Jenny Macklin (Jagajaga, Australian Labor Party, Shadow Minister for Families and Payments) Share this | Link to this | Hansard source

I am very pleased to be speaking on the Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015. This is the latest in Tony Abbott's relentless campaign to cut the pension and the latest attack by this government on pensions and Australian pensioners. It is the latest broken promise from a Prime Minister who promised before the last election that he would not touch the pension.

The Prime Minister, of course, has campaigned to cut the pension ever since he was elected. I want to make it very clear from the outset that Labor will oppose this bill and particularly oppose the asset test changes proposed in this legislation. With our vote we will make clear that there is only one party in this whole parliament that will stand up for pensioners, only one party that will fight for a fair pension and only one party that will make sure that Australia has a fair retirement income system. That is Labor. We already know that every single member opposite, Liberal and National party members, have voted once to cut the pension. Last year they all voted to cut the indexation of the pension—a cut that would have left three and half million pensioners with $80 a week less within 10 years. Today they intend to try to cut the pension again. Today the Abbott government will once again break a promise they made to pensioners before the last election. Each and every one of these members of the Liberal and National parties will vote to cut the pension, to hurt Australian pensioners.

I am very proud to say that Labor last year beat this government's savage attack on the pension. We stood side by side with pensioners in every single of corner of Australia and fought the Prime Minister's unfair changes from last year's budget. We stood united with organisations like National Seniors Australia and Council on the Ageing, and we won. To all those pensioners who fought with us: this was your victory, because you stood up to this government. Every pensioner was spared last year's savage cuts. But now we have another fight on our hands—a fight made all the more difficult because of a filthy deal between the Greens and the Abbott government. Senator Di Natale and the Australian Greens have been dudded into accepting a $2.4 billion pension cut in exchange for a six-week extension to the deadline for submissions to the tax inquiry. What a deal! Senator Di Natale has been hoodwinked into claiming that he got the government to put superannuation tax concessions back on the table. He said that over and over again. Since we heard those claims from the Leader of the Australian Greens, we have had the Minister for Social Services, the Treasurer and, just a few short hours ago in question time, the Prime Minister making it absolutely plain that as long as this government is in power there will be no changes to superannuation. So Senator Di Natale and the Greens have been completely fooled, and it is Australian pensioners who are going to pay the price. This dirty deal is nothing more than the government and the Greens getting together to agree to cut the pension. That is really what it is all about. The first act of the new Greens leader has been to sell out Australian pensioners.

It is very clear that there is no intention by this government to review the retirement income system or to consider any changes to superannuation tax concessions. The Greens have been completely conned. They have all—the Liberals, the National Party and the Greens—sold out middle-income pensioners who have worked hard and saved hard their whole working lives. Each and every one of them—whether it is the leader of the Greens, the Prime Minister or the Minister for Social Services, and all of these people are going to vote for them—is going to take money off part pensioners. I will give one example. A part pensioner earning $25,000 a year will lose money as a result of these cuts. At the same time, this government is saying it will do nothing to the very generous tax concessions for the highest-income superannuants—those with incomes of more than $75,000 a year. They are not just happy about it, of course. They have all given it the green light. This deal sends an unequivocal and unmistakable message to every single pensioner in Australia: never, ever trust the Abbott government or the Greens again. It is only Labor that can be trusted to protect the pension.

Because of this legislation, because of the Greens and the government getting together, hundreds of thousands of pensioners are going to face a cut to their pension. In 2017, 330,000 pensioners will lose. Of these, 236,000 will lose part of their pension—a cut of, on average, $3,300 a year. So I hope each and every one of you is going to write to your part pensioners and tell them you are going to take $3,300 out of their pockets. Another 90,000 part pensioners will lose their pension altogether; so you can all write and tell them as well. That will be $5,000 a year that you are going to take out of the pockets of part pensioners. Over the next 10 years, more than one million pensioners will be affected by this cut. Although the government might have all of us believe that all of these pensioners are millionaires, the reality is, of course, very, very different indeed. Because of this measure, because of the changes in this legislation, pensioners with less than $300,000 in assets will lose. Some of these pensioners are on incomes of less than $15,000 a year. Yes, some of them do have assets but they are not all on easy street. This is an attack on those Australians who have worked hard all their lives and saved hard. All they wanted was to enjoy a comfortable retirement. In fact, that is what they have been working their whole lives to achieve.

Mr Ciobo interjecting—

The parliamentary secretary at the table, who is making such a load of racket, is about to vote for a cut to part pensioners. He is doing exactly the opposite to what he promised before the last election, which was to make no changes to the pension. Each and every one of these Liberal and National Party members are going to pull the rug out from under these part pensioners. As one pensioner wrote to me recently:

After years of planning for retirement … retirees are being told that for some they must go it alone and for others their part age pension will be drastically chopped.

She wrote:

A knife has been plunged into the breasts of middle income retirees.

And she is correct. This cut is an attack on middle-income retirees. And some of them will lose a lot. Some singles will lose as much as $8,000 a year. Some couples will lose up to $14,000 a year, each and every year. And this is only the immediate impact. The impact of these changes will be even more acute over time.

According to independent modelling, within 10 years around half of all new retirees leaving the workforce will be affected by these changes. Far more pensioners will be earning an income less than average than above average. According to the same modelling, for couples due to retire in 10 years time, the largest impacts will be felt by those with below average earnings. A couple who are still working and earning $62,000 a year stand to lose $8,600 a year or $224,000 over their entire retirement.

Yet, what do these people opposite want to do? For those retirees with $1½ million in superannuation assets or more will not be impacted at all. They will not have any change at all. That is right, the richest retirees will lose nothing at all. Here lies the absolute injustice of what we are debating tonight. The government would have you believe that this bill is fair. Whilst the government are saying that part pensioners must get by on less, they are actively promoting people with much higher levels of assets by refusing to rein in tax concessions for millionaires.

