an idea of the scale of what we are talking about. It is a large and important sector of our community, and that is why it is so vital to get the pension reform right.

As was announced on budget night, under this legislation single pensioners will receive an increase of $32.49 per week, which comprises a $30 per week increase in the maximum basic pension rate and a $2.49 per week increase in the pension supplement. Couple pensioners will receive an increase of $10.14 per week for a couple combined, which wholly constitutes a $10.14 per week increase in the pension supplement. These increases are on top of the regular indexation, which will be due in September.

This reform has also been about bridging the gap between single and couple pensioners, something that came out loud and clear from the Harmer review. Single pensioners of course do not have the same economies of scale as couples, as the third finding of the Harmer review states. This is especially the case for those who do not own their own home. I refer specifically to the report, where it states:

The Review finds that there is strong evidence that many pensioners in private rental housing face particularly high costs and have poor outcomes. Rent Assistance and social housing have complementary roles to play in addressing the financial security of these pensioners.

I am pleased to say that a very large part of the second stimulus package announced by the government this year included a very significant increase in spending on public and social housing. We expect that that will go a long way towards reducing some of the pressures on pensioners in the private rental market. Of course, that is on top of the National Rental Affordability Scheme, which is also aimed at reducing the costs of housing for people on pensions and low incomes. I am pleased to say that there are already eight social housing projects that have been announced in my electorate, and each of those projects involves multiple units of accommodation. I am looking forward to seeing some of the really acute pressures of the cost of housing and the availability of affordable housing in Rockhampton and the Capricorn coast being relieved when those units become available. So we have increased the pension for both couples and singles, which also helps to bridge the gap between them that was identified so strongly through the Harmer review.

We are bundling the old system of various utility allowances into a simpler to understand pension supplement which will be paid fortnightly. The Harmer review found that one-off lump sum payments were not an effective way of addressing shortcomings in the pension in the long term. We adopted the findings of the review to simplify the bonus payment system and to eliminate uncertainty. We are combining the GST supplement, pharmaceutical allowance, utilities allowance and telephone allowance. This includes an increase, on top of those existing allowances, of $2.49 for singles and $10.14 for couples combined, as I said. The supplement will be indexed in March and September each year in line with the CPI. So, for a single pensioner, the supplement will be around two-thirds of the supplement for a couple combined, which goes back to my earlier remarks about the additional challenges facing single pensioners. All up, we estimate the pension supplement will be worth $1,462 per year for singles and $2,199 for couples. The supplement will be paid fortnightly, but we have not forgotten the importance of choice and flexibility for people when it comes to their finances. From July next year, pensioners can choose to receive about half of the supplement in quarterly instalments. This will be helpful to those who like to get their payments in larger instalments to meet the costs of big bills such as electricity and car registration.

Ensuring a sustainable pension system for the future also means we are tightening the income test. This will ensure sustainability in the long term and that increases are targeted to the people who are most in need. From 20 September, the income test taper rate will increase from 40c to 50c for each dollar of income over the income test free area. Under the new rules, where a pensioner has ordinary income over the income test free area, their rate of pension will decrease by 50c for each dollar of income above the free area. For couples, their combined pension will decrease by 50c for each dollar of combined income over the income test free area. Pensions paid to each partner will decrease by 25c for each dollar of income for the couple combined over the income test free area. We are putting in place transitional arrangements to protect existing pensioners who would otherwise face a payment reduction because of changes to the income test.

As we know, some pensioners choose to work to supplement their pension. With this in mind, the government is introducing measures to ensure that there is proper concessional treatment of the income derived from this work. Under the new rules, employment income will be assessed fortnightly for pensioners, and only half of employment income, up to a maximum of $500 per fortnight, will be assessed in the income test. So, if someone is earning $500 a fortnight, they stand to be up to $125 better off thanks to this bonus.

Further amendments in the bill are made to close the Pension Bonus Scheme. The Harmer review found that it was not meeting its objective of encouraging workforce participation. It will be closed to new entrants from 20 September this year, although existing members of the scheme will remain eligible.

One of the major aspects of this legislation and of the reforms that were announced on budget night is that the qualifying age for the age pension will progressively increase, at a rate of six months every two years, beginning in 2017 and reaching 67 in 2023. It is a move that is born out of necessity. We are facing a demographic change in this country, as our life expectancy increases. People are also tending to retire earlier. It is a challenge happening in many parts of the world. Indeed, countries such as the US, Germany and Norway are already facing similar challenges and are on the path to increasing their pension age as well.

The projections indicate that in Australia, by 2047, the ratio of people of working age to those over 65 will have halved. Today we have about five people of working age for every person over 65; in 2047, we will have 2.4 people for every person over 65. We are facing a scenario where there will be 7.2 million people over 65 in 2047, or about a quarter of the population, compared to about 13 per cent today. This cannot be ignored, hence our moves to increase the pension age.

