Karen McNamara (Dobell, Liberal Party) Share this | Link to this | Hansard source

Australia is a generous and compassionate nation. Our society has been built upon a commitment to help those less fortunate and to look after our mates. Throughout the years Australia has had a strong social safety net for those in need. It is crucial that we ensure the sustainability of this safety net and guarantee that it will be there for generations to come. Over the past 12 months the federal government has spent approximately $150 billion on social services and welfare. This spending provides Australians with pensions, aged care, benefits to families and individuals, and the National Disability Insurance Scheme. Of this, the age pension is our largest welfare payment, totalling an estimated $44 billion in 2015-16. This represents close to 35 per cent of the Commonwealth budget. In the coming decade the costs of delivering these services will increase as our population grows and ages.

The Intergenerational report stated that the number of Australians aged 65 and over is projected to more than double by 2055. Future projections anticipate that by 2055 there will be approximately 40,000 people aged 100 and over. Payments made through age and service pensions are projected to increase each year, and in real monetary terms spending per person is projected to increase from almost $2,000 in 2014-15 to around $3,200 in 2054-55. Currently, this spending accounts for 2.9 per cent of our gross domestic product; without changes to how we deliver the age pension this amount will increase to 3.6 per cent of GDP by 2054-55. This is an unsustainable path for Australia. It is essential that we address the sustainability of Australia's pension system to ensure that we are able to provide for senior Australians in future years. The age pension provides support for 2.4 million Australians and contributes to a broad retirement income system, which also includes superannuation and voluntary savings. This government will ensure that, as our population ages, our pension system is sustainable and fair.

The Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015 introduces several 2015 budget measures aimed at improving the fairness and sustainability of the pension system, and such measures commence from 1 January 2017. It also reintroduces measures previously introduced in bills last year, which are currently before the Senate. The government's measures to provide fairer access to a more sustainable pension will see more than 170,000 pensioners with moderate assets have their pensions increase by an average of more than $30 per fortnight. The government's changes will also see approximately 50,000 part pensioners qualify for a full pension. This bill will rebalance the assets test parameters by increasing the asset-test-free areas and the taper rate by which a pension is reduced once the free areas are exceeded. There will be no change to the existing assets test exemption for the family home.

  Currently, pensioners with substantial assets can still receive a part pension. Currently, in addition to their family home, single homeowners are able to hold assets up to approximately $800,000, and couple homeowners are able to hold assets up to approximately $1.2 million and still be eligible for a part pension. The generosity of this scheme long term is unsustainable. The changes outlined in the budget and contained within this bill will require pensioners with substantial means to draw down a maximum of 1.84 per cent of their assets to maintain their current income levels in retirement. In turn, the government will be better able to support those who need it most. Asset tests are applicable to social security pensions—pension payments are assessed under both income and asset testing, with the test that produces the lower rate applicable to an individual. The pension assets test includes an area for the value of assets, excluding the family home, below which a person's rate of pension is not affected by their holdings. The value of a pensioner's assets above these free areas currently reduces their pension by $1.50 per fortnight for each extra $1,000 in assessable assets over the free area.

Currently, the assets-test-free areas are $202,000 for a single homeowner, $286,500 for homeowner couples, $348,500 for non-homeowner singles and $433,000 for non-homeowner couples. As announced on budget night, the government will increase the assets-test-free areas by $48,000 for a single homeowner, $88,500 for homeowner couples, $101,500 for non-homeowner singles and $142,000 for non-homeowner couples.

This bill also makes amendments to increase the taper rate for pensions, providing that an individual's pension rate is reduced by $3 per fortnight for every $1,000 of assets above the relevant assets-test-free area. The lower taper rate placed an additional 110,000 people on the part-pension and increased the cost to taxpayers by almost $1 billion a year. These measures were introduced at a time when the budget was in surplus and there was $40 billion in the bank. But sadly, due to the economic mismanagement of the previous Labor government, this measure is no longer available.

I am pleased to say that, as a result of this government's budget measures, approximately 90 per cent of Dobell's age pensioners will see their pension remain the same or increase by an average of $30 per week.

Pensioners who lose pension entitlement when these changes take effect on 1 January 2017 will automatically receive a Commonwealth seniors health card or a health card for those under pension age without having to meet the usual income test requirements. With these changes, the government can confirm that plans to link increases in the pension to the consumer price index are off the table. Changing the assets test rather than changing pension indexation will ensure that pensioners with relatively low income or means of support are not adversely affected by changes to improve the affordability of the pension system.

In addition, the government will also ensure that a fairer proportion of superannuants' actual defined benefit income is taken into account when the social security income test is applied. From 1 January 2016, this measure will introduce a 10 per cent cap on the defined benefit income that can be excluded from the social security income test. Present arrangements allow some defined benefit superannuants to have a large proportion of their superannuation income excluded from the pension income test. For example, currently a couple receiving $120,000 per year from their defined benefit scheme would still be able to claim a part-pension of around $7,400 per year. Under the proposed income test, people with such benefits are recognised as being able to support themselves.

Approximately 65 per cent of income support recipients with payments from defined benefit income schemes will not be affected by this measure. It is worth noting that individuals receiving Veterans' Affairs pensions will not be affected by this change. Furthermore, defined benefit income streams paid by military superannuation schemes will be excluded.

The government is strengthening the residence based nature of Australia's social security system. Amendments proposed by this bill will reduce from 26 weeks to six weeks the period of absence from Australia after which a pension recipient's payment is proportionalised. After six weeks, the payment of a recipient who is outside Australia will be adjusted according to the length of the pensioner's Australian working-life residence. To retain their basic means-tested rate while overseas, a pensioner requires 35 years of working-life residence in Australia. This is calculated based upon the period beginning when the person turned 16 and ceasing when the person reaches pension age. Should an individual's period of Australian working-life residence be less than 35 years, their individual rate of pension after six weeks will be adjusted according to their years of working-life residence. After a six-week absence, payment will be based on the length of time a person has resided in Australia during their working life.

This bill also takes the opportunity to reintroduce measures relevant to pensions from the 2014 budget. The first of these measures is to cease payment of the seniors supplement for holders of the Commonwealth seniors health card or the Veterans' Affairs gold card. Additionally, the bill reintroduces two measures currently before the Senate that cease the pensioner education supplement and the education entry payment.

The necessity to ensure the sustainability of Australia's welfare system was entirely brought about by the economic mismanagement of the previous Labor government. The reality is that unfortunately government cannot be all things to all people. We have a fiscal responsibility to all Australians and future generations.

Many senior Australians have worked their entire lives without a superannuation system to support their retirement. We owe these men and women, who built this great nation that we enjoy today, support in their retirement years. The government flat out rejects Labor's plans to introduce a new superannuation tax as part of Labor's plan to raid the retirement savings of older Australians. Minister Morrison has clearly stated, in regard to Labor's plans:

… we will not increase the rate of tax on those who have saved for their retirement.

Our welfare system is there to support those most in need. We owe a great deal to those who have saved for their retirement and are able to support themselves without assistance from the Australian taxpayer. Before this parliament is a robust plan for a stronger and fairer pension system, helping those who genuinely need it.

Members opposite say that there is no need to address the future sustainability of the pension system. This is despite the fact that spending per person is projected to increase from almost $2,000 in 2014-15 to around $3,200 in 2054-55. Instead, they seek to hurt Australia's superannuation system and the retirement savings of thousands of Australians. Labor believe that they can improve the fairness and sustainability of our superannuation system by introducing a new tax on superannuants' annual earnings that are in excess of $75,000. On Labor's own figures, the introduction of a 15 per cent tax rate on earnings over $75,000 will impact approximately 60,000 superannuants. Once again, Labor have fallen back on their obsession with raiding the retirement savings of senior Australians. Unfortunately, this proposal does nothing to address the sustainability of our welfare system or the age pension.

The government has a mandate to balance the budget and spend taxpayers' money responsibly. Our plan, when fully implemented, will get the budget back on track to a sustainable surplus. The measures outlined in this bill will contribute to the budget repair job, saving $2.4 billion over four years. Under the Labor government and their policies, the underlying cash deficit would have reached 11.7 per cent of GDP in 2054-55, and net debt would have reached almost 122 per cent of GDP. Under our proposed policies, it is projected that the underlying cash balance will improve to a surplus of 1.4 per cent of GDP in 2039-40 and then to a moderate surplus of around 0.5 per cent of GDP in 2054-55. Furthermore, net debt is projected to be fully paid around 2031-32. These improvements can only be achieved by making the tough but necessary decisions across all facets of government spending, and it is important that changes do not impact those who can least afford it. The measures contained within this bill strengthen our pension system and ensure that Australia's most vulnerable are protected in their retirement.

Labor simply chooses to ignore the facts. When it comes to Labor's legacy and record of economic mismanagement, they are in utter denial. Under the previous Labor government, spending as a percentage of GDP was on track to grow to 37 per cent, far greater than the previous high of 28 per cent. If left unchecked, this would have resulted in drastic cuts to payments, higher taxes or both. Under our policy approach, expenditure will remain broadly in line with current levels, with real spending to grow at an average rate of 2.7 per cent per annum, thereby reaching a total of 25.9 per cent of GDP. This is where the Leader of the Opposition is exposed as an economic novice. You simply cannot maintain current service delivery without increasing taxes or reducing spending.

We have before parliament flair and sustainable change to the age pension. Our changes look after those who are most in need and protect those Australians who have saved to fund their retirement. The government's measures to provide fairer access to a more sustainable pension will see more than 170,000 pensioners with modest assets have their pensions increase by an average of more than $30 per fortnight. We owe today's senior Australians the best possible retirement, and we owe it to future retirees to ensure that there is a sustainable pension system which will address their needs.

I commend this bill to the House.

Jim Chalmers (Rankin, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

I rise today to also speak on the Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015. I think that, to properly understand this bill that is before the House right now, we need to understand and acknowledge the two most recent previous waves of changes proposed or passed to the pension.

The member for Jagajaga last night, in her characteristically wise contribution to this debate, reminded the House, and I want to remind the House again, that when Labor were in office, in the first term of the Rudd government, Labor did make a big change to the pension: we provided the biggest increase in the pension in Australian history. We did that by making difficult decisions elsewhere in the budget to fund what we thought was an important piece of social and economic justice for age pensioners in our community, who were falling behind and finding it harder and harder to make ends meet. I want to commend the work that the member for Jagajaga did in that period, working with the member for Lilley, Prime Minister Rudd, Deputy Prime Minister Gillard and others on a really important package of reforms to pensions in this country. I was proud to have played a small part in that effort as well. So that is the first big change that I wanted to refer to in this debate as an important part of context when we are considering this bill.

The next change, of course, was contained in the first Abbott-Hockey budget last year. In last year's budget, the Treasurer came in here and announced his plans to cut future payments for Australian pensioners. Of course, Speaker, as you would recall, the government tried to pretend that there were no cuts to the pension, but their own budget papers, the documents produced by the Treasury and by the government, showed that the impact of their plans would be to take $3 billion out of the pockets of Australian pensioners. That means something like $80 a week cut from the pension over the next decade. As a result, I am proud to say, of the hard work of members on this side of the House—including the member for Blaxland, who is at the table—campaigning in communities, suburbs and towns right around our nation, we managed to force the government to retreat from these plans to cut pensions. I also want to pay tribute to the pensioners of Australia who participated in that effort—the people who signed the petition, showed up to rallies, wrote to the minister and played such an important part in knocking over a terribly unfair attack on the retired workers of this country.