Some weeks ago our colleague Chris Bowen put forward a proposal to rein in the tax concessions that the government provide to people with superannuation balances over $1½ million. The government have just rejected that outright. Of course, this just shows the government's true colours

Opposition members interjecting—

And they cut low-income super; that is exactly right. They still do not get fairness. They think that part pensioners have too much money, but that millionaires with huge balances in their superannuation accounts have too little. That is what this measure really protects. Let us be clear. If you are on a pension, if you are rely on a pension in the future, the Liberals are coming after you. If you have a few million squirrelled away in a superannuation account then the Liberals are there for you; they will protect you. But if you are a pensioner who has saved your whole life, then the government is coming after you and coming after your savings.

Not only is this measure going to mean pensioners are left significantly worse off, but it also has some very significant built-in floors. The government should be aware of these because it was one of their own luminaries, former Treasurer Peter Costello, who, when he was Treasurer said:

The current taper rate of $3 means a retiree loses more aged pension than they earn on their additional savings if they do not achieve a return of at least 7.8 per cent a year.

He went on to say:

This is a large disincentive to save for retirement

Of course, he is correct. This point was reinforced by Professor Andrew Podger who recently wrote that the new assets test taper involves—and I quote—'a very tough wealth tax'. That is what you are all imposing: a very tough wealth tax.

For every $1,000 of assets the pension will be reduced by $3 a fortnight or $78 a year, much more than those assets can deliver in income. That is what you are all doing to these part pensioners. As a consequence pensioners will have a very strong incentive to sell off their assets. There are already people giving pensioners advice about how to do exactly that, to invest in non-assessable assets like the family home or to not save in the first place. These are the flaws that are built into this cut to part pensioners, and the government know it. They know it. They would rather see a cut to the pension than a fair, sustainable pension system. That is because they seem to only have one goal and that is to cut the pension. There is no intention whatsoever of standing up for pensioners or of protecting the pension.

By contrast, of course, Labor have always fought for pensioners. When we came into government in 2007 one of the first things that I did was to ask my department to undertake a review into the pension. We knew that pensioners were doing it hard. Many were living in poverty and finding it hard to make ends meet. The Harmer report into pensions was delivered to me in February 2009. It made three recommendations. The first was a $30-a-week increase to the base rate of the pension. The second was the introduction of a new indexation measure: the Pensioner and Beneficiary Living Cost Index. The third was an increase to the indexation benchmark from 25 per cent of Male Total Average Weekly Earnings to 27.7 per cent of Male Total Average Weekly Earnings. Not only would these changes provide for a fairer pension, but they would also be sustainable as the result of difficult savings decisions that we made at the time.

The Treasury made it clear that by 2021 these measures would be cost neutral. I am very pleased to say that Labor delivered this significant increase to the pension. I would like to particularly acknowledge the contribution that the member for Lilley, as the Treasurer, made to the way in which Labor could deliver this pension increase. Labor delivered, for pensioners, the biggest increase in the pension in its 100-year history. We delivered a new, fairer indexation arrangement that would see the pension keep pace with wages, making sure that pensioners maintained an adequate standard of living. I am very pleased that we were able to deliver these very significant changes. Analysis by Professor Peter Whiteford showed that, as a result of this single reform, poverty among older Australians was cut from 27 per cent to less than 12 per cent. It was a very significant poverty alleviation measure. It literally brought millions of pensioners out of poverty. That is Labor's record—a record we are very proud of.

This government would have you believe that the pension is unsustainable. They would have you believe that the government cannot afford to look after low- and middle-income retirees. But it is simply not true, and Labor knows that the pension is sustainable. Australia is considered to have one of the most sustainable pensions in the world. The Allianz Pension Sustainability Index last year found that Australia's pension system is the most sustainable in the world. According to the OECD, Australia spends just 3½ per cent of GDP on the age pension, compared with the OECD average of 7.8 per cent. Ensuring the continued sustainability of the retirement income system is important, but it has to be done in a fair and equitable way.

Our universal superannuation system—of course, introduced by a Labor government—has taken, and will continue to take, the pressure off the age pension. Labor believe that Australia can afford a fair pension system. We want to be both fiscally responsible and socially just. We believe it is possible to be both—to rein in unnecessary spending and to continue to support growth, jobs and hardworking Australians. We cannot afford to continue to provide generous tax breaks to millionaires with superannuation balances of millions of dollars. That is why we are continuing to make fair and responsible decisions.

The superannuation proposals that Labor has announced are all about putting fairness back in the system. They are fair and they are good for the budget. This Prime Minister thinks that pensioners have got too much money and that millionaires do not have enough. We know, however, that it is possible to be both fair and responsible. We cannot afford to let multinationals avoid paying their fair share of tax. That is not fair or responsible. That is why we have also put forward the changes to rein in the tax concessions for those superannuants with balances above $1½ million.

We know that tough decisions need to be made. That is why we will agree to certain measures in this bill. We will agree to the abolition of the seniors supplement and we will agree to the changes to the social security treatment of defined benefits, but we will not agree to the changes to the assets test, we will not agree to the changes to the portability arrangements for the pension and we will certainly not agree to the cuts to the pensioner education supplement or the education entry payment. We have fought these cuts for a year and we will fight them once again. We will continue to fight for pensioners. It is what we have always done and we always will.

Bert Van Manen (Forde, Liberal Party) Share this | Link to this | Hansard source

Twice today I have had to listen to contributions by the opposition that were full of complaints and no real solutions. As usual, there was no recognition or admission of the fact that they were the ones who put the budget in such bad shape in the first place. I am proud to stand here and say that this government is focused on building a better, stronger and more sustainable pension system for all Australians who require that support.