The people this will affect—those born after 1 July 1952—will have had far more time in the workforce accruing superannuation than previous generations had. Of course we do not expect people to be slogging it out in tough manual jobs into their old age. We as a government are working towards a future where we have established a framework for older citizens where they can tackle other roles and occupations. After all, we are talking about people who will have at least 40 years of experience under their belts. They have valuable knowledge that can be shared with their younger peers. The government is committed to developing a workplace culture which values older people, flexible training and retraining, and new options for career pathway planning.

In this legislation we have also decided to share the pension increase that is coming into place between aged-care providers and those pensioners who are living in aged-care facilities. This ensures that pensioners in homes can benefit from the pension increase while at the same time recognising that care providers also need additional funds to contribute to costs such as nursing care, food and cleaning. We are also protecting the independent retirees who are already in the system. We do not want to burden them with a sudden increase in costs, so self-funded retirees in aged care on 19 September will have their existing fee levels protected until they leave. People who enter care after this date will have any cost increase phased in over four years. The arrangements for self-funded retirees will also apply to part-rate pensioners who do not benefit from the pension increase.

These reforms have come with tough decisions, but they are informed decisions, thanks to the Harmer review. This broad-sweeping review took very seriously its role of talking and listening to pensioners. It visited every capital city as well as regional centres, such as Rockhampton in my electorate, and accepted almost 2,000 written submissions.

This legislation will help Australians enjoy a proper and dignified retirement while also positioning us to deal with the demographic changes that we know are coming in the decades ahead. We are bringing fairness to the pension and doing our bit to help recipients as they deal with the ongoing costs of living. We are simplifying the pension system and untangling the complications surrounding the previous supplement system. We are also making sure the pension is fairly targeted and we are able to assist those who need it the most. Finally, we will increase the pension age, starting in 2017, in six-month increments until it reaches the age of 67. These are challenging reforms but I believe they are the right reforms.

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

I rise to support in principle the Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Bill 2009 in relation to the impact particularly on Australia’s veterans and the veteran community. This bill is an indicator of the Rudd Labor government’s strategy to align veterans with the Social Security Act. It is also an indicator of how the Rudd Labor government is responding to the debt and deficit caused by its reckless spending.

One of the key changes this bill introduces is the increase to the qualifying age for the age pension. The rise in pension age was unfairly sprung on senior Australians just before the budget and is an indication of the arrogance of the Rudd Labor government. In the same way, this bill is being unfairly sprung on the parliament today. There has been no opportunity for the broader community and the veteran community, both veterans and members of the broader ex-service community, to debate the reforms. It is appalling that the bill is being rammed through today. How can we ensure that there are no anomalies and there is no disadvantage? And what about the groups that will miss out? In the absence of any clear economic modelling, we have to surmise that the rise in pension age is a ‘savings’ measure. This policy direction deserves a fulsome debate, with opportunities for all those who potentially will be impacted not only to understand what it means for them but to give voice to their concerns, to have their questions answered and to be able to put their position clearly.

The bill proudly proclaims that the pension age for veterans will not be increased as a result of the legislation. While that is welcome, it is not quite true. The male veteran age will remain at 60 years, but the age for females in the veteran community to receive payments will gradually increase to align with the male veteran age of 60 by 2013. The pension age for females is currently 58.5 years. The bill goes on to say that for nonveterans under the Veterans’ Entitlements Act the pension age will increase in the same manner as the qualifying age for the age pension under the Social Security Act. Here the government is showing its hand, and clarification is required. Here the government is hiving off a section of the veteran community and, again, aligning it with the Social Security Act. This government did a similar thing last year when it made changes to the partner service pension. The government attempted to lift the age thresholds, but pressure from both the coalition and the veteran community led to amendments to that legislation. The question needs to be asked: what section of the veteran community will be next?

The bill implements increases to the amount of pensions and allowances for Australia’s 3.3 million age pensioners, disability pensioners, carers, and wife and widow B pensioners, and recipients of bereavement allowance, special needs pension and veteran income support. It would seem, however, that there are no increases, no provisions made, for Australia’s TPI pensioners. ‘Blue’ Ryan, the National President of the Australian Federation of Totally and Permanently Incapacitated Ex Servicemen and Women, has raised a number of concerns regarding increases with me.

The Department of Veterans’ Affairs ad hoc information system sourced through the Parliamentary Library shows that the number of TPI pensioners as at March 2009 included: 19,737 Vietnam veterans; 3,234 World War II veterans; 2,760 serving members of the Defence Force; 2,329 Korean, Malaya and Far East Strategic Reserves; 254 veterans from the East Timor; 157 members of peacekeeping forces; and veterans from the Gulf War, Afghanistan, Iraq and other operations. In 2009 there were approximately 28,768 recipients on TPI pensions. TPI pensions are compensation payments and it needs to be noted that TPI pensioners have experienced the same cost increases as other income recipients.