That was the good news—that that first effort was defeated. Unfortunately, even though it is a new year, a new budget and a new Minister for Social Services, we have the same callous approach to people's retirement incomes, particularly the pensioners of middle Australia, the people who have done the right thing. They have paid their taxes all their lives, they have worked in their jobs, they have raised their kids and put them through school and uni, and now they are under attack again. This new minister has brought back some of the same measures that failed last year: the abolition of the seniors supplement, the abolition of the pensioner education supplement and the abolition of the education entry payment. On top of this, he has added some cuts of his own: changes to the social security treatment of defined benefit schemes, changes to the proportional payment of pensions outside Australia and, perhaps most significantly in terms of impact, changes to the pension assets test.

The sum total of these changes will rip $2.4 billion from the pockets of pensioners. Single pensioners will be up to $8,000 worse off a year and couple pensioners up to $14,000 worse off a year, and 91,000 part pensioners will lose their pension altogether. According to independent analysis from Industry Super Australia, within 10 years half of all new retirees leaving the workforce will be impacted by this measure. So enough of this false claim that the changes are somehow just dealing with a very small sliver of the wealthiest pensioners. We know from independent modelling that they will impact on half of all new retirees leaving the workforce within the next 10 years.

Despite a promise to maintain the Seniors Health Card for retirees affected by these changes, 91,000 people will lose access to a series of pensioner concession card benefits, including discounts on car registration, public transport, council rates, gas and electricity. The Association of Superannuation Funds of Australia (ASFA) has suggested that the value of these concessions lost could be up to $1,500 per year. These cuts to concessions will disproportionately affect people from areas like mine.

I have 11,803 age pensioners in my electorate, and the message from this government to them over the last two budgets has been clear: 'We are coming after your pension.' If you are an Australian who relies on the pension today, the Liberal Party of Australia is after your pension. Or if you are an Australian working hard, saving for retirement in a few years' time, the Liberals are after your pension.

One constituent who contacts me about the pension assets test frequently—and I want to thank him for his correspondence—expects to lose $150 a week from his part pension. That is nearly $8,000 a year. A single pensioner who owns her own home and is earning less than $25,000 from super will lose around $8,200 a year, a huge chunk of her household income. So it is no wonder that this issue has been so concerning for people in my area. Perhaps no issue in recent months has provoked more phone calls, emails and angry discussions with pensioners in my electorate. And it is on behalf of those pensioners that Labor will not be supporting the most unfair and unwise parts of this bill today.

I spoke earlier about the anger in the community. One reason pensioners are so angry at this government is the insulting way that the Prime Minister and the Minister for Social Services refer to retired people. They are so dismissive, describing them as if they are some sort of welfare bludger or as some sort of lazy person on the public teat. I think that is a terribly offensive way to describe people who have worked all their lives. They have paid their taxes and they deserve to be supported by this place.

The Prime Minister and the Minister for Social Services characterise Labor as 'the welfare party' for standing up for pensioners in our community. We are the party who stand up for people who work all their lives. We are the party who stand up for people who put their kids through school and uni and who paid their taxes, and who deserve some dignity in retirement. Again, they deserve our support in this place. They will get it from us; they will not get it from the government.

Pensioners are asking for some certainty in their retirement incomes. When the Prime Minister promised before the election—not once or twice, not as a throwaway line, but nine times—that there would be no change to the pension and he then cut the pension of around 330,000 Australians, that creates anxiety—not certainty. On this side of the House, we understand one thing: if you attack the pensioners of Australia, you attack middle Australia itself. Now that we have seen this deal done between the government and the Greens—a deal that they said would never happen—we are left, on the Labor side of the House as the only party standing up for pensioners and not supporting most of the measures in this pensions package.

We will not support measures that disproportionately affect people who have worked hard; we will not support the abolition of the Pensioner Education Supplement, that modest fortnightly payment for 41,130 pensioners who are studying; we will not support the abolition of the Education Entry Payment, the $208 one-off payment that goes to recipients of some of the other payments; and we will not support changes to the payment of pensions outside Australia. This issue is red hot in my electorate. People in my area are very concerned about the government's proposal to reduce from 26 weeks to six weeks the period that recipients of pensions can be paid their full pension while absent from Australia. We do not think pensioners who go overseas to visit family members should have their payments cut after six weeks. And critically, as I have said, we will not support the change to the assets test, which doubles the taper rate and which alone makes 327,300 current pensioners worse off. Labor cannot support these grossly unfair measures for retirees and low- and middle-income earners in our community.

But we do understand the legitimate concerns about the budget. We do understand that we need to do all we can to improve the budget bottom line, and that means finding sensible savings. That is why we have agreed to support some of the measures in this bill. They are not the most unfair ones. In doing so, and in acknowledging that we need to improve the budget bottom line, we do not accept the government's characterisation of the age pension as 'unsustainable'.

The latest Intergenerational report projects that the age pension will peak at 3.6 per cent of GDP in the middle of this century, based on no change. That is still lower than the current OECD average today of 7.8 per cent. More generally, we know that Australia has one of the most targeted welfare systems across the OECD. This is something that is celebrated about Australia around the world, that Australia does have a well targeted, sustainable system of social security that other countries would love to emulate.

Welfare expenditure in Australia accounted for just 8.6 per cent of GDP in 2013, compared to the OECD average of 13 per cent and, of course, over the last decade there has been a drop in the number of retirees who rely on benefits as their main source of income from almost 66 per cent to 63½ per cent. So if the government were serious about fixing the budget situation they would not be attacking pensioners, they would be looking to close some of the superannuation tax concessions for the very few at the very top of the system.

We do know—and this is a fact, not an opinion—that the cost to the taxpayer of superannuation earnings tax concessions will almost double over the next four years from $11.8 billion in 2014-15 to $22.4 billion in 2017-18, and continue to grow at a rate that is unsustainable. And, of course, high-income earners, particularly the very highest-income earners, receive a disproportionately-large amount of the super concessions because the difference between their marginal tax rate and the concessional superannuation rates grows as their income increases.

Now, this is not just a Labor opinion: the government's own Financial System Inquiry by David Murray—selected by the government—found that 10 per cent of Australians receive 38 per cent of Australia's superannuation tax concessions, more than the combined benefit of the bottom 70 per cent of Australians. Action in this area has been supported and encouraged by a growing consensus of stakeholders. Again, these are not just friends of the Labor Party: the Australian Chamber of Commerce and Industry, the Association of Superannuation Funds Australia; the ACTU, Industry Super Australia and the Australian Council of Social Service. That is a remarkable consensus among business groups, unions and social service groups that action needs to be taken in this area.

The member for McMahon has proposed a very sensible plan to make the super tax concession fairer and more sustainable by reducing the tax-free concession available to people with annual super earnings of more than $75,000 and by reducing the high-income super charge threshold from $300,000 to $250,000. Together, these reforms would save $14.3 billion over the next decade. And they are ready to go. We have done the homework for the government; we could put them on the table today and they could support them and we would get that $14.3 billion in a way that is so much fairer and so much smarter than the way that the government is going about attacking the pension.

As I said, we will not support the pension cuts that hurt retirees and low- and middle-income earners preparing for retirement. We are willing to cooperate on $1.5 billion worth of savings in the bill, because we understand we need to put the budget on a sustainable footing, but I say again: if the government were truly interested in improving the budget bottom line, they would be supporting Labor's plan to make superannuation tax concessions fairer and more sustainable.

Steve Irons (Swan, Liberal Party) Share this | Link to this | Hansard source

I too rise to speak on this bill. I have listened with interest to the member for Rankin and the member for Dobell this morning, and it is good to see that we are getting some sort of support from the other side—even though it is not their full support. We are trying to fix the budget. The member for Rankin acknowledged this, but he did not acknowledge where the budget fell away—that is, under six years of the previous Labor government. Maybe the member for Rankin, who has now left the chamber, could listen in to hear these words: 'You had your chance for six years and you just messed it up. You took Australia in the wrong direction, and now it's our turn, and that is what the Australian people are looking for.'

During his speech he talked about sustainability. This is obviously an important word, particularly for governments of all tiers and persuasions, but it is a word that, for those six long years, did not just fall by the wayside, which would have been bad enough, it was completely forgotten by those opposite. Instead, what we saw was one unsustainable handout after another, one bad policy implemented after another and one economically burdensome and competition-destroying tax after another throughout the six long Rudd-Gillard-Rudd years.

What this coalition government is doing instead is developing and implementing policies that will put each area of government expenditure back on a sustainable path. We are getting rid of the waste and we are getting rid of the mismanagement, particularly when it comes to social services. And that, members, is exactly what this Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015 will achieve within our nation's social security and welfare system, which, for this financial year, will cost taxpayers $154 billion.

Despite every economist and every review recognising this need for sustainability, those opposite continue to grandstand in this place even though their argument against this bill's proposed changes have absolutely no basis. As members on this side of the House know, Labor's refusal to back our changes has been based on advice from consulting firm Rice Warner, which has just made a submission for the part-pension to be phased out as part of this government's tax white paper process. Rice Warner have also called for inclusion of the family home in the pension assets test if it is worth more than $1.5 million. So there you have it: the fact that those opposite want to try to claim that they are a friend of pensioners is, quite frankly, ridiculous, and we have just heard the previous speaker, the member for Rankin, confirm the Labor Party is coming after people's superannuation.

Rice Warner is not a friend of pensioners, and neither are those opposite. They are voting to deny an average $30 a fortnight pension increase to 170,000 Australian pensioners with modest assets. They are denying an increase to those who need this support most purely so that they can oppose this government's budget measures. You see, members, what is often forgotten in this lucky country of ours is that the government support services, and in particular our welfare system, were not created or designed to provide a wage for those who simply do not want to work—this is despite, as members know, some people viewing subsidies such as the Newstart allowance as just that—and they were not created to give more to those who can afford to provide for themselves.

What government subsidies are established to do is to provide support to those who, without these concessions or assistance, would not be able to uphold the basic standard of living that we as Australians expect every person to have—and those would be food, shelter, clothing. These are not wants, they are basic necessities, but, to put it simply, they all cost money. So when times are good, government can afford to provide additional assistance in the areas of welfare or infrastructure, for example; when times are not good, we as a society need to accept that belts must be tightened and those additional concessions must be reined in. But what appears to have happened in Australian society is this concept of entitlement overshadowing the need for sustainability. As a government, we cannot just focus on what is happening right now; we also have to implement policies that can be maintained in the future.

The reality for Australia's future is that we are faced with an ageing population, creating a situation where less people will be working and paying taxes in the future. And to put this concept into perspective: the number of Australians aged 65 and over is projected to double by 2055. This will mean there will be fewer people contributing to the government's spending measures in key areas such as health, education, infrastructure and the many welfare measures the government has in place, particularly for older Australians. So to ensure we can continue providing these services for our most vulnerable, we have had to make a number of policy decisions to create a welfare system that we can actually afford to maintain.