I will assist those opposite with a couple of basic facts. The current base asset test threshold for a single homeowner is $202,000. Under the proposed measures in the Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015 that asset test threshold will increase to $250,000 before they start to receive any reduction in their age pension. For a couple who own their own home currently the asset test threshold is $286,500 and under the new proposed limits it will be $375,000. They are two examples of how, through an increase in the bottom tiers for the asset test threshold assessment, we help those at the lower end of the income scale who are receiving significant pension payments. The end result will be a significant number of part pensioners moving from the part pension to the full pension. The arguments of those opposite were, as usual, hollow.

I am proud to support the Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill. As I said, it is focused on creating a fair, sustainable and better targeted pension system for the future. More than 90 per cent of pensioners will be better off or have no change to their pension under these measures. Additional assistance will be provided to about 170,000 people with modest assets, particularly nonhomeowners who are currently affected by the asset test. The base threshold for a nonhomeowner currently affected by the asset test is $348,500. The base threshold will increase to some $450,000 with these proposed changes.

Importantly, there will be no change to the existing asset test exemption for the family home. Only people with significant levels of assets other than their home will see their pension reduced. The shadow minister touched on someone who has $1 million of assets who will lose about $5,000 in their pension. That represents about 0.5 per cent of their assets. There is no doubt that they can accommodate that reduction in their pension through utilising the assets they have accumulated, particularly in superannuation where they have received significant tax advantages over their lifetime. The whole purpose of the superannuation system is to provide an income stream and capital to fund retirement incomes.

I think this is a tremendous step in the right direction in creating long-term sustainability for our pension system. There are also a number of other measures in the bill that look to improve the longer term sustainability. These measures include changes to the defined benefit income stream assessment, the proportional payment of pensions outside of Australia, the asset test and concession card, the seniors supplement, the pension education supplement and the education entry payment. I notice that the minister, when she was at the dispatch box, touched on those last two, but at the end of the day people who want to go and study have access to support through VET FEE-HELP and a number of other measures that then do not require those supplements in duplicate.

In addition, the pensioners who lose the pension entitlement as a result of these changes will automatically be issued with a Commonwealth seniors health card indefinitely without having to meet the usual income test requirements. The government, in introducing these changes, obviously will not be proceeding with the indexation changes. From 1 January 2017, the government will rebalance the asset test parameters by increasing the asset test free area and taper rate. The budget changes to the asset test mean that the majority of pensioners in Forde with modest assets will be on average $30 a fortnight better off or have no change to their pensions. This is a measured and fair change. Around 170,000 pensioners in Australia with moderate assets will receive a full or increased pension, with many changing from part to full pensions as I alluded to earlier. At the end of the day, as I have already touched on, it is the pensioners with substantial assets, who have already received significant tax benefits through the superannuation system, who will be affected by these changes. People who change to a no-pension situation will also continue to receive the healthcare card for those under pension age.

From 1 January 2016, with these measures, the government will ensure a fairer portion of the superannuant's actual defined benefit income is taken into account when applying the social security income test. A 10 per cent cap on the income that can be excluded from the test will be introduced excluding in military defined benefit schemes. This will result in an increase in the accessible income for people with a deductable amount greater than 10 per cent for the purpose of determining the rate of income support the person receives.

Another measure that will create a fairer and more measured age pension system for Australians is reducing the length of time a recipient can be paid the age pension and a smaller number of other payments outside of Australia at the full rate. From 1 January 2017, this schedule will reduce from 26 weeks to six weeks for the period in which the age pension can be paid outside of Australia at the full means tested rate. After six weeks the payment will be adjusted according to the length of the pensioner's Australian working life residence.

I am pleased that as a result of these changes we will see many pensioners in Forde receive an increase in their age pension benefits from 2017. I also note with interest the former minister's reference to a large increase in the pension when they were in government. That was tied to the introduction of the carbon tax, and it was this government that repealed the carbon tax but also left that pension increase in place.

I would also like to reflect on some further comments that the former minister has made that their refusal to back our changes is based on advice from consulting firm Rice Warner. This is the same organisation that made a submission to the Tax white paper, calling for the part pension to be phased out. I did not hear those opposite speak about that. They also call for the inclusion of the family home in the pension test if it is worth over $1.5 million. I am pleased to say that we are not doing that. They also say that if couples have more than $500,000 in assets they should lose the pension entirely. I am pleased to say that the minimum threshold at which pension will cut out is some $547,000, the upper threshold for couple non-homeowners is a bit over a million dollars and the policy for couples is $823,000. Rice Warner, who seem to be the source of their information, even go on to argue that, if people lose income but still have a valuable home, they can choose to downsize it to access the pension, effectively forcing someone to sell their home. As usual, the Labor Party has been exposed. They should do some policy homework before they start lecturing the government on pensions. Instead, they are voting to deny an average $30 a fortnight pension increase to some 170,000 Australian pensioners with modest assets. ACOSS backs this policy as do others. It has been well received by the members of the crossbench and key stakeholders and it will receive the support in the Senate. Labor are upset that once again they have been made irrelevant and are suffering from relevance depravation syndrome. It is good to see the Leader of the Opposition here as well. What we are not going to do is tax superannuation any more than it is already taxed. The government position on super is crystal clear. We will not be taxing it, unlike those opposite, who want to tax your super.

We understand the difference between superannuation that people have built up through their own savings and the pension as a welfare payment. We understand they are very different things. Before the 2007 election, Labor told Australians, 'We won't touch super—not one jot or one twiddle.' But Labor could not be trusted. They made 12 different changes to super in government, ripping $9 billion out of people's savings, and they are going to do it all over again. Rebalancing the asset test and assessable income and continuing pension increases at the highest inflation or wages mean that our government is looking after pensioners today and age pension recipients in the future. I commend this bill to the House.