Prior to the 2007 election expectations were raised by the Rudd Labor government that this group of veterans would not be left out. In a letter from ‘Blue’ Ryan to the Prime Minister, dated 1 June 2009—and I have it here—he wrote:

We are at a loss to understand why the increase to pensions announced in the budget was not passed on to TPIs and other DVA Disability Pension recipients.

There may be some provision in the bill. We have had very little time to have a close look at the bill. We have looked at it to the best of our ability over a very tight time frame, and it needs to be highlighted that not having the time to look at it comprehensively is hardly a democratic process. It is hardly the action of a transparent government, which is what they claimed and argued they were going to be.

What is important to the TPI group is that the relativity of their payments is maintained. When the coalition was in government we closed the gap by increasing all veterans’ affairs disability pensions and introduced indexation for payments to veterans with reference to both the consumer price index and the male total average weekly earnings. This group of people who have permanent and major health conditions due to their service to our nation had their expectations raised. I can understand their disappointment.

Last year the coalition tried to secure an increase for pensioners but this was bitterly opposed by the Rudd Labor government. Had the coalition bill been passed, many senior Australians would have already received over $1,000 in additional income to date. In 2007 Mr Rudd went to the election promising to ease the cost-of-living pressures for senior Australians and, even with a $22 billion budget surplus left by the former coalition government, he failed to act. When the government announced the first stimulus package there were several veterans—in fact, a number—who missed out. These people missed out on the stimulus payments and they are again missing out today.

There was one concession given to veterans. Recipients of social security and veterans’ entitlements payments who receive payments under certain Western Australian programs will have these amounts excluded from the income test for the purpose of calculating their rate of payment. The Western Australian programs are the Cost of Living Rebate Scheme and the country age pension fuel card scheme. However, this income test concession will start on 1 July 2009 and end on 30 June 2012.

Another major issue that has been raised by senior Australians is superannuation. I note the Rudd government has also decided not to proceed with the measure to include gross tax-free superannuation pension income in the income test for the Commonwealth seniors health card. This measure appears to have been withdrawn, I believe, thanks to the pressure brought to bear by the coalition and seniors groups. Now it is only income that is salary sacrificed into superannuation that will be included in the income test, but that is still a matter of concern within the community.

The pension increases will come into effect from 20 September 2009, and the minister in her second reading speech said that a ‘further bill, to be introduced at a later date, will deliver the pension reform measures for veterans and their dependants’. I look forward to seeing the bill foreshadowed by the minister and hope that, at least, when this next bill is introduced the legislation will not be rammed through with little or no opportunity for debate or consultation with the veteran community or the broader community.

Having seen this bill rammed through today, I would have to say that I think this is a grave attack on democracy and it is not reflective of a government that claim to respect and hold in high regard transparency. I have to say that many senior Australians will benefit from the measures in this bill but there are questions yet to be answered, particularly about those in the veteran community that will be missing out. I will be urging the minister to answer those questions at her earliest convenience.

Belinda Neal (Robertson, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak today in support of the Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Bill (No. 1) 2009. I have to say that the member for Greenway is really leading with her chin in this debate today. To see someone who was part of the government for some 11 years stand up and bleat about how they would like to have done something for the pensioners, when they had 11 years, and then complain that this government has not done it after 18 months in government is really quite bizarre. It really shows some sort of delusion about the situation. I really think that the member should consider that it is not just—

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

Mr Deputy Speaker Scott, I raise a point of order. I take offence at being referred to in a derogatory way—as ‘delusional’. I am quite sane and I am here to debate the bill and represent the veteran community.

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

I hear the member for Greenway’s point of order. The member for Robertson has heard it also. It would assist the chamber if she would withdraw that comment.

Belinda Neal (Robertson, Australian Labor Party) Share this | Link to this | Hansard source

Which comment?

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

The member for Greenway wants you to withdraw the comment of ‘delusional’.

Belinda Neal (Robertson, Australian Labor Party) Share this | Link to this | Hansard source

I am happy to withdraw it to assist the chamber but what I have said is that—

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

Thank you.

Belinda Neal (Robertson, Australian Labor Party) Share this | Link to this | Hansard source

Just to clarify: what I said was that the member was suffering under a delusion if she felt—

Chris Pearce (Aston, Liberal Party, Shadow Minister for Financial Services, Superannuation and Corporate Law) Share this | Link to this | Hansard source

Mr Deputy Speaker, I raise a point of order. The member for Robertson has repeated her claim, which you asked her to withdraw. I ask her to withdraw the repeat.

Anthony Byrne (Holt, Australian Labor Party, Parliamentary Secretary to the Prime Minister) Share this | Link to this | Hansard source

Mr Deputy Speaker—

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

I will rule on the point of order. The parliamentary secretary will resume his seat. I understood that the member for Robertson had withdrawn the comment. She has the call and I ask her to bring herself back to the bill before the House.

