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

This motion on the indexation of British pensions is in essence about fairness. This motion recognises the significant impact of the British government's refusal to index British pensions that have been allocated to British expatriates living in Australia under the United Kingdom's National Insurance Fund. I have raised this issue previously in the parliament. It affects many people in my electorate. I will continue, and I am pleased to see that government ministers have continued, to bring this to the attention of this parliament and indeed the British government.

The 2011 census shows that around 14 per cent of my constituents were born in the United Kingdom. Since I have been elected I have on numerous occasions had residents in my community raise this as an issue. I distributed a survey in 2007 and received an overwhelming response from well over 500 local residents. They said that they believe that the British government continues to fail them in failing to index their pensions and that this is unfair and discriminatory.

As you would know, indexation ensures that the amount received in real terms remains the same over time, accommodating increases in inflation and cost of living. The failure of the British government to index the pension payments of British expatriates living in Australia means that indexation ceases from the point of migration to Australia, so those who migrated to Australia some years—or even decades—ago have been severely affected. As a result of the ever-decreasing buying power of their frozen pensions, some pensioners have not been able to keep up with rises in the cost of living and must rely either on their dwindling savings or on means-tested assistance provided by the Australian government where available.

The UK government's policy has resulted in the erosion of the purchasing power of pensions of more than 250,000 British pensioners living in Australia. I have heard many stories in my local community and in the broader Australian community about the effect this considerable erosion is having on quality of life for affected pensioners. In particular, I refer to Mr Kenneth Ball of Christies Beach in my electorate. He tells me that he receives £42.26 while his wife, Frieda Ball, receives £25.27 pence per week. This is of course exactly the same amount Mr and Mrs Ball received when they first became eligible for the pension in 1995. Mr and Mrs Ball feel they are being treated unfairly, given that they paid into the national pension fund just like every other Briton who is living and working over there. But now, while other pensioners who continue to reside in Britain—and indeed, many countries around the world—have had their entitlements indexed so that in real terms they remain the same, the Balls have been denied this. The impact is most significant of course for those who emigrated some time ago. For example, for residents who emigrated 20 years ago upon retirement, the pension at that time was around £54 a week. That would now have been over £100 per week if it had been properly indexed.

One might ask: why is this unfair? These people have, after all, decided to emigrate to Australia. There are two main reasons why the failure of the British government to index the British pension is unfair and discriminatory. First, it is important to recognise that these British pensioners paid into the National Insurance Fund of the UK, which operates more like a superannuation account than the sort of pension system we are familiar with in this country. It requires compulsory payments from the salaries of workers in exchange for an allocated pension upon retirement. All British pensioners pay into the National Insurance Fund under the same rules. So equity demands that they should be treated the same—that their pensions should now be allocated under the same conditions, regardless of where they choose to live. Instead, the reality for some British expatriates is that they do not receive the full benefits they deserve, despite having contributed throughout their working lives both to this scheme and to the British nation.

Second, the UK government's current policy of not indexing the pensions of British expatriates living in Australia discriminates in its treatment of expatriate pensioners on the basis of the country they reside in. Regular increases in line with inflation and cost of living are made to the pensions of British expatriates living in numerous countries, including the United States of America and the European Union. But pensions are frozen in most former Commonwealth countries, including Australia, Canada, New Zealand and South Africa. This means that British expatriates who choose to retire in Australia are disadvantaged. Their entitlements are less than those of British expatriates who choose to retire somewhere else in the world. They are not, therefore, only at a disadvantage when compared with British pensioners who continue to reside in the UK but also when compared with British pensioners who have decided to retire in a country which is not subject to the frozen pension policy.

Through our own pension system, the Australian government does provide more than $100 million each year to recipients of the UK pension who are living in this country to help supplement the shortfall created by the frozen pension policy of the UK government. This is a significant burden for taxpayers, who would not have to carry it if the British expatriates living in Australia were given the pension they deserve. I know that the Australian government has over recent years repeatedly requested that the UK government reconsider its frozen pension policy, to ensure that there is fairness for British expatriates living in this country and also to bring an end to this situation where Australian taxpayers are forced to meet the shortfall—really created by the United Kingdom government.

I would like to take this opportunity to commend Minister Jenny Macklin, who I know has been a long-standing advocate of this issue. She has raised this matter most recently during her meeting with the UK Secretary of State for Work and Pensions. I would also like to recognise the continuing efforts of Minister Bob Carr, our foreign minister, who has taken up the task of lobbying for pensions for British expatriates living here in Australia to be fully indexed, including by meeting his counterpart in the UK government earlier this year to put what I know he feels is a very strong case for this discriminatory policy to be reconsidered.

This motion does a number of things. It firstly and importantly recognises the problem and the effect that it really does have, which is widespread, as I mentioned: 250,000 people who are affected. It also acknowledges the impact that it has on the Australian government, which does have to pick up the tab when it comes to this issue. Importantly, I think that that needs to be recognised.