Before I outline the measures in the bill before the House that will achieve this, I do believe it is important to put on the record my appreciation and the appreciation of the coalition government for all of our partially or fully self-funded retirees. We appreciate the work these people have put in throughout their lives so that they are not reliant on government pension support, either at all in some cases or only in part in other cases. This is a significant achievement, which supports and reflects the true ideals of the pension system specifically and the welfare system more generally—that is, being a social safety net for those who need it and, in particular, for our most vulnerable. It is not an entitlement.

Before I go into the detail of these measures, I will also take this time to highlight that the government has listened to stakeholder and community feedback regarding pension changes and will no longer be proceeding with previously announced changes to indexation. Under the government's reformed welfare system, pension indexation increases will be determined by the higher of the consumer price index, the pensioner and beneficiary living cost index or the male total average earnings.

In terms of the measures outlined in the amended bill before the House, which I must say has been aptly named for being focused on fairness and sustainability, it makes a number of key changes to pensions that were announced in the 2015-16 budget with regard to the assets test threshold by which pension payments are assessed for eligibility as well as the taper rate that is applied to this assessment.

I recently discussed this measure in great detail with members of the Association of Independent Retirees Perth Southern District Branch, which is based in my electorate of Swan, to ensure the partially self-funded retirees in particular understood how these changes may affect them. As I outlined to members of the AIR, what the government has done with the assets test is to again refocus our welfare support toward those who do not have the means to support themselves, bringing it back in line with its original intent. We have achieved this by re-balancing the scale so that additional assistance is provided to non-homeowners and people with moderate assets and less support is provided to those who are better off.

I will, however, firstly highlight that, prior to these announcements being made, a number of interest groups were speculating about whether the value of a person's home would start to be included in the assets test. So I will very distinctly say now that, under a coalition government, a person's home will not be touched. This government views the family home as sacrosanct and it will not be included in the assets test. Pensioners worked hard for that home and we will not let its value whether that is $300,000 or $1 million or $2 million affect the pension they receive later in life.

Unlike those opposite who have now proposed it, this government also will not be taxing retirees' superannuation. Unlike those opposite, we, again, view superannuation as sacrosanct. However, under the changes that were announced rather than just speculated on by the media, more than 170,000 pensioners with modest assets will have their pensions increased by an average of more than $30 per fortnight from January 2017. More than 90 per cent of pensioners will also either be better off or have no change to their pension under the measure. This is largely because the assets-free area of the pension will increase. For example, for single homeowners with assets of $210,000, these people are currently not eligible to receive a full pension; however, under the changes which will see this asset-free area increase from $202,000 to $250,000, more people will therefore be eligible to receive a full pension and will be $1,540 a year better off under the changes at this threshold.

To continue with this single homeowner example, as a person's total assets increase, the rate of pension they will receive will gradually decline. Under current arrangements, a single homeowner will continue to receive a pension until their assets exceed $775,500; however, under the changes this will be reduced to $547,000. Again, to put this into context, we are therefore lifting the threshold for the amount of assets a person can have at the lower end to receive a full pension, so those people with less assets who need more assistance to make ends meet can be helped. And we are taking down the higher assets threshold at the other end so that the maximum amount of assets a person can have and still receive the pension is not as high.

The same concept will also be applied to pension payments for couple homeowners and couple non-homeowners. For those who own their home, the assets test-free area has been changed from $286,500 to $375,000, and the respective cut-out area has been reduced from $1,151,500 to $823,000. In terms of couples who are non-homeowners, this has been increased from $433,000 to $575,000 for the assets test-free area and the respective cut-out area has been reduced from $1,298,000 to $1,023,000.

To summarise these examples, all couples who own their own home with additional assets of less than $451,500 will therefore get a higher pension. Couples who do not own their own home with asset holdings up to $699,000 will also be better off. For singles, the maximum threshold point below which pensioners will be better off will be $289,500 for homeowners and $537,000 for non-homeowners.

The bill before the House also includes a provision to alter the taper rate applied to pension rates. Currently the taper rate applied to pensions is $1.50. As of 1 January 2017, this will increase to $3. The reason why this change has been applied is because, as I said earlier, we need to create a welfare system that is sustainable long into our future so that we can provide for the 23 per cent of Australia's population who are estimated to be over 65 years of age by 2050. This will reverse the lower taper rates which were introduced by the Howard government in 2007 when the budget was in surplus and we had $40 billion in the bank. Because, as members on this side of the House know, thanks to the former Labor government's cash-splashing policies this is no longer the case and this coalition government now has to work hard to reverse this downward fiscal trajectory. With the lower taper rate being applied, this currently costs taxpayers an additional $1 billion a year. Simply, this is no longer affordable. So just like every Australian taxpayer has to balance their budget books at home when their personal circumstances change, this government has also had to develop policies that will once again balance the welfare budget books based on Australia's fiscal standing today, not our fiscal standing from eight years ago. As members know, every pensioner's circumstances will be different. But I believe it is important to highlight to the House that in the very worst case scenario under these changes, those most affected would only have to draw down a maximum of 1.84 per cent of their assets to make up for the loss of their part pension if this were to happen.

For those people who will lose the part pension under these assets test threshold changes, the government has also ensured important safety nets in relation to access to medical concessions continue to be received, including eligibility for the Commonwealth Seniors Health Care or Health Care Card, which provide the same concessional access to pharmaceuticals as those who have a pension card. Once the changes come into effect, this will be automatically issued.

In terms of health care, I also believe it is important to highlight that the government also announced in the budget that we will be investing $1.3 billion over four years to list new medicines and vaccines. This includes the listing of new drugs to help Australians beat melanoma, breast cancer and blindness on the Pharmaceutical Benefits Scheme, as well as extending free vaccinations for the shingles virus to older Australians aged 70 to 79 on the National Immunisation Program. It is important to note that Commonwealth Seniors Health Card holders will, however, continue to receive the energy supplement under the changes to the seniors supplement.

Overall the measures before the House will ensure our nation's welfare scheme is sustainable in the long term and will make vital budget savings for the benefit of taxpayers. We do not want to be in a situation where the government simply cannot afford to provide these payments to those who most need them, so we need to work together to remove the concept of pensions and other subsidies being an entitlement in lieu of taxes paid when working, and instead as the safety net they were designed to be. This mentality and attitude needs to change in Australian society, and it needs to change in this place and the other by those who continue to knock back this government's budget savings measures. If we want Australia to continue to be a prosperous country with vital safety nets, then passing bills such as the one before the House is imperative. And that is why I will be joining with my colleagues in commending this Fair and Sustainable Pensions Bill to the House.

Joanne Ryan (Lalor, Australian Labor Party) Share this | Link to this | Hansard source

I also rise to speak on the Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015. I would open my comments with a feeling of shock and awe that the word 'fair' is in the title of this piece of legislation, because it is anything but fair. For most of us here it is not a surprise to see that this government would label something 'fair' when in fact they understand that at the core it is not fair. Because, of course, they have a track record. They had a completely unfair budget last year which was suitably and appropriately rejected by the public of Australia. One of the reasons it was rejected by the Australian public was that at its core it had some incredibly unfair measures. One of those went to pensions. Of course, we in this place all know about the indexation cut plans in last year's budget. We know because in our electorates pensioners came to see us, because we stood with pensioners across this country day in, day out to beat back that change. Only this year, in the new budget that is supposedly the fair budget, having learnt the lesson that the Australian public will not stand for things that are fundamentally unfair, under this new election emergency budget designed to save the jobs of those opposite we have had to go to the details to find the most unfair measures. But they are coming to light over time. Today is one of those days when they are coming to light, and they are coming to light again around pensioners.

We all remember the Prime Minister as Leader of the Opposition before the election. We all remember all of his promises. We can all recount the broken promises since then and the biggest broken promise of no changes to pensions. Now we are onto the second raft of changes to pensions, having beaten back the first by standing together with pensioners. We understand that this is a broken promise. We understand that this piece of legislation before us breaks that promise by introducing changes to the pension and attempting to introduce those changes in this place today. We understand that, although the title calls it fair, it is anything but fair.

Everybody on this side of the chamber understands that, and I am hoping that through this debate some of our colleagues in the Greens party come to understand that and come to understand that with this government you always have to go to the detail. You have to unpack things like the pensioners at home in my electorate today who are unpacking this debate and finding out how unfair it is. Of course, that goes to the priorities of this government, and we have seen this very clearly. I would urge people who are looking at this debate today and unpacking the detail of this not to single out this one issue but to look at it across the raft, because, as we have seen, this is a government that is intent on hurting low- and middle-income Australians to find its savings while refusing to look at revenue. It is a government that wants to sell this new budget as fair when it contains very unfair measures.

As a Labor member of parliament, I stand here very proud of our history on pensions not just since the government's debacle of its first budget but over history. I stand here very proud of the review into pensions and the action that was taken by the previous Labor government in implementing the Harmer report and delivering the recommendations made—delivering the biggest increase to pensions in 100 years and delivering fair indexation arrangements to keep pace with wages which experts acknowledged were cost neutral. I stand here as an Australian very proud of that history and also with the knowledge that our pension system is the best targeted in the world. I want to immediately suggest that the notion that our pension system is unsustainable should be rejected outright by the Australian public. Pensioners who are looking at the detail of this legislation can rest assured that this side of the parliament will not allow them to be separated from other pensioners as is this government's wont—family against family, pensioner against pensioner, retiree against retiree. We will ensure that the public understands that this is an attack on pensioners, that this is an attack on low and middle-income people in their retirement—not, as those opposite would have us believe, the millionaires.

I would say that this government perhaps learnt something after its very poor first budget. They did learn. They kept telling us that it was the salesman and not the content, but we now understand, because we have different approach to this budget, that it was definitely the content that was rejected, not the sales job. But look at what they do in building this division—we have seen that across legislation this year, trying to divide the Australian people into winners and losers, lifters and leaners. Now we are getting into the nitty-gritty—if we cannot separate the whole community let's go in, family against family, pensioner against pensioner. That is what is happening here. That is what is happening in this piece of legislation. We have heard speaker after speaker. We heard the member for Jagajaga yesterday, we heard the Leader of the Opposition yesterday get out those critical points and put on record what this legislation really means.

This piece of legislation is bad news for low- and middle-income pensioners currently and for those set to retire across the next 10 years. It is not justifiable—it is about priorities. This is a priority this government has. In the process, they have done some really cruel and unusual things. They have tried to run a discourse with the Australian public, first labelling the people targeted in this piece of legislation as millionaires when they are anything but millionaires. But they have gone further than that with the insinuations that people who have worked hard all their lives are somehow a drain, a burden. This parliament needs to be reminded that these people have contributed all their lives to our economy and to our community and that this piece of legislation breaks a contract with pensioners in this country.

We have to be very clear about this bill does. This bill could leave single pensioners $8,000 a year worse off. Some couple pensioners could be $14,000 a year worse off—and this is important because that could be a quarter of their annual income. I think back to images on our television screens back in 2007 and earlier, and how the community rallied behind pensioners when the levels of poverty that some pensioners in this country were living in became apparent. I fear, and I know, that we will see a re-run of those images if some of the measures in this bill go through this parliament.