Belinda Neal (Robertson, Australian Labor Party) Share this | Link to this | Hansard source

I would like the shadow minister to withdraw his statement because it is untrue, and it is reflecting poorly on me.

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

Are you raising a point of order?

Belinda Neal (Robertson, Australian Labor Party) Share this | Link to this | Hansard source

I am raising a point of order and saying that what he said was offensive to me and I ask him to withdraw.

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

Member for Aston, it would assist the chamber and it would help this debate move along—the member for Robertson feels aggrieved by the comment, which I would ask you to reflect on.

Chris Pearce (Aston, Liberal Party, Shadow Minister for Financial Services, Superannuation and Corporate Law) Share this | Link to this | Hansard source

I asked the member for Robertson to withdraw the previous comment. If that offended her I withdraw.

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

Thank you. The member for Robertson has the call and I remind her of the bill before the chamber.

Belinda Neal (Robertson, Australian Labor Party) Share this | Link to this | Hansard source

The withdrawal is required to be made without comment—

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

Order!

Belinda Neal (Robertson, Australian Labor Party) Share this | Link to this | Hansard source

The member for Greenway believes that a failing of the previous government that the pensioner community suffered for some 11 years should be remedied instantly. In fact, when the present government brings a bill before this chamber to remedy the problem that has been identified for the member for Greenway, she complains. She says it is a travesty of democracy. She says that the bill is being rammed through. The fact is that this bill does more for the pensioners of Australia than any legislation that was brought before this House by the previous Howard Liberal government did. I am constantly amazed at their incapacity to have insight into their own policy positions, particularly in relation to pensions.

The measures contained in this wide-ranging and important bill represent one of the most significant reforms of the age pension system since it was introduced in Australia in 1909. The Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Bill 2009 will adapt the arrangements for paying pensions so that they are better suited to Australia’s changing demographic profile. The population of the country is ageing and these new measures will confront the challenges that this provides. The bill introduces increases in the amount of pensioner entitlements and makes the payment scheme simpler and more responsive to pensioners’ needs. It does not ignore them. We are not ramming it through. It is actually assisting our pensioners. The bill also brings forth new measures that make the pension system more sustainable in the long term. It is certainly my view and my submission that a more sustainable pension system also assists those who are required to rely on it.

The pension reform bill deals primarily with new arrangements for social security and aged-care legislation. A further bill to be introduced at a later date will deal with reforms in pensions paid to veterans and their dependants, a fact that the previous speaker, the member for Greenway, did not seem to appreciate.

The current bill will bring new benefits and increased payments to some 3.3 million of Australia’s age pensioners, disability pensioners, carers, wife and widow B pensioners, bereavement allowance recipients, special needs pensioners and veteran income support recipients. One of the major benefits under this new bill is an increase in pension payments. I would have thought that was a good thing, not something to be criticised by the opposition.

From 20 September 2009 single pensioners on the full rate will receive a total increase of $32.49 per week. This increase comprises a $30 per week rise in the pension base rate plus a $2.49 increase in the new pension supplement. Pensioner couples on the full rate will receive a total increase of $10.14 per week. These changes will bring the single rate of pension up to two-thirds of the combined couple rate. This reform restored equity in the relative rates paid to couples and singles by recognising that certain fixed household expenses have in the past impacted to a greater degree on single pensioners. That is certainly something that I have heard on a regular basis from single pensioners who reside on the central coast.

The new total weekly pension plus supplement will be an estimated $336.68 for singles and $507.50 for couples combined, with the estimate depending on the size of the September consumer price index rise. This amounts to $17,507.36 a year for singles and $26,390 for couples on a combined basis. It is important to note that these pension increases will come on top of the regular indexation increases that are due in September. In addition to this, increases in the cost of living and its impact will be better calculated to meet the needs of pensioners. Under the government’s reform package, a new pensioner and beneficiary living cost index will be calculated by the Australian Bureau of Statistics. This will reflect the increased cost met in reality by our pensioners, not a more broad increase in living costs that the broader community, maybe those not retired, might face. This will identify changes in the living costs for pensioners that may not be as readily reflected by the CPI.

From 20 September 2009 payments to social security and veterans pensions will be adjusted using either the pensioner and beneficiary living cost index or the existing consumer price index—whichever is the higher. Isn’t this a better option than the present situation? More significantly, pension rates will also continue to be benchmarked to male total average weekly earnings, as has been the practice in the past. From 20 March 2010 a new pension benchmark for a maximum combined couple rate of pension will set payments at 41.76 per cent of male total average weekly earnings. For single pensioners the rate will be set at two-thirds of the couple rate, at 27.7 per cent of male total average weekly earnings.