Bill Shorten (Maribyrnong, Australian Labor Party, Leader of the Opposition) Share this | Link to this | Hansard source

Nine times before the last election Tony Abbott said, 'No cuts, no changes to pensions.' On the day before the election, on election eve, in that famous SBS interview—which still has the hardheads of the Liberal Party slapping their foreheads in frustration when they watch re-runs—Tony Abbott said there would be no changes to pensions. Yet today we are here arguing about the government's rotten changes to pensions. But of course we know that the government has form when it comes to telling untruths to the Australian people. Mr Abbott said there would be no cuts to schools—and there are. He said there would be no cuts to hospitals—and there are. He said there would be no changes to universities and their funding—and there are. And, of course, he said, 'No cuts to the ABC and SBS'—and that is exactly what has been happening.

This country is run by a Prime Minister who is willing to look Australians in the eye and lie to them and keep lying to them. This time, just like he did with the debt ceiling, he is using a dodgy deal with the Greens. Here we go. It almost defies belief. The Prime Minister of Australia lectured the previous Labor government for three years, saying he would never work with the Greens. If it means breaking a promise and cutting pensions, Mr Abbott will work with anyone he can, and that includes the Greens. The real problem with the deal is not that he has lied, although that is terrible—but he has certainly lowered our expectations about his honesty anyway. That is not the real issue here. The real issue here is that he has certainly broken his promise to the present and future retirees of Australia.

Let us be really clear about what is happening with this proposed legislation, the Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015. This new round of pension cuts is going to cut the pensions of 330,000 low-income pensioner households. That will be the effect of this law, of this change. This is not people in the future. This is people right now who have worked hard their whole lives. They have made plans and financial arrangements, they have allocated money into term deposits and they have made decisions about their assets based on a set of rules. And what does this government do? It is retrospectively undercutting the ground upon which 330,000 people felt they had a contract with the government of Australia.

In these 330,000, there will be 90,000 thrown off the pension entirely. The message is clear for Australians, as we watch the debate about this legislation: the Liberal Party are coming after your pensions. You cannot trust the Liberal Party of Australia with the interests of pensioners in Australia. They tried to cut the pensions last year. In the shameful 2014 budget, the government changed the indexation rates, and they said that was not a cut, even though their own budget papers demonstrated this was a cut of some significant amount to pensions, for every pensioner in Australia. When confronted with evidence of their wrongdoing, the government chose to defend their position for nearly a year. But eventually, in their concern to save the jobs of Mr Abbott and Mr Hockey, survival instincts kicked in and, at the last moment, they have chosen to drop their cuts to pensions, even though they told Australians for a year that they were not doing what we were accusing them of. Then they decided to change what we had accused them of, because they knew we were right and the government was hurting pensioners.

The real issue here, though, is that, if you are on a pension now, or if you will rely on a pension in the future, the Liberals are coming after you—and it is only the Labor Party willing to stand in front of the Liberal Party steamroller coming to flatten pensioners in this country. The research shows that, with these proposed cuts, if they pass the House and they pass the Senate—where the Liberal Party have their new-found allies in the Greens—half of all new retirees in the next 10 years will be affected. Seven hundred thousand working Australians who will retire in the next decade will be affected by these rotten changes.

The people we are talking about are not 'Tony's millionaires', as he likes to call them. These are ordinary people who have worked hard all their lives. They have paid taxes all their lives. They have paid off their house. They have educated their kids. They have been good citizens in their community. And they have been ambushed by a government that simply cannot keep its word. There is a new generation of Australians currently planning and saving for their retirement, people in their 50s and 60s, who this government is shifting the goal posts on.

The government love to say that they are only affecting rich people. They somehow think that they have become a new Trotskyist front, where they are helping the poor and punishing the rich. The government are making out—

Bob Baldwin (Paterson, Liberal Party, Parliamentary Secretary to the Minister for the Environment) Share this | Link to this | Hansard source

You don't know where you're going, Bill.

Bill Shorten (Maribyrnong, Australian Labor Party, Leader of the Opposition) Share this | Link to this | Hansard source

That arrow got home, I suspect. The government are making out that somehow they are doing poor people a favour and they are going after rich people. That has been their language. But it does not reflect the reality. Most people who are affected by these changes are below average income rather than above. That is right: most people affected by this are below average income rather than above. The wealthiest households to be hit by these cuts, the so-called millionaires that the government loves to criticise—because the standard product from the government when they do a broken promise is to lie about what they are going to do, then break their promise and then blame the victim for breaking their promise—are on a total superannuation income of less than $55,000 a year. That is the household's total income. And that is if they get all their income from superannuation.

Let us have a look at what we are talking about when we talk about the assets of the people that the government have now decided are so scandalously rich that they going to cut the part-pension on them. If you are a pensioner couple, you are going to be worse off if you have assets of over $451,000—not $1 million; over $451,000. That is a pensioner couple. If you are a single pensioner, you start to lose if you have assets over $289,500. The point is: they try and convince us that the asset is somehow the annual income. They make out that somehow the asset is the annual income. It is not the annual income. What you then have to do is divide that asset by what income is raised from it each year.

Let us look at the assets that will take you up to the ceiling of $451,000 if you are a couple or $289,500 if you are a single pensioner. It is your motor vehicle. Let us imagine that some of these couples or these single people have a motor car. So you take some off for that. It includes caravans or boats. So if you are someone who has a tinnie—after 40 years of working, you like to wet your line and go fishing on the weekend—we have got to count that. Or your caravan—heaven forbid that these pensioners ever want a challenge. Also it includes licences. So, if you have a fishing licence, there goes that. If you have household contents, they are included in your assets. So part of the assets which will take you over the part pension accessing arrangements will be if you have furniture—I think it is fair enough if you have furniture—whitegoods, linen and manchester, cutlery and crockery, and kitchen appliances. Of course, these pensioners do not have computers because their NBN is rolling out so slowly they do not need a computer—they would be better off getting two cups and a piece of string and talking to each other. It also has audiovisual equipment, books—

An opposition member interjecting—

You are right. Why would this government believe that you should have assets like books? That might involve reading! The point about all of this is that the pensioners whom this government are heroically attacking for being millionaires actually have much lower asset thresholds. They will keep some of their cash available for emergencies like getting sick and then they will put the rest in term deposits and maybe they will have a bit of superannuation. But under this out-of-touch government, as soon as a single person gets to $289,000 in assets, or a married couple gets to $451,000, including all those items I said, bang, it's over—this government are going after you for your pension.