Make no mistake: this bill will spare some pensioners the pain from last year but it will still have very serious negative impacts for other pensioners this year, and the bulk of it is around the notion of assets. Those opposite are painting a picture that these pensioners and part pensioners are somehow millionaires with millions of dollars worth of assets when in fact that is not the case. The measures in this bill actually go to people with assets of $450,000. I want to dig in to that in terms of pensioners in my electorate and what their assets might be. You have got to look at that assets list, as the Leader of the Opposition did yesterday. Obviously, speaker after speaker will talk about the family home being sacrosanct and how that is not part of this package. That is terrific news. But anything else that is owned, like the furniture in that home, is part of this measure. We have got to look at motor vehicles, caravans, boats and household contents. I can see people keeping their family home but having to sell off the furniture to maintain their income across the year. Also included in people's assets will be their whitegoods, their linen and manchester, crockery, kitchen appliances, computers, televisions and books. It will include their grandmother's engagement ring and any paintings that have been passed down through the family. These will be counted up in those assets.

If you think about part pensioners and what they are likely to have in their asset pool, beyond their family home—if they own a home—then they may have some cash in term deposits and they may have some superannuation, but they will have some money set aside in their everyday accounts. I know that they will have that money set aside for an emergency with their health. They may have some set aside for the health of their family. I know that if you asked my mother—and all of us are well and truly grown up with families of our own—she would say she needs money aside in case one of her great-grandchildren has a medical emergency and the family needs assistance. That is how Australians are wired: to look after their families over time. We have to think about these pensioners and what they have got in their asset pool, because this government is now going to say, 'Because you have got that small amount of money set aside for an emergency for yourself, an emergency for a grandchild or an emergency for a great-grandchild, we are going to cut your income—possibly by up to a quarter every year. This is a clear attack on what has been a social contract: a living income for pensioners in this country.

One of the provisions in this legislation is around those who are set to retire in the next 10 years, those who have been planning and those who have already retired and have planned and set out what their incomes will be. We hear a lot of rhetoric on this side about superannuants and about how unfair Labor's proposals on superannuation are because they have changed the rules. And yet it is okay to change the rules on pensioners because somehow this government fails to understand that the people who are going to be harmed by these measures are the same people. I call upon people to think about what it will mean if we let the government get these measures through, if we let them divide and set aside one group of pensioners and say to them, 'Your income could be cut by a quarter,' and if we allow them to call them millionaires while at the same time they have ruled out any changes to the top end. The Labor proposal is that those people drawing an income down on their superannuation above $75,000 would have a tax concession change at their income above that $75,000—which seems much fairer than this, which would cut people's income by up to a quarter.

We are not talking about high incomes. We are talking about low incomes. We are talking about people on a part pension who have saved hard for their retirement. It does not surprise me—and I am sure it does not surprise the member for the Perth, who is in the chamber—that the people who will be hardest hit by this are women. Of course, women: women who have had time out of the workforce, women with less in their superannuation, women who may have scrimped and saved, women who may have purchased a home in partnership with a husband or partner and who is now in that home as a single pensioner on their own. They will be hardest hit, and they will be hardest hit across the next 10 years as well. There is no surprise in that. So again this government finds a way to divide people and pit Australian against Australian, pensioner against pensioner.

I would like to conclude my remarks today with that track record in mind, and with the Minister for Social Services at the table today. If we look at the childcare packages, the same is happening there. This government has learned something. It has learned to put some sugar on the table and a bottle of vinegar down your throat the next second. It wants to put some sugar on the table and say it is doing a great thing for some pensioners while it categorically hurts other pensioners—the same as it is doing with families on family tax benefits, 18,000 of them in my electorate, who are being demonised as bludgers and leaners. (Time expired)

David Gillespie (Lyne, National Party) Share this | Link to this | Hansard source

I rise to speak on the Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015. So much of what goes through this House affects people in their everyday life—that goes without saying—but this legislation is acutely important in the Lyne electorate because a very large number of my constituents are indeed pension dependent. There have been a lot of conversations about who is getting what and what is changing. Unfortunately, through life situations do change. We have a shifting demographic, we have a massive debt that we inherited and we have a responsibility to the generations to come. When you have that formula, you have to think about the generations of people, like the generation now, who will depend on the pension. Also, the generation of people who will depend on the pension in the future will probably be double the size in some areas. In the Lyne electorate, because we are a coastal community, a couple of generations of proud Australians have decided to migrate up the coast in their retirement. They want to have that period of their life where they can sit back and look at what they have done and what they have achieved. However, many of them are not high-earning retirees. Many of them are pension dependent.

Those on the other side of the House have focused on some of the difficult decisions that the government has had to make, but there is always a quid pro quo. Basically, 90 per cent of the 3.7 million pensioners in the country are going to either be better off or have no change to their pension under this measure. In fact, in the Lyne electorate, the 170,000 people at the lower end of the assets range will be better off to the tune of $30 a fortnight. Some, about 50,000 people, will qualify for a full pension. There are levers being pulled here. We can slice and dice things, but to cut to the chase: some people will be better off. The changes are focused on people who have not much of an asset base to look after themselves in their retirement. They will be in a more secure position.

There are changes to the way assets are assessed and the tapering system. And here you have to keep in context what the members on the other side have proposed in their changes, which are far, far worse and far more draconian. At the moment, with these changes, couples that own their own home, with additional assets of less than $451,000, will get a higher pension as opposed to couples who do not own their own home and have asset holdings of up to $699,000. If you are dependent in your retirement age on having to rent premises, you will be better supported. You can have assets up to $699,000. For singles, the maximum threshold point below which pensioners will be better off will be $289,500 for homeowners and $537,000 for non-homeowners. A lot of people in my area live in retirement villages and do pay weekly rent for the space where their relocatable home, caravan or annex is placed. These people will be more secure in their retirement.

We were criticised in the last budget for changing the method of indexation: the highest of MATAWE or CPI. We chose CPI. The pension has gone up twice a year since the coalition has been in government, and double pensioners are up to $78 better off. So the pension will continue to go up twice a year, but by the same system of the higher of the various indexes rather than CPI. So we have listened to people's concerns and maintained the current system. I do note that, with the pension increases that have happened since the coalition has been in charge of governing the country, the index which has gone up the most has been CPI. In retrospect, there was high wages growth during the mining boom, but since that has gone off the boil the exponential wages growth has slowed. So, in effect, the CPI will probably be chosen in the foreseeable future as the index that is moving up the most.

The assets free area is also being changed. The value of assets that you can have in addition to your family home in order to qualify for the full pension will change, and that is an increase from $202,000 to $250,000 for single homeowners and $286,500 to $375,000 for couple homeowners. This is quite a significant change.

The controversial bit is about the assets taper. It is changing. People who currently have significant assets can have their family home and $1.15 million in assets to draw on. People who have that amount of assets will have a change in their circumstances. There is no way to escape that reality. As I said, we are left with an enormous debt, we have an increasing number of Australians who will require support during their retirement and we have to make it all marry up.

If you are losing part of your pension, it will then necessitate you to draw down on your savings. When you think about it that is why you worked hard and made all your savings—to look after yourself in your retirement. The calculations reveal that those who are affected will be able to replace the reduction in their part pension or their pension by drawing down on their savings by 1.84 per cent of their capital. That will maintain their current income stream. A lot of people would like to preserve their assets and hand them on to the next generation. I totally understand that, but we have a dilemma. The fiscal mess of the nation's finances we have inherited has necessitated these changes.

I have been approached by several members in my electorate about changes to defined benefit superannuation funds and how they are calculated as part of your assets. A defined benefit superannuation scheme is quite different to an accumulated benefit superannuation scheme. Defined benefit schemes deliver much more than accumulated benefit pension schemes do. Some of these were in retrospect very generous. They were designed at a time when wages for people like judges and teachers were not really high. They did a good job for the government teaching or working in the judicial system or in the state public service and they got a pension. That has not changed. What has changed is the amount. Depending on your years of service in the various schemes it can be anything from 50 per cent to 90 per cent of your finishing wage. I admit that that is really quite a great pension. I add for the record that people who have come into parliament here are no longer in a defined benefit superannuation scheme. That is a popular misconception.

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

Seventy-six per cent of us.

David Gillespie (Lyne, National Party) Share this | Link to this | Hansard source

Yes. Young politicians like me are like everyone else in the Public Service. What we accumulate from our superannuation payments is our pension scheme.

Getting back to the legislation in hand, we are changing the amount that is assessed. Some people were assessing it up to 50 per cent of the value, which allowed quite a generous income stream from the government as well as the pension that you were receiving from the state governments. I admit that it will change your situation, but these schemes were very generous and when you look at it in the cold hard light of day the changes are reasonable and, unfortunately, necessary because when we have twice as many people in the coming years relying on a government pension for their sole source of income there will not be enough to go around. Superannuants who are paying for their own superannuation from money that they have saved are saving the government money because they have put aside for their own retirement.

Concession cards will continue but the energy supplement will replace the seniors supplement. That is a significant change, but no-one will lose their veterans' affairs gold card. The seniors supplement is going to change. It could not be sustained. Another difficult decision has had to be made in relation to the pension education supplement. That is quite relevant in the Lyne electorate because we have a lot of seniors studying at the University of the Third Age and other universities. When we have students requiring support at the start of their life, that is a luxury we cannot afford any more when we have such a bad set of finances. We have to make these difficult decisions. Not that education in the golden years of your life is a bad thing—it is an excellent thing, and I recommend it continue.

I have a few other comments I would like to make. Pensioners who do have a change and lose some of their pension entitlement will automatically be issued with a Commonwealth seniors health card indefinitely. A lot of people I have spoken to who were concerned about these proposed changes thought they were going to lose that. I can reassure them that they are not.

The other thing to remember is what members on the other side have proposed. They are going to include the home. A man's home is his castle. They are planning to put the value of your house into the calculations to see whether you have too many assets to qualify for the pension. They like to stand in this chamber and criticise us for really hard decisions. I freely admit that they are not popular with those people who are affected, but overall we will have a much more sustainable system.

Let us look at what members of the Labor Party are proposing. They are proposing that if your house is worth more than $1.5 million it be assessed as an asset. In the whole Lyne electorate I think there would be 10 houses in that price bracket, but most of the people in Sydney or Melbourne who bought their house 20 or 30 years ago would be swept up by this. I am absolutely shocked that the Labor Party could be thinking of including the family home. The asset level they were going to set was $500,000. If you think ours are bitter pills to swallow, watch out for what the Labor Party has in store for you.

Alannah Mactiernan (Perth, Australian Labor Party) Share this | Link to this | Hansard source

Where did you get this information from?

David Gillespie (Lyne, National Party) Share this | Link to this | Hansard source

Rice Warner have been used as a source of advice and their report includes this. I am not dreaming this up; this is in financial advice that they are using for their policy development. Anyhow, that is even before they get to taxing your superannuation. (Time expired)

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

I rise to speak on the Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015. A tip for the listeners out there: as soon as you hear a title such as 'fair and sustainable' your red flag should go up and your radar should ping. Whenever there is an Orwellian title like that—it is sort of like Work Choices—you know you should listen carefully to what is going to follow and you should be very careful about what the government has proposed.