One of the most significant of the pension reforms contained in this bill is the new arrangements for supplementary payments and allowances. Under existing arrangements, separate supplements are paid to pensioners to make allowances for the costs of GST, pharmaceuticals, utilities and telephone and/or internet. Supplements are paid in addition to the pension base rate, the changes to which I have already outlined. These various payment categories are cumbersome, inflexible and significantly add to the administrative load in calculating a payment to pensioners. The new framework of pensioner and senior supplements introduced by this bill will make the supplement portion of the pension easier to calculate and understand.

All of the various supplementary payments and allowances will now be rolled into the one payment. From 20 September 2009 the pension supplement will mean that increases of $2.49 for singles per week and $10.14 combined for couples per week will be paid on top of the value of existing allowances. The pension supplement will be indexed twice a year, in March and in September, being adjusted in line with increases in the consumer price index. Like the pension base rate, pension supplements for singles will be set at two-thirds of the couple’s combined supplement.

As at 20 September 2009 it is estimated that the pension supplement will be worth up to $1,462.70 a year for singles, or $28.13 calculated on a weekly basis; and up to $2,199.60 a year for couples combined, or $42.30 calculated on a weekly basis. The pension supplement will be reduced as private income and assets increase until reaching a minimum payment of an estimated $790.40 a year for singles or $15.20 a week; and $1,190.80 for couples combined or $22.90 on a weekly basis. These are estimated amounts as final indexation figures will not be known until late August. However, pension payments will not fall below the minimum amount of the pension supplement until income or assets reach a level that would otherwise reduce a pension to nil. Arrangements for the new pension supplement will provide pensioners with a more flexible payment system and will enable them to better manage their own household and personal budgets. The pension supplement will be paid fortnightly from 20 September 2009 along with the base pension.

From July 2010 pensioners will have the choice of receiving around half of the pension supplement in quarterly instalments. In addition to these changes the new seniors supplement will be introduced from 20 September 2009, replacing the seniors concession allowance and telephone allowance currently available to holders of the Commonwealth seniors health card. The seniors supplement will only be available as a quarterly payment and will be paid at the same rate as the minimum amount of the pension supplement. The seniors supplement for a single person will be two-thirds of the seniors supplement for a couple combined. Single recipients will benefit in moving to a 66.33 per cent single-couple ratio, which delivers a small rate increase on top of the existing entitlements of $129 a year. Seniors supplement payments will be an estimated $790.40 per year for singles and $1,190.80 a year for couples from September 2009. Increases in the pension supplement and minimum amounts for couples combined and for singles will flow through to increases in the seniors supplement. This will mean pensioners cannot receive fewer supplements than eligible self-funded retirees.

Australia’s pension system faces enormous challenges in the face of long-term demographic changes. All the changes in the bill that I have outlined mean increases, higher payments and more flexibility for pensioners, but with an increasing proportion of older people in our population pressure is mounting to ensure the age pension is targeted at those most in need. Pension reforms must be framed with a view to the long-term sustainability of the system itself because, if the pension system is not sustainable, it will not continue to exist and it will not benefit those who receive payments from it.

With these principles in mind, the Rudd Labor government in its 2009 budget committed itself to the introduction of a secure and sustainable pension reform package. Part of this package proposed a tightening of the pension income test. The measure will provide long-term security and certainty for the pension system. From 20 September 2009 the pension income test taper rate will increase from 40c to 50c for each dollar of income over the income-test-free area. To ease a burden that this change may cause to some pensioners, the government proposes a transitional safety net. Current payment rates for part-time pensioners will be maintained in real terms, with indexation in line with increases in the CPI. Affected pensioners will also benefit from an increase of $10.14 per week for singles or couples combined. They will continue to receive those existing entitlements, including the increase, until they are better off under the new pension rules, including the new 50c income test withdrawal rate.

Another measure that is designed to enhance the sustainability of Australia’s social security system is the provision to increase the age pension age from 65 to 67 years—an item that received quite some coverage when the budget was first announced. This measure will be introduced gradually, with full implementation not to be until July 2023. There will be no impact on current pension recipients and the phased introduction will allow those who will be affected to plan for their retirement well in advance. The pension age for veterans will not be affected.

The increase in the age pension age is another recognition by the Rudd Labor government of the slow but immense demographic change occurring as we speak in Australia. Over the past several decades there have been significant improvements in the life expectancy of the Australian population. This measure is a response to the costs of that demographic change, costs that must be borne by all Australians and the shrinking working population of Australians.

The nation’s people are living much longer and are enjoying healthier and more active lives than they were in 1909 when the pension age was first formulated in law. Many older people are expecting and looking forward to continuing their active participation in employment. I have to say that that is certainly my experience. My father, who is now 70, continues to work full time and my mother, who is only 18 months younger, has only retired in the last year. Frankly, because they have continued to work I think they enjoy life more than they would have if they had retired and done less.