This government arrogantly say that we do not know what we are talking about and that they have looked at this matter. But we know differently. Westpac and Australian superannuation funds association have said that for a modestly comfortable lifestyle, an individual retiree would want to have about $38,000 in income in today's dollars and a couple would need about $51,000. There is no doubt that the government think that a modest lifestyle is more like $20,000 a year. What they are doing is stranding a whole lot of working people who deserve better from their government.

The case they are making for these changes include, firstly, that there are a whole lot of millionaire part pensioners who are just rorting the system. The evidence shows that that is just not the case. But then they go on to say that there is a crisis in funding the age pension. Yet they do not deal with the fact that superannuation tax concessions are going to outstrip the age pension within four years in terms of the cost to the budget. If you are fair dinkum about making retirement income sustainable policy, surely you should look at the most well-off and look at where those taxes are going.

The government seem to confuse a tax concession with cutting pensions. They think that on one hand cutting pensions for modestly well-off people is a good thing to do and, on the other hand, reducing a tax concession paid for by the taxpayers of Australia from 45c to 30c is the death of democracy, and that that was what the Magna Carta was all about.

The truth of the matter is that a single person receiving superannuation income of $19,000 will lose more than $4,000 every year from their part pension. Who do these people think they are to grab $4,000 off people on very modest incomes? A pensioner couple on a superannuation income of just $25,000 will lose almost $2,000 every year. Say you have two people who have worked hard and they get the pension, and they have $25K coming in income—and let's hope the returns are good that year from the asset because if it is a poor return year, it might be less. These people are already subject to the vagaries of the market with their private investment, their term deposit or their superannuation. This government are going to take $2,000 from their part pension. This government seriously do not know what it is doing. Because if it did know what it was doing then that makes them a rotten bunch of people, even worse. I do not believe they can understand. This backbench have been led up the garden path by their frontbench, by Mr Hockey and Mr Abbott.

Labor are up for sensible changes to the retirement income system. We will support $1.5 billion of the government's proposed saving measures, but we recognise that the real challenge is in fact superannuation. It is the fastest growing tax concession in the federal budget. But as soon as we even talk about it, we get lectures from boy wonder down at the Assistant Treasury end of the benches saying, 'Labor do not know anything about superannuation.'

The government should not patronise the Labor movement on superannuation. We are the only ones who ever voted for increases in compulsory superannuation—three per cent, nine per cent, 12 per cent, and then they rolled back. We have listened to this government lecture us for two years about superannuation, but we know that when it comes to doing something for people, this government took the tax rebate of $500 from 3½ million low-income earners. They have taken it off people with low-superannuation accounts. They have also frozen increases in superannuation on three occasions—before the election and twice since; when they did the deal with Clive Palmer and they keep freezing it in the budget.

The truth of the matter is that this government cannot be trusted with superannuation. But the real challenge when all is said and done is that this government tells lies to the Australian people. This government is telling lies, saying Labor wishes to tax everyone's superannuation. That is just a lie. We attend question time more in a triumph of hope over experience, and I listen to this government parrot lines in their idiotic fashion. When we raise a question and the chief economic adviser says there is a challenge about housing prices in Sydney, they immediately scream Labor want to lower your house price. What a lie. When we say that we want to do something about excessively generous taxation superannuation concessions, the big joke that was introduced by Costello and Howard at the height of revenues coming in, and that we should modestly rein them in, this government say we want to tax everyone's superannuation. What a lie.

When we say to the government, 'Keep a promise for once in your miserly, meagre existence about pensions and don't cut 330,000 people, don't deny 700,000 people and change the goalposts in their planning for retirement,' they say that we are protecting millionaires. The truth of the matter is that we are the only force in this country, the only political movement in this country that stands up the pensioners. We are not just standing up for today's pensioners; we are standing up for the pensioners of tomorrow. We are standing up for the people who are over 50 and heading towards 65 and hoping for a decent retirement. There is no doubt in my mind that these measures in this budget, and this particular proposal, are simply unfair.

Who knows what on earth they promised the Greens. I understand from the Greens press releases that they were promised an extension of a letter-writing offer for six weeks so you can put in your submissions for a further six weeks. What the Greens should realise sometimes is that if the deal looks too good to be true, it probably is not true. The government got up in parliament today and contradicted the poor old Greens by saying they are not going to ever change or look at these matters, never ever—you know the nature of a Tony Abbott promise. Although, maybe the Greens think that when Tony Abbott promises not to do something, they do not have to worry because he probably will contradict his position. But I do not think the Greens will necessarily triple-think this issue.

The real truth of the matter, the real reason why we oppose this, is that there are part pensioners and people who have worked their whole lives who do not deserve to be treated so shabbily by the government. This government should take these changes to the election. They should also make very clear that when they castigate people, they should understand the harm they cause

Someone who has $289,000 in that range of assets from their car to their licences to their furniture to some money in shares in the local community bank and a bit of superannuation—these people do not deserve to have thousands of dollars cut off their income by an out-of-touch government. We will keep fighting for pensioners every day. Every day between now and the election, we will fight for pensioners because—I tell you what—you cannot trust the current government to ever fight for pensioners, now or in the future.

Ross Vasta (Bonner, Liberal Party) Share this | Link to this | Hansard source

I thank the honourable Leader of the Opposition. The question is—

Opposition members interjecting—

Order! The question is that this bill be now read a second time. It is my pleasure to introduce the honourable member for Longman.