Pensions: we need to get a few things straight about pensions. Firstly, 'pension' is not a dirty word. It is not the dirty word the government would have us believe. The social services minister said just a few days ago:

The pension is a welfare payment, it is there for people most in need, it is a safety net payment.

I, and the Labor Party, see the pension as a recognition of the service that pensioners have given to this nation—for those doing the hard yards and those who have paid their taxes and then been provided with a secure and adequate system of support. The Queensland MP and Deputy Prime Minister, Warren Truss, told a breakfast in Brisbane:

Increasingly the lifestyle—and the savings for superannuation—are being seen as the opportunity to enjoy a few cruises and the luxuries of life—

as if our pensioners and our superannuants are living an incredible life of luxury. These statements are further evidence of a government that is out of touch with ordinary Australians, particularly our retirees. Labor understands that ordinary people rely on their pensions but are not living a life of luxury, particularly those who are paying rent and do not have their own home.

It was the Labor Party that first introduced the pension system to Australia. Take your minds back. At the turn of the century there was no social security system beyond churches and benevolent organisations. Once the colonies federated on 1 January 1901, charitable relief was provided to needy persons by voluntary organisations and in some cases with a limited amount of government assistance or government grants. The main areas of need which attracted charitable assistance were the sick poor, neglected children, old people who were destitute and women who had been deserted or who had fallen pregnant. These people who I have just described were living a horrible hand-to-mouth existence of high mortality rates and subject to the whims of employers and society. The unemployed were assisted by grants of wages or rations in return for relief work provided by the government. It was a Labor government that created our pension system in 1909, only eight years after federation, where we attached intrinsic dignity to humanity. Rather than seeing them as economic burdens to society, we saw people who were doing it tough as having intrinsic value.

In June 1908, Labor exercised the power granted to the Commonwealth upon Federation contained in the Constitution to legislate with respect to age and invalid pensions. Labor introduced means tested flat-rate age and invalid pensions. The new pensions which were financed from general revenue came into operation in July 1909 and December 1910 under Andrew Fisher's Labor government. The new pension was paid to men from age 65 and it was paid to women at age 60, but women did not receive the pension until December 1910.

Obviously our standard of living has improved significantly since 1910. Our health care has improved. Our mortality rates have improved, to a large extent due to Medicare—another Labor initiative—and obviously our life expectancy has increased. In 1910 our life expectancy at birth was 55 years. If you were lucky enough to reach 65 years, your expectation was to live only for another 11.3 years. A male child born in Australia today can expect to live to 80 years. Sorry; it would be higher than that. I beg your pardon. A 65 year old man today would be expected to live for another 18.7 years, and the ratio of workers from 1909-10 to people on the pension has changed significantly. So, as people live longer, the period of retirement has increased. Labor recognised that and we increased the end of life working age to 67. The coalition government has increased it out to 70. Obviously it is difficult—I understand—if you are in a blue-collar job; even a job like an electrician that involves crawling around in the ceiling would be difficult when you are 70 and even worse if you are digging holes or a builder's labourer or something like that.

It now costs more to sustain a person through their retirement, and there are many reasons why people have not accumulated enough savings to do that adequately. That is why Labor took the tough decision along with unions and employers to forgo wage increases for future returns by bringing in superannuation. Industry-wide compulsory superannuation was introduced by the Keating government in July 1992. Prior to that date, unless you had an income substantial enough to allow you a nest egg—and there were many people and families in particular who did not—people were destined to eventually end up on a pension. It was how the system worked prior to compulsory superannuation. Every worker paid taxes, and that allowed the government to look after those who could not afford to adequately look after themselves in retirement. People worked hard and people saved hard, but that did not always guarantee that they would have enough money to see them through the years when they could no longer work. That is why Labor introduced compulsory superannuation. The superannuation guarantee system was part of a major reform package addressing Australia's retirement income policies. Labor anticipated that there would be a major demographic shift in the coming decades which would result in an increase in aged pension payments and would place an unaffordable strain on the Australian economy: the baby boomers generation moving through to retirement. This decision was a precursor to that document called the Intergenerational report. The first one of those came out in 2002. The Labor government made a political decision in the nation's interest that we had to change because of this population that was shifting through.

So Paul Keating's Labor introduced a three-pillar approach. The first pillar was a safety net consisting of a means-tested government age pension system. We understand that. The second one was private savings generated through compulsory contributions to superannuation. The third was voluntary savings through superannuation and other investments. Think of those as three legs on a stool. The stool falls over if we do not make sure that they are all there—the pension, the private super savings and the voluntary system.

Our superannuation industry is a great system—in fact, it is the envy of the world—but we have to remember that that superannuation system was not available broadly until 1992. People reaching the current retirement age of 65 this year were already 42 years old when the superannuation guarantee came in, so half of their working life had already passed by. People who are currently receiving the pension had even less working life to accumulate superannuation. There are other reasons people may not have been able to accumulate enough superannuation to see them through retirement. People may not have had steady employment during their working lives—for example, seasonal workers or, particularly, women, who may have had time out to have children. There were also those greater pay gaps, where women were making less than men on average. I think we have just had the first year ever where the pay gap stopped going down and actually started to go back up again. There are many other factors that would have taken people out of the workforce.

It is arrogant of the coalition government to assume that everyone has had the opportunity to accumulate enough superannuation to live comfortably in retirement. Most pensioners, including part-pensioners, would quantify living comfortably as being able to afford safe, secure housing, eat nutritious food and occasionally see family and friends. That is the Australian lifestyle that we have come to expect—not that turn-of-the-century lifestyle; I would hate to see us take steps in that direction.

There is absolutely no doubt that the superannuation guarantee was a great Labor policy success. It was a difficult solution to a future problem. It was an elegant intergenerational solution. Through Labor's initiative, Australians have accumulated more than $2 trillion in superannuation assets, and this is rising. How did we do that? As I said, unions, employers and the government got together and arranged it. People decided to forgo wages for some of those superannuation commitments—three per cent, six per cent, nine per cent, 12 per cent. Keating's plan was always to get to 15 per cent. Every time we brought in those changes—three per cent, six per cent, nine per cent—those opposite, the coalition, voted against those increases. We have seen, as soon as they have got into government, that they have frozen those increases we would need to get up to the 15 per cent.

The balance sheet for Australians would look a whole lot better if the Howard government had not abandoned the Keating government's 15 per cent superannuation guarantee way back in 1996. That decision has cost the average Australian worker about $250,000 of accumulated superannuation. I again condemn the government's decision last year to abandon the previous Labor government's increase of the superannuation guarantee to 12 per cent, because that decision further eroded the retirement savings of Australians. The rate is now frozen at 9.5 per cent until 2021. I think Wyatt Roy will be in his early 40s by then, almost! This is not a decision that is in the best interests of the nation.

The Labor architect of the superannuation guarantee, former Prime Minister Paul Keating, has described that decision by the Abbott government as representing:

… nothing other than the wilful sabotage of the nation's universal savings scheme. And sabotage for reasons only of prejudice.

The three-pillared approach introduced by the Keating Labor government, vandalised by the Howard government and the current government, is now a bit of a wobbly stool. Remember the three legs—the pension, the private super savings and the voluntary savings. The government's response to their own destruction of it is to hit those who can least afford it. What a surprise! Three hundred thousand pensioners will now have their pensions cut as a result of these changes, and 90,000 pensioners will lose their pension altogether. And remember that other weapon the government had in their armoury, introduced in the 2014 budget—changing the way that the pension increases.

In real terms, this proposal before the chamber will bring $8,000 less for a potential single pensioner with $500,000 of assets that generate income of around $26,000. A pensioner couple would lose $14,000. These are people who have worked hard all their lives. They have saved hard. They deserve better from our government than to be stripped of a pension that would make their life not lavish, not extravagant, just adequate. It is the difference between being able to have some heating in winter and being cold; the difference between eating a healthy diet of good-quality, fresh food and eating cheaper, poor-quality food; the difference between taking part in a range of regular healthy activities and taking part in very few, infrequent social activities.

It was Labor that created our pension system in 1909 and built universal superannuation in 1992. Labor did not stop there. Between September 2009 and 2013 there was an increase in the maximum rate of pension of around $207 per fortnight for singles and $236 per fortnight for couples combined—the biggest increase to the pension in its history. Labor did that, and it is Labor that will continue to protect retirement incomes for all Australians and ensure their financial security. The three-tiered system, the three-legged stool, designed by Paul Keating is starting to look wobbly due to its destruction by the Abbott government and the previous Howard government. They have taken a hacksaw—and the tenon saw is out there—and they are cutting away at one of the legs. It needs to be fixed, but attacking the people who can least afford it is not the answer. It will never be the Australian way as far as Labor is concerned.

Let us have a look at that superannuation system. The reality is: we have around 400 people who have more than $10 million in their superannuation account. That shows that there is a bit of a loophole there and people are exploiting it.

The top 10 per cent of Australians receive more tax concessions than the bottom 70 per cent of Australians combined. There is something seriously wrong with those figures. The superannuation system was not designed to facilitate wealthy people to get tax relief on their millions of dollars of savings. In fact, the Treasurer's own budget papers show the total cost of superannuation tax concessions, earnings and contributions actually outstripping the cost of the age pension by the end of the forward estimates period. That is in the Treasurer's own budget papers. The growth in superannuation tax— (Time expired.)

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

The one thing that Australian pensioners know is that the Abbott government has them in its sights every time it wants to make budget savings. It is important to point out at the commencement of my contribution to this debate that it is always the case that the Abbott government said one thing before the election and then does something totally different after the election. Nothing demonstrates this more than its attack on pensioners.

Prior to the election, it said that there would be no cuts to the pension. Well, we have had two budgets and two attempts to cut the pension. This mean and tricky legislation is an attack on the part pension, in the same way that last year's budget was an attack on all pensioners, when the Abbott government planned to rip $23 billion out of the pockets of pensioners by changing the way that pensions were indexed. Labor knew this was unfair; we stood alongside pensioners, we fought and we won. The Abbott government has backed away from these mean-spirited changes that it had intended to make to the pension.

This Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015 introduces three measures from the 2015 budget. I would have to say that, in the electorate of Shortland, these measures were absolutely the most unpopular measures in the budget. Shortland is one of the oldest electorates in the country. The pensioners and the people living in Shortland are not wealthy people. They are hardworking people—many of them have worked in blue-collar jobs over the years—and they were devastated when they were confronted with these changes. The legislation changes the way that defined benefit schemes are treated, it changes the proportional payment for pensioners outside Australia and it changes the pension asset test, which was a really big issue in the Shortland electorate. In a moment I will share with the House some of the thoughts of part pensioners from Shortland electorate. I am pleased that the Minister for Social Services is in the House, because he will see how these changes are set to impact on the lives of real people—people that have worked so hard all their lives and are now looking at having to totally change the way that they live their lives.