To recognise and reward those Australians of pension age who choose to take up paid work to supplement their pensions the government will introduce a work bonus scheme. This scheme will allow pensioners who do some work to keep more of their earnings. Employment income will be assessed every fortnight but only half of all employment income—up to a maximum of $500 a fortnight—will be assessed in the income test. Someone earning $500 per fortnight will thus be $125 per fortnight better off under the new work bonus scheme. This bill will close the existing pension bonus scheme, which the Harmer pension review found did little to encourage older Australians to participate in employment, which as I have said I think is good for both them and the community at large.

The object of increasing the flexibility of the pension scheme for those who receive a pension is behind another innovative measure in this bill that improves access to advance payments. Advance payments are lump-sum prepayments of a pensioner’s entitlements, which can then be repaid in instalments. The bill will increase the maximum allowable advance from $500 to around $1,000 for singles and $1,500 for couples. This provision builds in greater flexibility for pensioners, giving them greater control over their finances. It recognises that they are responsible individuals who are capable of managing their own affairs.

This bill also contains added benefits and protection for those pensioners who reside in aged-care facilities. Both pensioners in aged care and the aged-care provider will receive increases from this new pension arrangement. Of the pension increase for singles, $10.09 per week will go to the pensioner and $22.40 per week will go to the residential aged-care provider through an increase to the basic daily fee. Fees charged to self-funded retirees are based on the amount of pension they receive, but the bill includes some protections for them too. Self-funded retirees in residential aged care at 19 September 2009 will have their fees pegged until they leave the facility. Those entering after that date will have their fee rises phased in over four years.

This pension reform bill will establish the Australian pension system on a more equitable and sustainable basis. In the end I guess the most important thing about this bill is that it reforms the pension, takes action and provides pensioners with a better payment to suit the cost of living. That is a lot more than was done in the 11 years of the previous government. (Time expired)

Paul Neville (Hinkler, National Party) Share this | Link to this | Hansard source

It is a pleasure to speak in the debate on the Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Bill 2009. I represent the electorate of Hinkler, which is very much a lifestyle electorate. It is extraordinarily popular, with people moving to the area. I have 21,000 constituents on the pension and the highest profile of constituents above 65 years of age, so it should be no surprise to the parliament that I take a profound interest in the matter before the House tonight.

I have been following this issue for some time. In the last year of the Howard government I raised on a number of occasions in the party room increasing the single pension because it was becoming increasingly evident at that time that there was quite a problem in the aged community. Pensioners in particular but also some self-funded retirees were having a number of difficulties. People would come to my office and tell me that it was getting increasingly harder to pay rates, maintain a car and pay the gas and electricity bills and that the price of fruit and vegetables had gone up as a result of the drought and the increase in the price of petrol added to the running costs of the car. Of course, some country areas do not have a public bus system. That is not the case in the city areas of Bundaberg and Hervey Bay, but in other parts of my electorate it was markedly difficult. So I welcome an increase in the pension, and I particularly welcome an increase in the single pension.

I will be totally honest with the House: I did not favour the pre-Christmas bonus that the government put out. I wanted to see that money go to pensioners. I thought the mix was all wrong. I thought it would have been much better to have paid a bonus of $500 to singles and $750 to couples and then put the remaining amount of the money that had been put aside for those bonuses into an immediate increase in the pension, because the one thing pensioners said to me as part of these interviews was: ‘We want certainty about this.’ Had we gone that way, by now pensioners probably would not be looking at $30; they would be looking at a pension topped up by around $40.

I did predict at the time that, by the time we got to actually handling the pension itself, six months or more would have slipped by. And that was the case, because the government was not going to do anything, having given out all that money at Christmas and then more recently with its other infrastructure package. The government was not going to give out any more money before the budget. On top of that, I knew that, when they did do it, it would have to be debated—as indeed we are debating it tonight and it would then have to go into the social security system and adjustments would have to happen as we moved toward September—the September-March adjustments. A lot of this will not come into full effect until September. So, rather than getting something in December on a permanent basis, to see the total fulfilment of this measure pensioners will be waiting nearly nine months. In these economic times, that is pretty tough going, and I do not think it values the Australian pensioner nearly well enough.

Yes, $30 will be welcome and it goes some way to correcting this problem of the single pensioner trying to keep up with the pensioner couple. I do not want to make it an us-and-them debate, but it is clearly obvious that it costs you almost as much to maintain a house for one person as it does one for two—to pay the rates, to pay gas and electricity, to pay maintenance on the house and so on. Certainly, other things, like food, would be cheaper. But what the government has proposed that I do agree with is taking the single pension up to 66.33 per cent of the couple pension.

However, again, I would have approached it in a different way. I think what I would have done would have been to also increase the couple pension slightly. In real terms the couple pension has not increased. There has been a $10.14 increase in the pension supplement, and that will be welcome. That is much more than the $2.49 for the single pension supplement. I am not discounting the value of that. And I realise that, had you given a couple pension a straight pension increase, you would have had to approach getting up to this 66 per cent level in another step, in perhaps September this year or March next year. I thought that would have been better, because with no increase at all in the couple pension we have fixed up part of the agenda—the single side—but we have left the couple pensioners a little bit behind. I think if we had taken this in two steps, with an increase in the couple pension, it would have gone down better. However, I am not decrying the fact that the $30 will be welcome.