Wyatt Roy (Longman, Liberal Party) Share this | Link to this | Hansard source

Thank you very much, Mr Deputy Speaker. The Leader of the Opposition just spoke about present and future generations of retirees in Australia. Let me take a moment to talk about what retirement will look like for the next generation of Australians, to remove from this debate the political desperation and the populism that we just saw from the Labor Party and the Leader of the Opposition, to remove the misleading assumptions and the political cynicism in this debate and talk about a reality that our country faces, a reality that we all face. It does not matter whether you are a Labor politician or a Liberal politician.

The Productivity Commission tells us that, for every Australian that is not working today, there are about 7½ Australians working, supporting through the tax system the welfare entitlements of that person. The Productivity Commission says that our country is transitioning from a phase where we have 7½ people working for every person that is not to a phase where we have only 2½ Australians working for every Australian that is not in the workforce. That is an inevitable demographic challenge for our country. It is an undeniable demographic challenge for our country. It will put enormous strain on the next generation of Australians.

This is not anybody's fault. It is not a problem. It is a great thing that in a simple reality, after the war, lots of Australians had big families, and we had a huge population growth and that demographic bubble. But the reality is that when my generation are heading towards retirement—when the supposed future generation of Australians that the Leader of the Opposition was trying to talk about are heading towards retirement—we will have a very different system in this country because there just will not be as many people working to support the system that we have today. If we go through that transition—and this is not a Labor politician or a Liberal politician saying this—the Productivity Commission says that, simply to support that demographic transition, that demographic bubble, we would have to increase taxes on the next generation of Australians, my generation, and other generations yet to come by 21 per cent.

I do not think any Australian politician in their heart of hearts wants to say that, because of the cheap political populism that we saw from the Leader of the Opposition and the Labor Party in this chamber, because of their own political survival here today, so that politicians of this generation can keep sitting on this green leather on one side of the chamber or the other—because of those self-interested reasons—we are going to leave a country to the next generation of Australians that has less opportunity, where the next generation of Australians pay more tax and ultimately will have to support themselves far more than the current generation of Australians do.

If we are moving towards that system—and we have to, because it is just a demographic reality—there is one thing that will save the next generation of Australians in their retirement. The one thing about which we will be able to say to the next generation of Australians, 'We've left you with enough opportunity so that your retirement can be as good as that of the current generation of Australians,' is superannuation. It is superannuation that will save the next generation of Australians. They will be able to keep more of their own money in their own pockets to plan for their own retirement so that, when my generation hit retirement, we might have the possibility of having a similar retirement to that of the current generation.

In this debate about how we manage the retirement of Australians of all generations, the one thing we should not be attacking, the one thing we should not be changing the goalposts on, the one thing we should not be removing certainty around, is superannuation. It is the saving system for your own money for your own retirement. What is the only policy solution that the Labor Party have in the mix of all this cheap political populism that is focused on the next media cycle, not even really the next election? We know that the Labor Party were mulling over the legislation we have before us for quite some time before they announced their changes. When the political heat came back on the Labor Party because of other political issues of the day, they looked for a very quick political distraction, one that will cost our country dearly if they have their way. The only policy solution that they could then come up with in this mix of pathetic political populism was to raise taxes on superannuation—to raise taxes on your own money.

The Leader of the Opposition, at the dispatch box, just said that superannuation tax concessions are a gift from the taxpayer. Having a lower tax on superannuation is not a gift from the taxpayer; it is allowing you to keep more of your own money. It is not taking more of your own money away. So I do not understand the logic that the Labor Party have when they say they are some sort of fighters for equality and fairness in this country because they are going to take away a gift from the taxpayer. They just forget to tell you that that gift is actually just you keeping your own money. It does not matter whether you are somebody who is heading towards retirement in the next five or 10 years or in the next 50. Surely, as a value system—surely, as a common-sense approach to policy—we should say in this place that one thing that the government should do and aim to do is allow you to keep more of your own money. When the government take away your money and we give a bit of it back, we should not be calling that a gift from the government. You actually had to go to work for years, for decades, to accumulate that money. Not taking away the money that you worked incredibly hard for across the course of your lifetime is not a gift from the government.

In this debate, the one thing I would say is—and I think there are many members of the Labor opposition, particularly the shadow minister, who would in their heart of hearts say—that this is a very sensible policy solution that we have before us today. The reason I think that is that they took a very, very long time before they announced their position on this legislation. They only announced this cheap political populist measure and approach when they had some political heat on other political issues of the day—on border security and on unions—and they needed a political distraction.

The other reason I know in their heart of hearts the Labor Party does not believe this is because the new leader of the Greens, somebody who I think deserves a lot of respect for the decision he has made on this legislation, has shown more economic responsibility than the entire Labor opposition. For a Liberal politician to say that about a Green is an absolutely remarkable thing. For the leader of the Greens to understand that we have to have a fair and equitable retirement system, not just for this generation of Australians but for future generations of Australians, and for him to understand that while the modern Labor Party has just decided to give up on it is absolutely remarkable.

The reason we think this is a fair and equitable system is because, firstly, we are not attacking superannuation in the way the Labor Party would like to; we are keeping your own money in your pocket, so you can plan for your own retirement with your own money. We are not going to take your own money away from you. Secondly, we recognise that the pension system is a safety net for the most vulnerable people. That is ultimately what the pension stands for. When we go through the reality of what is happening with the pension in this legislation, we can see that this gives a boost to the most vulnerable pensioners in our country. The fact that the Labor Party is opposing a package of legislation that significantly increases pensions for the most vulnerable people is just absolutely bizarre and very strange.

Let's walk through the reality of this: since the election of the coalition government the age pension has already increased by $51.80 a fortnight for singles and $78 a fortnight for couples. The age pension will continue to rise twice a year by whatever is the highest available indexation rate. On top of these perpetual increases in this legislation—the legislation that the Labor Party is opposing in this House tonight—170,000 pensioners with modest assets will have another increase of $30 a fortnight. So, for 170,000 Australian pensioners with the most modest assets, there will be an increase on top of those perpetual increases of $30 a fortnight on average. And the Labor Party is opposing it! The Labor Party is opposing this legislation.