The legislation also reintroduces three measures contained in the 2014 budget—that is, the abolition of the seniors supplement, the abolition of the pensioners education supplement and the abolition of the education entry payment. The education entry payment is quite a small amount of money, and it particularly benefited people with a disability. But unfortunately this government tends to marginalise those people that are most vulnerable within our community—those people that it thinks it can target in some way or another. To say that this legislation is good news for pensioners is an absolute twisting of the situation, because over 300,000 pensioners will be worse off as a result of these changes. It will increase the taper rate from $1.50 per fortnight for every $1,000 above the free area to $3 per fortnight for every $1,000 above the free area—that is doubling it. That will have a real impact on pensioners.

I think this might be an appropriate time for me to refer to some correspondence I have received from constituents. The first one is from Bridget. She and her husband have been saving and preparing for their retirement over a period of 10 to15 years. Everything that they have done has been directed towards ensuring that they have a sound retirement, a retirement where they can actually afford to live. She pointed out to me very clearly that they started their superannuation savings some time ago—but they started late. She only worked part time while her children were growing up and she was not able to put a lot of money into superannuation. As the children got older, she increased the amount of money that she was putting into super, and so did her husband. They did this so that they would reduce their dependency on a state provided age pension. They salary sacrificed, rather than spending their money on expensive holidays, new cars and other luxuries, and achieved their goal by building a retirement nest egg. They did this based on what the rules were at the time, and they did so because they wanted to be self-sufficient and only attract a small pension from the government. They always provided for themselves as much as possible and planned for their future, which included a modest top-up from the age pension. They see the changes to the taper reduction as a very arbitrary decision and one that will really impact on their retirement.

They point out that this legislation will be a disincentive to save for retirement, and it will have its greatest impact on low- and middle-income earners. The new lower and upper threshold levels of the asset test will mean that people will want to spend their money on cars and holidays because there is no point in saving their money. This is something that I think that the Abbott government needs to have in mind.

She talks about how she has had to change her existing arrangements. They will need to keep their super and investment options open and maybe invest in high-risk portfolios, which will mean that they will be more exposed to another GFC-style incident.

While she believes that the government's actions in this area are very harsh, she is quite upset about the fact that the government is failing to look at superannuation. She believes that targeting super tax concessions that unfairly benefit the top 20 per cent of income earners is something that the government should be looking at. She is absolutely horrified that this government can attack part-pensioners who get a very small income, whilst on the other hand ignoring that top 20 per cent of income earners, who, in most cases, will never qualify for the age pension. She believes that the very wealthy top 10 per cent of beneficiaries of the government's super tax concessions have 'undue influence' over the government's policies.

What she put to me was that the 10 or 20 per cent of top income earners were having influence on the area that the government targeted. It was listening to them, whilst it was not listening to the part-pensioners. To stand in this House, day after day, and try to make out that these part-pensioners are wealthy people with a lot of money is ludicrous, and it is a way of further marginalising those people. That is what this government does so well. It stigmatises, marginalises and attacks one group within the community at the expense of another, at the same time ignoring those people who truly are millionaires, who truly are benefiting from this government's very, very top-down approach to any type of changes. 'Do you have a lot of money? We'll leave you alone.' If you are just an ordinary, average Australian, watch out: the Abbott government is coming for you.

I would like to draw from the final part of her letter to me. She states very strongly that she objects to being described as a 'leaner', a 'drain on the public purse' and a 'liability' by the current government. She has worked for the past 46 years, and she points out that there are many hundreds of thousands of people who are just like her. She has made a significant contribution to the growth and success of this nation, something those on the other side of this House choose to ignore. She had a plan to continue working until she had sufficient money in her superannuation—she is over the age of 60 now—and then transition into working voluntarily within the community. She sees this as something that will need to be put on hold, and she is very, very angry about the fact that this government does not penalise in any way the very wealthy individuals in our society who dictate to the government.

I cannot disagree with that. I see that evidenced each and every day here in this parliament. This legislation targets those people who are most vulnerable within our community. Over a period of time, there will be more and more Australians who fall into that group.

I quickly want to touch on another constituent who sees these changes as unfair for part-pensioners. She talks a little about her circumstances. She lived in Sydney. She sold her home and came to Swansea, within the Shortland electorate. She bought a house that was much less expensive. This is very typical of people who move to the Central Coast and to Lake Macquarie. They invest the money that they receive from their house in a term deposit, and then they live off that, along with a part-pension. She points out that the return on term deposits is three per cent at the moment, and she needs to draw on her assets from time to time to maintain her living standard. But, if she were to sell her house and move to Sydney, she could not even afford to re-enter the market there. She finds it quite upsetting that people living in houses worth millions in Sydney are still able to access the pension, while she enjoys rather a modest living standard in Swansea. She finds it rather disgusting, and she sees these changes as threatening health and making people much more vulnerable at a time when they look to government for support.

Those are only two constituents. My office has received so many phone calls from pensioners who have been adversely affected by this—pensioners like a member of the Swansea Lions Club, who does so much volunteering work in the community, who came and said to me, 'This will change the way we live our lives.' I do not think it is right. This is unfair legislation. It is legislation that will attack the living standards of over 300,000 part pensioners, and the impact will be greater over a period of time. Everyone in Australia knows this is a mean-spirited government. It is arrogant and out of touch, and it constantly attacks Australian pensioners—Australians who have made an enormous contribution to Australia over their lifetime—whilst ignoring the flaws in the superannuation system, a system that rewards millionaires. The Abbott government is an unfair government that attacks vulnerable Australians. (Time expired)

Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Link to this | Hansard source

Pensioners are some of the most financially vulnerable members of our community. Although many have a high-value asset, their family home, they tend to be income poor. Most will get by on between $24,000 and $28,000 a year, so they are by no means well off. With an income such as that—$24,000 to $28,000 a year—you are highly susceptible and highly vulnerable to changes in the level of that income, particularly given that, as a person ages, the incidence of requirement for access to health care can tend to grow, increasing insurance expenses and other expenses associated with looking after yourself.

That is why I and my colleagues have taken our time to work through the details of these very substantial reforms and changes to the way the pension system works in Australia. I have consulted many pensioners in the community of Kingsford Smith, and I want to thank those pensioners who have contacted me and my office to outline the details of their concerns regarding what the government is proposing with these reforms. It is on the basis of those consultations and working through the details of the Abbott government's proposed reforms that I have decided, with my Labor colleagues, to oppose the proposed changes to the pension taper rates.

The basic reason why I have decided to make that decision is that these changes are grossly unfair. They target some of the most vulnerable in our community. Two hundred and thirty-six thousand vulnerable elderly Australians will be worse off because of these reforms, by an average of $130 a fortnight. That is $3,380 a year that part pensioners will be out of pocket because of the Abbott government's reforms. A further 91,000 pensioners will lose their pension altogether. That is $4,940 a year that they will be worse off by.

The thing about this reform is that it gets worse into the future. The nature of the change compounds into the future because of the ageing of the Australian population. More and more retirees, into the future, will be affected by these changes, leaving more and more people in our community who are vulnerable. This is something that has been recognised by many who have made submissions to the Senate inquiry regarding these proposed reforms. Industry Super Australia have said that within 10 years half of all retirees will be impacted by these changes. Importantly, most of those people will be women. I think eight out of 10 of those who will be affected by these changes will be women, disproportionately affecting vulnerable women within our community. But, although the government is proceeding with these changes, there are massive taxation concessions that are available to some of the wealthiest individuals in Australia—people with well over $1 million in superannuation balances. Many of those people pay no tax whatsoever on their income from superannuation. So here we have the government wanting to take money from part pensioners, some of the most vulnerable in our community, but they will not touch those who are on some of the largest incomes in Australia and who are the biggest drain on the federal budget and fiscal consolidation and sustainability into the future.

That is why these reforms are unfair, and the best way to highlight this unfairness is through some concrete real-life examples. I would like to outline a few of those now. A single pensioner who owns her own home and is earning $28,900 from interest and earnings on superannuation, under this government's proposals, will lose $8,200 per year. Almost a quarter of her entire income in one year will be lost. But someone who has $1½ million in superannuation and is earning around $100,000 a year in income on that superannuation will not be touched. They pay no tax on that at all. That is unfair. Another example is a couple who own their own home and earn $45,000 together off their superannuation. Under the Abbott government's reforms, they will lose their entire part pension of $11,400 per year. Tony Abbott has his hand in their pockets and will take almost a quarter of their entire income for that year. This reform simply is attacking some of the most vulnerable in our community whilst letting off some of the most wealthy, who are the biggest drain on our budget into the future.

I and my Labor colleagues understand that we need to develop a position in our budget that is fiscally sustainable into the future. We understand that. Labor is deeply conscious of that. That is why we have offered close to $20 billion worth of savings over 10 years, or additional revenue over 10 years, for the budget through reforms to taxation, and in particular to superannuation tax concessions.

I want to talk a little about those tax concessions. The approach that I have taken in respect of this and the holistic debate on fiscal sustainability is: how do we generate more revenue for our budget? How do we generate savings for the budget? But how do we do those things in a manner that is fair? It must be fair. Importantly, it must not attack the most vulnerable and push some of those people into poverty. One way to do that is to have a look at superannuation tax concessions.

Currently in Australia, the wealthiest 10 per cent of Australians—so, those who are in the highest-income quintiles in our nation—get 38 per cent of the tax concessions. That is almost 40 per cent of the tax concessions under the current fiscal arrangements. I can give an example of that. I gave some examples of how pensioners are going to lose but I will also give some examples of how wealthy superannuants are not touched by these proposals.

There are 475 Australians with superannuation balances of more than $10 million—$10 million! Let's assume that they earn an average five per cent return on that superannuation balance, which is an average return in the market at the moment. Such a person would get $500,000 a year from their superannuation as an income. That is half a million dollars per year from their superannuation as an income. Under this proposal—under what the Abbott government wants to do—that person pays no tax on that superannuation income. No tax whatsoever, and yet the government wants to slug part pensioners who are earning an income of around $24,000 to $28,000 a year and take almost one quarter of their income from them in these reforms! How on earth is that fair? How on earth can I, as a representative of my community, say that is fair and agree to these reforms? I cannot and I will not.

We also have 24,000 Australians with superannuation balances of more than $2 million. Again, under this proposal that the government is looking at, they will pay no tax at all and yet the government wants to slug pensioners and those who are the most vulnerable in our community. They want to cut the pension by almost a quarter for some of those people, people who are earning around $25,000 a year. They want to take it off their pension. It is unfair, because it attacks the most vulnerable in our community. It is something that I will not be part of.

And I am not the only person who is making claims about this. Many in industry are as well. In their submission to the Senate social services legislation bill inquiry—this bill—Industry Super Australia said:

… efforts to obtain short-term budget savings by tightening Age Pension benefits are likely to undercut community living standards in an inappropriate way.

…   …   …

ISA-Rice Warner modelling indicates that the proposed changes to the Age Pension asset test and taper rate in this Bill are misguided because they reduce the retirement incomes of Australians who currently are on modest incomes, and whose retirement incomes are projected to be below that sufficient for a comfortable standard of living in retirement. Over time, the changes would adversely affect about 40 per cent of Australians, and 8 in 10 single women.