If you look at the overall pension supplement now, the increase of $2.49 for the singles takes them up to $1,462 a year and the increase of $10.14 for the couples translates to $42.30 week and a gross amount for the year of nearly $2,200. I think that is helpful, and it rolls in a lot of payments of previous governments and things like the GST supplement, the pharmacy allowance, the utilities allowance and the telephone allowance—with due consideration, of course, to internet. In one respect that might be tidier, for people who can budget. For people who do not, it does pose some difficulties. But I think the government have foreseen that, in that they are going to allow half the pension supplement to be taken as a quarterly payment. I hope I have this right. I did some work on this. It occurred to me that the single pensioner would get a cheque of about $182.50 a quarter, give or take a dollar or so, and the couples would receive about $275 a quarter. For people who have trouble with budgeting, or who want to have a built-in form of saving, I think that would be quite good. But bear this in mind: for the couple pensioner to do that their weekly amount will actually slip back. What they will receive now will actually have slipped back from what they were receiving before. Sure, it will catch up over time. With the single pensioner, the large increase, and taking half, should not have the same impact.

The government has moved to three different forms of assessment. It has often been said by the opposition, including the last speaker, that we did nothing for pensioners. That is patently untrue. Pensioners are probably about $40 a fortnight better off now than they would have been had we stuck to the old Keating model, because we introduced a MTAWE factor of 25 per cent and, with CPI, whichever of those two had the highest rating for that period was taken as the benchmark and added to the pension. The government has introduced a third level. They have called it the ‘living cost index for age pension households’—a fairly convoluted name. In short, it focuses in on those particular items that would affect a pension household and not a lot of the generalities that appear in the CPI that probably are quite irrelevant to pensioners. So the pension will be adjusted in future on whichever of these three scales is the greater. I think that is fair enough. That is accepting the principle of the previous government that you go to the highest measure in helping pensioners. That will be fully implemented in March 2010. Overall, I think the opposition welcomes aspects of this.

When we go to the taper test, however, an element of mean-spiritedness seems to have crept into the government’s agenda. Previously, we had been easing the taper test. That was an encouragement to pensioners who wanted to work, especially those who wanted to work part time—to be able to earn an amount of money over and above the limit that was set, be they a single or a couple, and to retain 60 per cent of what they earned. In other words, they paid 40 per cent to the government.

Under this measure, we have slipped back. We have gone back to fifty-fifty again. I think that shows a mean streak and it runs contrary to what the government is professing to do in this social security bill. I find that a bit bewildering. I sometimes wonder—and I do not say this intending any offence to my government colleagues—whether you change the names and some of these programs just because they were the Liberals’ or the Nationals’ ideas.

Let me give you an example: the co-contribution payment for superannuation. It is very generous. It was 150 per cent. For every $100 that someone put in, the government put in another $150. You have reduced that to 100 against 100. Why? Why would you do a thing like that? Isn’t the whole idea of that to give people on very modest incomes—and there are a lot of people there, lower and middle income people—a chance to build a nest egg that gives them some dignity in their later life? And the bonus for the government is that they are less dependent on the pension. So why would you try to stop that? Is it just because you wanted to change what the Liberals and the Nationals put in place in the last government? This taper test is another example.

Then we had a bonus scheme. If people worked beyond 65, you could get up to around $33,000 if you did the whole five years. Certainly there was a carrot and stick in that, but a lot of people found that very appealing—that they could have a nest egg of $33,000 when they reached their 70th birthday. I could stand corrected on this, but I understand that people on that scheme will be grandfathered until that scheme is finished. In the short time we had to prepare for this debate, I could not clarify that. If they are to be grandfathered, then I think that is probably fair enough.

But you have replaced it with what I think is a very bureaucratic sort of measure. That is this work bonus. If you work on, up to a maximum of $500 per fortnight, or $250 per week, you will only be assessed on half of that for the income test. It is certainly a positive step in one sense, but I think it is not as tidy. It is a lot messier than the other bonus scheme, to my way of thinking. The other scheme really gives you something substantial when you get to 70, whereas I suppose this one would be helpful if it suits you to do a certain number of hours a week, but I do not think it is quite as tidy as the other one.

In the remaining minutes, I want to talk about the increase in the age for the age pension. In effect, that will become the benchmark for retirement. Everything over time will probably spin off that. As a member of parliament, I do not particularly want to tell my fellow Australians that the time is coming when people are going to have to work beyond 65. But, if we are honest, we have to realise that at present there are five working Australians for every pensioner, every welfare recipient. By 2040—and that is only 30 years away—it will be 2½ working Australians for every pensioner. That is scary. You have to make provision for these things early. For that reason I am, somewhat reluctantly, going to support the government’s measure.