On top of these changes, when the Labor Party were in government they introduced the carbon tax, which increased electricity prices on the average household by about $550 a year. So the Labor Party said that, in order to compensate for that tax hit on Australians, they would increase pensions. To compensate for the carbon tax, they increased the pension by $361 a year for singles and $546 a year for couples—even though for the average household it was about $550 a year increase, but that was part of the compensation measures for the carbon tax.

When we came to government we removed the carbon tax. We removed that $550 a year hit on the average household but kept those pension increases. So, while people saw lower pressure on their electricity bills, they kept that $361 a year increase for singles and $546 a year for couples. So singles have had an increase or kept the carbon tax compensation of $361 for singles and $546 for couples. The age pension since we have been elected has gone up by another $51.80 for singles per fortnight and $78 a fortnight for couples. For 170,000 pensioners with modest assets there will be another $30 a fortnight increase under this legislation.

Yet, the Labor Party has opposed all of these measures. They opposed the repeal of the carbon tax. They are opposing legislation which would increase by $30 a fortnight the pension for 170,000 pensioners. And what was their policy solution? In response to all of these fair and equitable increases—so we can keep the pension as a safety net for the most vulnerable people—their policy solution is to increase taxes on your own money. Their policy solution is to increase taxes on superannuation.

As I begin my contribution tonight, for the next generation of Australians it is super that will save us. It is a great scheme that was set up—to give them full credit—by the Labor Party. It was a remarkable achievement in many ways to have a policy that looked decades into the future. Superannuation was set up understanding this demographic change that our country is going to. And, to fix this enormous black hole the Labor Party has in their costings, they will simply tax your own money more.

For the next generation of Australians, we are not going to have to have superannuation accounts like today; we are going to have to have a radically higher amount of superannuation than the current generation of retirees, because the pension system will not exist in its current form. It simply cannot exist in the its current form when there will be 2½ Australians working to support everyone who is not—when we have 7½ working today.

So I commend these bills to the House because they represent a fair and equitable approach to how we can support the most vulnerable people in our community and ensure that they have increases in their pensions. We will not do what the Labor Party is proposing to do, which is attack the superannuation of not only the current generation of retirees but of the next generation of Australians that will critically need their own money to secure their retirement. I commend these bills to the House.

Shayne Neumann (Blair, Australian Labor Party, Shadow Minister for Indigenous Affairs) Share this | Link to this | Hansard source

I speak in relation to the Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015. What an Orwellian title—'fair and sustainable pensions'—when the whole purpose of the legislation is not to put $2.43 billion back in the pockets of pensioners but to rip away $2.43 billion out of the pockets of pensioners. If you listen to the contributions made by the member for Longman and the member for Forde—what courageous contributions they have made in the context of places like Beenleigh and Caboolture. I look forward to seeing the DLs and I look forward to seeing the newsletters that they send out to their constituents in relation to the cuts to the pension that their constituents will receive.

This bill signals a resumption of the Abbott government's attack on Australian age pensions—an attack which commenced, surprisingly, in its first budget in 2014. It reintroduces a number of measures which the government has been unable to legislate for. It introduces measures in this budget which, according to the government, will see 236,000 pensioners worse off by an average of $130 per fortnight or $3,380 per year. Australian pensioners feel aggrieved. They are angry. They were angry at the last budget, but they feel betrayed—betrayed by a government which said one thing before the election and did exactly the opposite after the election.

For example, who would ever forget the now Prime Minister being interviewed live from Penrith football stadium when he promised no cuts to education, no cuts to health, no changes to the pension, no change to the GST and no cuts to the ABC or SBS. So far, it is only the GST that has been able to avoid the Abbott stamp of cuts. Pensioners remember, of course, AM on ABC radio on 5 September 2013, when he said, solemnly:

… I can assure your listeners that there will be no cuts to health, no cuts to education, no cuts to pensions, no change to the GST …

No cuts, no change: these were the words of the future Prime Minister.

Pensioners would think that was probably true, because that blue brochure—Real Solutionswhich Liberal Party candidates and Nationals candidates took around the country was like the Bible to them. They paraded it everywhere. In fact, the future Prime Minister used to hug it—he used to hold it to his chest as if somehow it was a badge of honour! It was definitely going to happen; it was the holy Scriptures for the Liberals and Nationals, who would come into government—and this was what they would do. Nothing about cuts to pensions or changes to pensions was ever forecast in that document. If it were a Biblical text, there was no prophecy in it about what would happen! Pensioners could wade through all the pages of that glossy brochure and they would think that there were no dark plans for their pensions. But, guess what? It did not last.

It is very simple: after the 2013 election promised nothing in terms of changes they learned the brutal truth last year, in 2014. And this bill has to be seen in the context of the 2014-15 budget, because the coalition parties in government broke their promises. The Prime Minister broke his promise—his solemn pledge—to the Australian public. They said that in 2017 they would move the indexation of pensions solely to CPI. That is what they said. Now, all of the members opposite on the government benches know the anger. I have been to a number of their electorates and done forums, and I can say that the anger was palpable amongst those aged pensioners and seniors. They were furious. They knew the consequences of $23 billion being ripped away from their household incomes—$80 less a week within 10 years would be their lot in life. They knew it; they knew that the government had not respected them. They had expected to live in financial dignity in retirement but they were having money ripped away.

They knew it and they let the government know it. Labor stood firm here and in the other chamber. We campaigned ferociously on this and the government knew that they could not sustain it. So they went back to the drawing board and withdrew it. They went back to the drawing board—not, by the way, for making Australians work until 70 years of age; that is still their policy. But the Prime Minister went back to the drawing board on this and so did the Treasurer.