This will disproportionately affect a vulnerable group within our community.

I mentioned earlier the view of this government that the pensions paid to Australians are unsustainable into the future. I have done a bit of research into this issue. In 2013 the OECD published a report of comparable rates of pensions and social service payments to populations in OECD nations. Currently, Australia spends about 3½ per cent of GDP on pensions, according to the OECD. But when you compare that to other nations in the OECD—like the United Kingdom, which pays six per cent of its income; France, which pays 14 per cent of its income; and Sweden, which pays eight per cent of its income—Australia is in a very responsible and sustainable position when it comes to pensions.

And what are the forecasts for the future? The forecast for the future for growth in pensions in the Intergenerational report in 2010 was that they would stay about the same as they are at the moment—around that level of 3½ to 4 per cent of income. Spending on pensions was forecast to be around the same as it is at the moment. The Intergenerational report of 2010 reported on Australia's comparative position, and it said:

Australia is comparatively well-placed in relation to Age Pension spending because the Pension is means-tested and targets poverty alleviation.

That was the view of the Intergenerational report, prepared for the government on fiscal sustainability into the future. An article in The Australian Financial Review said:

The claim that Australia's welfare system is "unsustainable" would surprise observers in most other OECD nations which spend a much higher percentage of their GDP on social security payments. Our emphasis on flat -rate, means –tested payments rather than earnings –related social insurance has limited the burden on Australian taxpayers.

I think that the key words in that are that our pensions are means tested and target poverty alleviation. This works to ensure that vulnerable Australians do not slip into poverty. That is what the risk is if these reforms are passed in respect of the pension taper rates.

So, we have seen that the pension is sustainable on comparative levels at the moment and that, according to the Intergenerational report, they are forecast to remain at that level and be sustainable into the future. But what about superannuation tax concessions?

The cost to the budget of superannuation tax concessions will grow from $11.8 billion in 2014-15 to $22.4 billion in 2017-18—over the space of four years, a 23 per cent increase in the cost to our budget by superannuation tax concessions.

If you want to talk about the sustainability of the budget in the future, why are we not looking as a nation at superannuation tax concessions? Why is this government targeting the most vulnerable in our community but letting the wealthiest, those with $10 million in superannuation, off the hook by paying no tax? That is because they have an ideological obsession with driving down the value of the pension and we saw that in last year's budget. That is why I and my colleagues will oppose these changes.

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

It is a great pleasure to speak on the Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015, which provides such a stark contrast between the various parties. On one hand, we have Labor, which has an excellent record on pensions when in government. When we came to government in 2007, I remember how many pensioners in my electorate were desperate for the government to address the issue of poverty for those on fixed incomes and pensions. We had known that they had been fobbed off for a decade by the Howard government with one budget trick or another. Every budget pensioners were waiting in anticipation to see what support they would get. No increases were built into the ordinary pension rate. They had to rely on bonuses and on whatever Treasurer Costello and Prime Minister Howard had squirrelled away for that year or had decided to hand out for that year. Every year they waited with some trepidation to find what their annual incomes would be.

When Labor came to government, we commissioned the Harmer review, a very important review. That came back with three things: a $30 per week increase for the single pension and new a indexation measured to look at not just the CPI or average male weekly earnings but also, critically, to look at what a pensioner would buy every week and what costs they would expect to have in their household budget. That is critical because the CPI includes many things pensioners simply did not consume week upon week. As you get older, of course budgets change and perhaps your discretionary income changes. So what you spend week to week changes as well. So that new indexation measure of what a pensioner would buy or consume every week was in the report. There was also a suggestion to lift indexing from 25 per cent of male average weekly earnings to 27 per cent. All of this amounted to the biggest increase in the pension in its history. That is a very important achievement which should be acknowledged by those opposite and by the community. It was not achieved without some difficulty, it was not achieved easily and it was an important such social justice measure to alleviate poverty.

We know that poverty among pensioners went down from 27 per cent to 12 per cent and that was a significant change. It did not eliminate it, something we would all aspire to, but it made a significant dent in what was a very big problem. Obviously prior to those changes, when you did a shopping centre stall or a street stall, you had to talk to a lot of pensioners about the very real and significant pressures on their household budgets and some of it was quite confronting. When you see people who have worked all the life facing poverty, it is a terrible thing.

I spoke in my maiden speech about how confronting poverty is among the elderly because it is too late to get a better job, as the Treasurer would tell some people. It is too late to save a bit more when the bulk of your working life is behind you and you look to the government to do the fair and responsible thing, to make sure the pension is maintained in a manner which can prevent poverty among the elderly.

We know that Australia, alone in the world, did make changes to make sure the pension was fiscally sustainable. That was part of some of the very important economic and social justice measures Labor made while in government, a record we can be proud of and those opposite can look at in some awe.

Against that, we have the Liberal Party. We know what the Liberal Party have been up to. Before the election, the Prime Minister promised not to touch pensions. He said that nine times, including during that fateful interview on SBS. He, and with him all of his backbench, gave a solemn commitment to Australians not to touch pensions. Given the elevated trust among politicians to a sacrosanct matter, you would think he would be very careful with his pre-election commitments and that he would do everything to hold them. Instead, what we have found is disingenuous, gutless, irresponsible, wild and reckless promise-making before the election and decision-making after the election. What did we find? In their first budget, what was the first thing they did? They set out to cut pensions and not by a small amount—by $23 billion. That is what they were going to hack out of the incomes of pensioners, $80 per week. And every time, he stood up in this House and said oh well, they will still go up every September, every March; they will still be going up twice a year. Every pensioner in the country knew he was perpetrating a fiction, a spin, a lie, a scam. They knew they were being scammed and that is why—

Greg Hunt (Flinders, Liberal Party, Minister for the Environment) Share this | Link to this | Hansard source

Mr Deputy Speaker, I rise on a point of order. I would ask that the reference to 'lie' be withdrawn.

Rob Mitchell (McEwen, Australian Labor Party) Share this | Link to this | Hansard source

I think we have seen in recent times that the Speaker has ruled on the position of 'lie' so there is no point of order. The member for Wakefield will continue.

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

You would not want to challenge the Speaker's rulings, would you? I certainly do not. Eighty dollars per week, $23 billion will be ripped out of pensioners' pockets. Everybody knew it was a scam and no amount of points of order are going to change that by the so-called Minister for the Environment. No amount of spin and innuendo and trying to dance round of the facts, which we see constantly in question time, will change that. Many of the pensioners in my electorate watch question time rather diligently and they see through what the government's rhetoric is.

We know what the Liberal Party set out to seek to do and the Labor Party stood in their way and stopped them doing it. And so it was to be with part pensioners. We know, having tried to rip $23 billion out of pensioners' pockets, the government has now attempted to rip a mere $4 billion out of the pockets of part pensioners. Some of those single pensioners will be $8,000 a year worse off under this measure. Others, couple pensioners, will be $14,000 worse off a year—and those opposite want to talk about fairness. On average, 236,000 pensioners will be $130 a fortnight worse off, $3,380 per year. And 91,000 pensioners will lose the pension altogether.

The government's election promises cannot be trusted because they were a lie. Who is helping them implement this rancid, wretched agenda? They finally found the same partner they found for their wretched rejection of the Malaysian transfer agreement, the Greens. What a bunch of fools the Greens have been in this. Not only have they done a deal which undermines the pension, which sees all of this damage and wreckage to part pensioners, which facilitates the government's agenda of hostility against the pension but what did they get for it? If you listen to them, they said that the government will now look at the exploding concessions to wealthy superannuants. But if you listen to the government—the minister must have loved dealing with the Greens—he said no, we have not changed our position'.

So the question arises: have the Greens have been completely hoodwinked on this bill? I am not sure if the member for Melbourne is listed as speaking on this bill but it would be interesting to know his views. It would be interesting to know his views on the Green leadership as well—apparently he has been retired to do other projects. So we have the Liberals and the Greens doing a deal where one party says that they will look at wealthy superannuants and their concessions and the other party says no they will not. We know what will happen here. Everybody in Australia should know what will happen. The Prime Minister will say one thing about superannuation before an election. He will give all sorts of guarantees to those wealthy superannuants before the election. But after the election it will be a different story. It is either that or the Greens have been completely hoodwinked. Either it is secret deal with the Greens, under the table, some sort of arrangement after the election to remove the concessions that wealthy superannuants have—people with millions and millions of dollars—or the Greens have been completely hoodwinked. They are mugs. If this is their deal, well I have got a bridge in Sydney I would like to sell them. What a pack of mugs.

This is, I think, the great dividing line in Australian politics, the great values question in Australian politics at the moment. The question is: whose side are you on? Are you on the side of pensioners? Or are you on the side of people who are very wealthy, who are getting the biggest tax break ever constructed in the history of Federation? That is a pretty clear values proposition.

As Prof. Andrew Podger said, what the government has done is a very tough wealth tax but it only applies to part pensioners. It only applies to those people who have accumulated a bit of super, who have worked all their life, who have done their best to put themselves in a position where they are not entirely reliant on the government. And what the government will do is apply a vicious taper rate to them in conjunction with the Greens—that is who is passing this legislation—while the very rich, the super rich will get this massive tax concession and will be completely let off the hook. How could that be fair? How could that be sustainable?

It is one of two things: either the Greens have got some sort of secret undertaking out of the government to tackle these superannuation concessions or they are mugs. Because what they voted for is a tax on working people, on people who have worked all their lives, so that the very rich can skate out of the system, not just skate out of the system but get a very generous tax concession.

This is one of the great values questions in the Australian parliament and in the community at the moment. The community will rule when they look at the details—just as they did with the government's initial attacks on every pensioner—that this is an attack on aspiration and an attack on working people. It is an attack on all those people in their 50s who are about to retire. They will look at this and they will judge it for what it is: a rancid, terrible deal which attacks the interests of this country.

Pat Conroy (Charlton, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015. The measures in this bill cannot be separated from those in the 2014 budget, because we know that the 2014 budget was one of the most unfair, inequitable pieces of public policy in recent history. Pensioners were targeted by the government as an easy source of revenue, despite the promise of the Prime Minister that there would be no changes to the pension—a promise he made nine times before the last election and which he has most grievously broken.

Labor joined forces with the community and fought against the changes to pension indexation that would have seen up to $80 a week stripped from pension payment rates. In the electorate of Charlton, which I represent, almost 20,000 pensioners would have been worse off had these changes been legislated. They were not, because we won. Pensioners won, Labor won and the government lost. That policy is now off the table but not because the government has seen the error or the inequity in its ways; it is off the table because the government knows that it has been defeated.

However, we may have won the battle, but the war is not over yet. What is before us in this bill is the next phase of the government's push to unfairly target pensioners. The government says that these changes are to tweak the pension assets test. They defend the point by pointing to those with greater assets, who will lose their part pension, and those with more modest assets, who will receive an increase of up to $15 a week. They talk about the way these changes will impact on people right now, but that does not mean they are fair.