I think that Australians are much healthier than they were when the retirement age of 65 was introduced. You only had seven or eight years left after that, based on the longevity figures when it was introduced. The mortality rate was much higher. Medicine, drugs and a better quality of living have come to Australia over the years. We live to much riper old ages. We really have to ask, for many of us: ‘Well, what will we be doing when we are 65, 85, 90 or even older? Are we not capable of making a contribution not only to young Australians but to other retiring Australians that follow us?’ I think this is a very important issue.

I believe a measure should be put in place because a lot of people work very hard, especially in the building industry—brickies, construction workers and so on. There are people who work in rural industry, shearers and so on, whose backs give out at an early age. People who work in rural industry throughout Australia have very tough lives and I can well understand that they would want to retire at 65. So I propose—this is not necessarily the coalition’s position; it is just my suggestion—that we reintroduce a mature age pension that would be available to people like that between the ages of 62 and 67 so that, when their physical abilities had started to fail, albeit that they were not disabled or invalided in any way, and they could not get a job or found it very difficult to do that heavy sort of work, there was an escape hatch for them. I believe a mature age pension for people from 62 to 67 is the answer.

On that note, I support the bill. I think there are a number of little mean measures in there that diminish it in a lot of ways. I think it could be improved, and I hope it is improved, in subsequent budgets.

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

I speak in speak in support of the Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Bill 2009. How we treat those with disability, our carers and our senior citizens—those who have gone before us and made this country what it is—says a lot about what we expect our country to become and of our aspirations for the future, not just for ourselves but for our children. If we neglect those who have gone before us—our senior citizens of 60 years of age and older—what does that say about us? What does it say about what we expect our society to be when we become senior citizens? We have 3.3 million age pensioners, disability pensioners, carers, wife pensioners and veteran income support recipients in Australia. They will benefit from these pension payments.

This reform package does improve the adequacy of the pension system and ensures its security and sustainability in the long term. We must have a system of social security in this country which is responsive to the requirements of individuals and families in our community and we must ensure its long-term sustainability. We cannot do that unless we make reforms. The reforms being undertaken here are long overdue and make the pension system in this country fairer and simpler. These reforms give certainty and security and are adequate in the circumstances. The reforms tackle the reality that we have an ageing population. In terms of longevity, only Japan surpasses us. The situation in this country is that, if we do not do something about our social security system in the long term, it cannot be sustained. What sort of social security system are we going to leave for those who come after us, our children and their children?

The age pension was first paid in 1909, so this year marks its centenary—and that is important. The age pension is the largest-spending Commonwealth own-purpose program. That is the reality. The federal government spends in excess of $28 billion per annum on the aged-care and other pensions. It is a big-ticket item in the budget; it is a very important item. Millions of Australians will be affected by these reforms.

The member for Hinkler always says interesting things. He comes from a truly beautiful part of Queensland—Hervey Bay is simply a wonderful place. I am always interested to hear what the member for Hinkler says. He has been here a long time; he is a man of some experience. His longevity in his seat shows that obviously he has been working hard in his electorate for a long time. But I have to pull him up on something. He said that the Howard coalition government made substantial changes to help pensioners. The truth is they did not. There was 12 years of neglect. The truth is that, for 12 years, the Liberals and Nationals knew that the single pension was simply inadequate, and yet they did nothing. They covered it up with these ad hoc payments from time to time to conceal the inadequacy of the basic pension. We know that the former member for Longman, Mal Brough, took to the Howard-Costello cabinet the notion to increase the basic pension in 2007. We know he took it to cabinet and we know they said no. Those ad hoc payments were made simply to cover up the inadequacy of the single age pension—that is the reality.

We know, of course, that the Household, Income and Labour Dynamics in Australia Survey showed very clearly that the Howard coalition government failed in this area. Let us look at the report handed down today. Between 2001 and 2006 rates of income poverty were consistently highest among the elderly, particularly single person elderly households, and that one in three elderly people living alone spent all their years in poverty. This was 2001 to 2006. We were not in power then. The Howard-Costello government was in power. Twenty per cent of the persistently poor were over 65 years of age, compared with 11 per cent of the non-poor. Income mobility was considerably lower for elderly people than for non-elderly people, and that mobility was more downward than upward. That is the reality. That is an independent survey in relation to this matter—it cannot be denied because that is the reality. A number of ad hoc payments were made to cover up the failure to lift the basic single rate of pension. That is the reality.

The member for Higgins, whom I wish well in his retirement, actually knew about this and, on 16 April 2002, he said: ‘The population is ageing and we have got to think about how we’re going to cope with that.’ The coalition were in power until November 2007 and what do they do about it? Zero, in fact. That is the reality. He said a number of times—

Debate interrupted.