It also acknowledges the ongoing efforts of the federal Labor government in making repeated representations and calling for the issue of frozen pensions to be addressed. Indeed, it commends Minister Macklin for her most recent efforts in raising it with the UK Secretary of State for Work and Pensions. We hope that he actually does look at this very seriously. Finally, and importantly, it calls on the United Kingdom government to treat recipients of a UK pension equitably by indexing entitlements fairly, regardless of where they choose to retire.

I hope that this motion will be supported across the House. While I believe that the government has been making very, very good progress in raising this issue, I do believe that we need to provide a united front here. I really do hope that I get the support of the parliament because it would certainly back up the efforts of Minister Carr and Minister Macklin in ensuring that we do get equity and fairness within this.

I know that the British pensioners themselves have not been silent on this. There are a number of organisations around Australia which are really fighting for this justice. I know that they went to a number of international courts to try and get fairness and justice. Unfortunately, they were not able to succeed. But I think it is incumbent on this parliament and incumbent on this government, as well as on other governments in the future, to continue to push this issue until fairness and equality is afforded to British pensioners around this country.

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

I would like to rise to speak on this motion about the indexation of British pensions, and thank the member for Kingston for raising this important issue. I believe it is the second time that she has put a motion on the Notice Paper about this. As I recall, I also spoke on this matter back in September 2008, but I have raised it again in more recent months in an adjournment debate in this place.

The member for Kingston made mention that the Australian government had been pursuing the British government in recent years with regard to this matter—this injustice. But I was properly informed by the member for Pearce just then that former Howard government minister, Senator Jocelyn Newman, made repeated representations to the British government in pursuit of this matter. And so, I guess that, if anything, what we can say is that this has been a matter where there has been bipartisan support over many years. The trouble is that it has been unsuccessful bipartisan support over many years.

One of the main responsibilities of government is of course to look after those people who have worked in the interests of the nation. However, the British government have had this policy over many years. I believe it was the Attlee government that first had this policy, and successive British governments have followed it, to the benefit of the British taxpayer, obviously. The current British government, like previous British governments, has been unwilling to move on this matter.

When I last spoke on this, which was just two or three months ago, I did the right thing: I called the deputy British high commissioner to tell him that I was going to say some things about the British government and that they were not going to be kind. After I made those comments, I then also asked him if he would pass those on to the British government, and he told me that he would and he did. It is right for us to not only be prepared to go on the record here but also follow it up and make sure our criticism of the policies of, in this case, the British government, reaches them so that they are aware that their former citizens, those drawing pensions from their country, are represented here and so that the problems and inadequacies of British policy with regard to British pensioners here are highlighted.

Unfortunately, the circumstances of this injustice—the indexation of British pensions—remain the same and continue to have a negative impact on so many former UK residents, including a number from my electorate of Cowan. As is the case with most allocated pensions, the British pension scheme is indexed for increases to the cost of living. This in effect makes sure that, in real terms, the pension retains the same purchasing power over time. This method of indexation is applied to British pensioners who have moved from the United Kingdom to most other countries. The problem is that that is not the case in Australia. In my view and the view of British pensioners in Australia, the British government is refusing to honour what is nothing short of an obligation to those who have made contributions to the National Insurance Fund. Instead, the pension ceases to be indexed from the point at which the pensioner migrates to Australia. The indexation of the British pension is permanently frozen on the date the person leaves the UK for Australia or the date of the granting of the pension, whichever comes first. UK pensioners in Australia are required to rely increasingly on Australian income support because of the UK government's indexation policy, and that means that the value of the UK pension reduces over time and, as has previously been said, it has not in the past been made up by the Australian taxpayer.

I certainly completely disagree with the policy of the UK government and add my voice to calls for the UK government to change that and index the pension—to do the right thing. There are some 555,000 British pensioners worldwide, about half of whom apparently live in Australia and whose British pensions are frozen. Many of these British migrants have contributed to our great country. When travelling through my electorate, I often speak to British migrants are now residing in Cowan and, although they are happy in Australia, I am regularly told about how they are being disadvantaged in the pension payments they receive from the United Kingdom's National Insurance Fund because they migrated to Australia. Britons often leave the UK to join their children, grandchildren or other immediate family members in Australia and by doing so they face a major inequity in their pension payments. Some of these people actually served their country in World War II, putting their lives on the line and suffering the privations of the war years.

In return for their service and their hardship, they were hoping for secure support, and that is not being provided.

As I previously said on this matter, in Australia 190,000 British pensioners who are permanent residents here receive a means-tested Australian age pension to top up their unindexed British pension, at an additional cost of $100 million a year to the taxpayers. But this cost to Australian taxpayers would not be required if the British government applied the same indexation that it has in place for Europe and the United States. The UK government's position on the indexation is not only selective but discriminatory against certain countries such as Australia. As I mentioned, the Australian government is left to subsidise some of those left abandoned by the UK government. However, of the approximately 250,000 British age pensioners in Australia, only 190,000 are citizens or permanent residents and therefore able to access the support of Australia. That still leaves more than 60,000 British citizens who are not Australian citizens but are living in Australia without any assistance or support.