Surely government backbenchers understand what this bill that is before the chamber says? It says that 330,000 pensioners will be worse off and that more than 90,000 pensioners currently on a part pension will lose that pension. You can imagine that there are people who they know who will be affected. There are people in their Liberal and Nationals party branches who will lose this money.

Those opposite know that there are retired small-business operators, retired police officers, retired schoolteachers and retired nurses—people who have worked hard for a living—who are going to lose out. They have put some money away, they have modest incomes and they have modest assets. The Leader of the Opposition outlined some of those assets today—furniture, paintings, a fishing licence, a tinnie or a couple of cars. That is all taken into consideration outside the home. So they are in a position where they have a modest income and modest assets. If they are a single pensioner with more than $289,500 in assets they will have their part pension cut. If they are a pensioner couple with more than $451,500 in assets they will have their part pension cut.

All the money in those assets may not necessarily be geared as income-producing assets. That is what the Leader of the Opposition said. But the Prime Minister and Treasurer would have you think that these people are millionaires—that they are rich. They are engaging in some sort of socialist class warfare over there. It is not. In fact these are average working Australians who have worked hard all their lives, and this government intends to rip that away.

A single age pensioner who owns their home and who has a super income of less than $25,000 a year will lose $8,200 of their $11,800 part pension. How will they survive if they have that level of cut to their income? And an age pension couple who own their own home and receive a combined income of $45,000, with $450,000 each in superannuation, will lose their entire combined part pension of $11,400 per year. That is a second-hand car, a holiday, birthday presents or a new fridge or freezer. We are not talking about rich people here; we are talking about people who battled all their lives and put money away.

But those opposite think that these people are wealthy. It will come back to haunt them. More than 1 million retirees will have their pension cut, including about 700,000 people who are about to retire who are between, say, 50 and 65 years of age. They are going to retire. They are going to make decisions to adjust their financial affairs and put money away to retire. But they are going to have their assets cut in the future. The members opposite have talked about COTA and National Seniors supporting this. They have not come out and supported these cuts, because they know the impact it is going to have. We know the impact because we have seen reports done by Rice Warner Actuaries for Industry Super Australia. They reveal that the cuts will affect about 700,000 people who will retire in the next 10 years. The cuts will hurt couples 10 years from retirement. If they have an income of, say, $62,000 a year, which is about 80 per cent of average income, they will lose out. Those couples will lose $4,300 each per year, or about $112,000 over their retirement. For couples 20 years from retirement the cuts will hurt those on lower incomes, with couples earning as little as $45,000 set to lose $1,500 each year.

People say there is no difference between the major political parties. This debate shows there really is. Those people on the left of the political spectrum who want to support the Greens are shown what the Greens are really like. We have seen in this place the Greens not support an emissions trading scheme with the Carbon Pollution Reduction Scheme. When we tried to take action in relation to people smugglers and the Malaysian solution, the Greens sided with the coalition parties. The Greens sided with the coalition parties on the debt ceiling. And now they are siding with the Coalition parties again. What for? They are doing it to get an extension in relation to an inquiry. They have been sold out. They have been completely hoodwinked by the coalition. The coalition are good used car salesmen. They have sold the Greens a real dodgy lemon here; they really have. And the Greens accept it. I cannot believe that the Greens are so stupid as to accept this particular proposition. This shows that only Labor will protect pensioners. That is what it clearly shows.

There are so many pensioners living in our constituencies who are going to lose out. In my electorate there are just over 14,000 age pensioners. They are going to be affected by these cuts. There are 5,120 part pensioners in my electorate. They are going to be impacted by these cuts. This is a savage attack by the coalition parties on their savings. We on this side will fight for them. We will hold the government to account for these broken promises. This is a government that breaks promises and breaks them regularly. The two budgets they have done so far are full of broken promises. The people will hold the government to account when it comes to the ballot box. We will continue to fight for pensioners. We have suggested sensible changes to superannuation. We have adopted about $1.5 billion in savings as well. The government claims it is not impacting on superannuation but it is ripping away the low-income superannuation contribution for people earning up to about $37,000 a year. It is knocking off $500 a year. It is making those people pay more in superannuation contribution in terms of tax than they actually earn by way of PAYE paid in income tax. How sensible is that? It is dumb. Those opposite take away the rebate for the lowest earners. They attack pensioners who are the lowest income earners on the savings that they are trying to rely on. But they do nothing about multimillionaires in terms of superannuation, when they know very well that we are in a situation where in the next four years superannuation concessions will exceed the pension system in this country. They want to talk about fair and sustainable pension systems. We have a situation where 38 per cent of all super tax concessions go to the wealthiest 10 per cent. They want to be modern-day socialists over there—Trotskyites—and attack the wealthy in terms of pensions. How about they do the constructive thing and make the pension system sustainable? Support it but also make sure the superannuation system is more sustainable.

I heard the member for Longman lauding the Labor Party for bringing in superannuation. Since I have been in this place the coalition parties have never voted for an increase in the superannuation guarantee. They opposed superannuation being brought in in the first place in the Hawke and Keating years. They have opposed it every single time. They have put off the increase in the superannuation guarantee again and again and frozen it. They cannot come in here and say, 'We're going to protect superannuation; we're all in favour of superannuation', when they keep on voting against increases in superannuation. They have never supported superannuation. They used to call it a rort or a con. What platitudes they speak about the fact that they are supporting superannuants. They are not. Their record clearly shows that this is an attack on pensioners. If this were not an attack on pensioners, if this were really supporting pensioners as they claim it is, then it would be a $2.43 billion payment to pensioners, not $2.43 billion taken away from pensioners. That is what the record shows, and that is what this bill shows. That is why it is not fair and it is not sustainable. The title of this bill is Orwellian. This bill should be opposed. All of those members opposite who are in marginal seats should have a good look at themselves. They have been hoodwinked, like the Greens, by their frontbench and by the Prime Minister's office. They should not support this legislation.

Debate interrupted.