We are constantly reminded that the cost of living is increasing, and with this government's determination to prosecute the carbon tax it is only getting worse. Pensioners are struggling to be able to afford their basic living costs when costs are rising and the pension remains the same. The gap is worsening, and the British pensioners are right in the middle of this. This has been made very clear to me in the past through conversations with Shirley De Andrade and the President of the British Pensions in Australia group, Jim Tilley. From the British pensioners group's autumn 2012 newsletter, one statistic really stands out, and that is the estimate that the UK budget is some 3.1 billion pounds better off in 2012 as a result of so many expatriate pensioners living elsewhere, which the British Pensions in Australia group lists as an offset to the cost of re-indexing their British pensions. It is disturbing that the British Treasury already takes that benefit, resulting in its perception of re-indexation as being a cost to it. So it is both unjust and wrong that the British government is varying the level of support it gives depending on where its pensioners live.

It is clear that the British pensioners are highly motivated on this issue, and each time the cost of living rises the inequity of their situation becomes worse. I remember hearing a story back in 2008 from Mr Beyfus, who served in the Royal Navy and received a small pension for his armed service as well as a 20 per cent disability pension for that same service as a result of a back injury. It is interesting to note that both those pensions are indexed, yet he took the age pension in 1995 and he estimates that the 80 pounds that he got then has not moved since. It is estimated that he would be around 30 pounds better off in indexation were paid. So it is a shame that the UK government is happy for Australia to top up the UK pensions while not trying to advance the issue at all.

In conclusion, I would like to reiterate my view that the British government should acknowledge the contributions that these people have made to their country and index their pensions rather than letting the taxpayers of Australia and other countries pick up the cost for their obstinacy. I also note that this motion is something that has bipartisan support. It is not just a Liberal or Labor position; it is something that we all agree on on behalf of our constituents. So I join with the member for Kingston in calling upon the UK government to redress the injustice that they have created and have continued to ignore for many years. It is time for true indexation to take place, and it is about time the British government got on with fulfilling their obligations.

Janelle Saffin (Page, Australian Labor Party) Share this | Link to this | Hansard source

I speak in strong support of the honourable member for Kingston's motion and commend her not only for bringing this issue before the House by way of the motion before us that we are speaking to but for her ongoing advocacy on this matter—in fact, ever since we both came to this place in 2007. She has spoken on this matter before by way of her previous private member's motion on 15 September 2008. So I thank her for her ongoing advocacy on behalf of all the UK pensioners across Australia.

I have people in my electorate who find themselves in this situation, and they and their family members have made representations to me. It is an almost incomprehensible situation that they find themselves in, particularly when, in other countries that UK people have migrated to on a permanent basis and where they have taken up residence, they get it, but in Australia and a few other Commonwealth countries they do not. So it just does not seem to make sense.

I also commend Australia's ongoing efforts to get this issue fixed for UK pensioners—but it should be the other way round. The UK should be advocating on this issue. Currently, Australia spends around $110 million a year providing means tested assistance to Britains who have become needy as a result of their frozen pensions. We continually press Britain to rescind the policy. From what I can read, ever since Britain refused to pay it, it has been one of those issues on which Australia has made representations. In recent times, the Minister for Foreign Affairs raised it with his counterpart, the Foreign Secretary. In September of this year, the Minister for Families, Community Services and Indigenous Affairs also raised it with the UK secretary of State for Work and Pensions.

In the House the honourable member for Lyne asked the Prime Minister a question on this. She answered—and I am paraphrasing—that the Australian government considers the United Kingdom's policy of not indexing pensions in most Commonwealth countries, including Australia, Canada, New Zealand and South Africa, which is where the majority of the expats reside, to be unfair and discriminatory. I think every member in this place, without verballing people, has said either privately or when speaking to the motion publicly that this practice is really unfair and discriminatory.

Who can forget the case of Mrs Annie Carr reported in the Guardian newspaper on 4 May 2012. The article was titled: 'The 100-year-old woman whose state pension is frozen at just £6 a week'? It is unconscionable. Thank goodness we have safety nets and systems in place which can cover that.

I would like to put a few things on the record from Pension Justice, which is a campaign being run by the International Consortium of British Pensioners. It is rather sad that they have to resort to having to lobby on this issue, particularly when many of these pensioners have paid into a whole range of things and paid taxes in their country. Pension Justice state:

… 4.4% of pensioners … have their state pensions frozen at the rate first paid when they emigrated to mainly Commonwealth countries or when they have become entitled to a state pension having moved to those countries before retirement age.

… Nearly 5.3% of pensioners … who emigrated to Europe, the USA and over 40 other favoured countries, have their pensions indexed annually, just as if they had stayed in Britain.

Why can't it happen here? It should just happen here. Further:

The State Pension is paid in accordance with the number of years of mandatory contributions into the National Insurance Fund … made by British workers between the age of 16 and retirement age.

…   …   …   

The National Insurance Fund consists of the balance over and above the cost of paying the State Pension and other benefits. It currently stands at around £40 billion pounds.

I am sure the UK can afford to pay them. (Time expired)

Debate adjourned.