In the five weeks since the proposal appeared in the budget, Labor has examined these changes in detail. We reserved our right to take a position on these measures until we were clear on what the impact would be. We have looked at how it will impact people now but also how it will impact retirees in the future. We have worked through the policy details and consulted with the ageing and superannuation sectors to understand the true impact of these changes.

Here is our verdict: Labor will support some of the proposals in these bills but not the most grievous. We will support a 10 per cent cap on income from defined benefit schemes that can be excluded from the pension income test, a measure that will save over $465 million. We will not block the government's move to abolish the seniors supplement. This move will save over $1 billion over the forward estimates. However, we will not support the abolition of the pensioner education supplement, which supports pensioners, including those on disability support pensions and carer payments, with a payment of between $31 and $61 per fortnight as they undertake study. We will not support the abolition of the education entry payment, which supports recipients of Newstart, parenting payments and partner or widow allowances with a payment of $208 per year to assist with study costs.

This is an important point. Those on this side, the Labor Party, will not support removing a payment that helps widows and single parents to get an education. The coalition government is trying to take away assistance for widows and single mothers to get an education and improve their lives. We will not support it. We also will not support a reduction in the portability of the pension and we will fight with vehemence against changes to the pension asset threshold and taper rate. These changes will have a negative impact on those people who are amongst the lowest income earners in Australia, and the number of people adversely affected will significantly increase over time. This proposal in particular is not a fair one, nor is it commensurate with the spirit of the retirement income system.

The government wants to increase the asset threshold above which, with the exclusion of the family home, the value of those assets reduces pension payments. It then accelerates the rate at which payments are reduced, from a reduction of $1.50 in the pension payment for every $1,000 in assets above the threshold to a reduction of $3 for every $1,000. For those whose assets are above the current threshold but below the proposed new threshold, there will be a small gain. Those who will be most affected are single home owners with assets valued at over $250,000 or couples with assets valued at over $375,000. According to the government, there are currently 236,000 people in this category who will continue to receive a part pension but will be worse off by an average of $3,380 per year. A further 91,000 people will move off the age pension altogether, leaving them close to $5,000 a year worse off on average.

Let me repeat that: nearly 330,000 pensioners will be worse off because of this proposal, and the impact will be an average of between $3,000 and $5,000. Some of these pensioners are on incomes of less than $15,000 per year. These are not the millionaires the Prime Minister refers to. Let me repeat this point: nearly 330,000 people, part pensioners who have worked their entire lives, who have planned their retirement, will be worse off on average by between $3,000 and $5,000 because of this inequitable and short-sighted move by the government—a move which I sometimes think their backbench do not fully realise. I really think that their backbench, especially those in marginal seats, have been led up the garden path by their cabinet members in safer seats.

Let's be clear what we are talking about here. We are talking about part pensioners—those who have worked through their entire working lives and have their retirement income supplemented by the age pension. Some people do not receive a pension at all; their retirement income derived from superannuation and other wealth exceeds the level deemed by the government. So wealthy retirees do not receive a pension and are not affected by these changes. For some people the pension is their entire means of retirement income; their other income and assets are deemed by government as being not enough to sustain them through their retirement. So full pensioners are not affected by these changes either—their rate of payment will not change. It is those in between that are affected: those whose retirement income is derived from a mixture of superannuation, the age pension and other wealth. These people are in the centre of the spectrum of retirement income earners, but in comparison to average incomes overall they rank among the lowest income earners in the country.

Let me repeat: we are talking about people with $15,000 of income a year being negatively affected to the tune of $3,000 to $5,000 a year by this move. So let us dispel the idea that these changes are somehow designed to impact the wealthy; they do not. The wealthy do not receive the part-pension and will not be affected.

In the Hunter region, where I am from, more than 37,500 people receive a part-pension. Over 8,000 of them live in the electorate of Charlton. Each of these people will be affected in some way by these changes. Last week I met with Luis, a 74-year-old part-pensioner who lives with his wife in Maryland in my electorate. Luis migrated to Australia in 1968. He took work as a boilermaker and welder in the dockyards before joining the railways as a train driver. He did this job for 37 years, working up to the age of 71—a very high age for such an intense job. Rail work is shift work, mostly at night. He worked 10- or 11-hour shifts, often six to seven days a week. He had tears in his eyes when he talked about the time he missed with his in a new country because of his work commitments. By the time he retired he had close to $640,000 invested in his superannuation fund. He currently receives around $150 a week in age pension. He will lose all of this should these changes go ahead. Luis has an 18-year-old son who has recently started university studies. He says that he had hoped to help his son put a deposit on a house, but with this hit to his income he is worried he may not be able to do this or support his son's further studies. He says that this government is making the wrong choice—that they should not be penalising those who have worked so hard for so long.

This week I received a letter from a constituent which tells the story of Doug, a 79-year-old widower who shares a home at Wallsend with another widow. Both Doug and his partner receive a part age pension. Doug left school at the age of 15 and went to work in the BHP steelworks, which were the foundation of Newcastle. He worked for the company for 45 years and he did his fair share of overtime. Marrying at an early age, Doug and his wife built a home at Waratah West and raised three children. During his working life, he paid his tax and performed his two years of compulsory military training. Later he nursed his now-late wife of 51 years in their home during a prolonged illness until her death from chronic obstructive pulmonary disease.

Doug receives a monthly payment from a rollover pension and a small amount of age pension. He has a modest lifestyle, usually eating out once per week. He does not own any significant assets, apart from his four-year-old Mazda 3. Doug and his partner have always been honest and open with Centrelink. Although they each receive a small part age pension, it is not a significant amount—just enough to help with the council rates and utilities. According to the Prime Minister, the Treasurer and the entire coalition government, Luis and Doug should not be entitled to the modest retirement income that is provided to them by the taxpayers of Australia.

Let us not forget that this is not just a debate about the pension. It is about retirement incomes—principally our superannuation system in this country. Industry Super Australia estimates that between now and 2055 about half of all Australians will not have enough income from their super, their pension and other accrued wealth to live comfortably. In the next 10 years, over 17,000 in the electorate of Charlton will reach retirement age. In the 10 years after that, a further 20,000 or so will also reach retirement age.

These people will have spent their working life accruing superannuation; many of them will have started work around the time compulsory superannuation was introduced by the Keating government in 1992—opposed by the coalition. Superannuation guarantee aside, the government actively encourages people to save for their retirement. The age pension is one mechanism and superannuation tax concessions are another by which the government directly boosts the retirement income of working people. Yet, according to Industry Super Australia, over 40 per cent of people who retire between now and 2055 will be negatively affected by these changes. For couples due to retire in the next ten years, the largest impacts are felt by those earning just under the average wage today, or around $62,000. They stand to lose $8,500 a year between them. For those between 45 and 55 years of age now, who are set to retire in a decade, the impact is even greater. Those earning as little as $45,000 a year today will find themselves $1,500 a year worse off as a result of these changes. Let me repeat that: people on $45,000 a year today, well below the average income, will be significantly negatively affected by this change. This is a measure that is not affecting millionaires; it is affecting the vast majority of working Australians, some of whom earn barely above the minimum wage. In fact, studies have shown that nearly a million people will be affected by these changes in the next 10 years. The coalition government and their lackeys in the Greens are targeting the retirement future of over a million Australians, and they will pay a price for that.

This stands in stark contrast to their agenda on superannuation, because those on the other side are effectively saying, 'We're going to target people on as little as $15,000 a year while preserving vastly unsustainable taxation concessions for wealthy superannuation holders. The government's own budget figures show that in a couple of years time the cost of superannuation tax concessions will outstrip the cost of pensions, they will cost taxpayers over $50 billion a year, and 40 per cent of those concessions will go to the top 10 per cent of wealthy Australians. This is a system that is not only unsustainable but grossly inequitable. That is why the Labor Party has put together a modest proposal to reduce the tax concession on those who receive more than $75,000 a year in income from superannuation.

So let us contrast this. The coalition government and the Greens are attacking those with $15,000 worth of private income and yet they are opposing modest changes that say that if you receive more than $75,000 worth of income from super—typically that means you have more than $1.5 million of superannuation assets—you will have a small reduction in your taxation concession. Despite all the bluster from the Prime Minister, despite all his crude references to 'trousering' things, this is not attacking people's superannuation assets. This is saying that a concession granted to superannuation holders by the government of Australia on behalf of the taxpayers of Australia needs to be reduced slightly in order for it to be sustainable. I think that is a much more equitable and efficient way of reforming the retirement system in this country—a change that actually targets those who can afford the modest change rather than part-pensioners surviving on $15,000 a year.

In the time remaining, I would like to reflect on the role of the Greens in this process. The Greens, yet again, have combined all their hypocrisy about who they protect with doing a dodgy deal with the coalition. Just as they put petty politics ahead of a true solution on the Malaysian resettlement deal, they have put their narrow political interests ahead of a really comprehensive look at the retirement system in this country. They have done a dodgy deal under their new leader, and they have been sold a pup by the minister, Scott Morrison, who must have thought this was the deal of the century. In return for getting $2½ billion of inequitable savings through this parliament, he promised to continue consultations on a taxation white paper for 30 days. What a great deal! It reflects incredibly poorly on the Greens and their attitude to public policy, where they have sold a million retirees—a million retirees in the next 10 years—up the river for short-term political gain. They were truly atrocious in this process.

I am proud to be a member of the Labor Party. I am proud to stand up for part-pensioners. I am proud to stand up for those who have worked their entire life and deserve dignity in their retirement, while the coalition government and their Greens lackeys are attacking them.

Amanda Rishworth (Kingston, Australian Labor Party, Shadow Parliamentary Secretary for Health) Share this | Link to this | Hansard source

Here before the parliament we have the Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015—legislation that is not only unfair but represents two broken promises by the Liberal Party, two broken promises by our Prime Minister. The first is those famous words that then opposition leader and now Prime Minister said: he would make no changes to the pension. This is the second lot of changes the government have tried to make to the pension. Their first budget hit pensioners very badly. The government were going to effectively cut $80 per week out of the pension over 10 years. That would have hit over three million pensioners in this country. It really showed that they had no understanding whatsoever of what it was like to live on a pension. In government, Labor understood this and took a very long-term look, through the Harper review, at retirement incomes and the pension. What was clear then was that so many pensioners were living below the poverty line. So many pensioners were not really able to make ends meet.

I am sure that if those on the other side went out and spoke to pensioners they would know how thrifty pensioners are and how much they make their money work for them. I hear stories again and again about how pensioners put their heater on for only a short period of time so that they do not get large energy bills. That is what our pensioners of Australia do. They have worked hard their entire lives, and it was wrong of the Howard government to let them slip below the poverty line and to have to struggle so much. That was why when Labor came to government we made three important changes to the pension. First was the $30-a-week increase in the base rate of the pension. The second was the introduction of a new indexation measure, the Pensioner and Beneficiary Living Cost Index. We were really looking at an index based on what pensioners and older Australians actually bought. Their basket looks somewhat different from the CPI basket because of their needs in older age. We brought in that index. Third was the increase of the indexation benchmark from 25 per cent of male total average weekly earnings to 27.7 per cent of male total average weekly earnings. These changes not only brought an increase to the base pension but also ensured that the pension kept pace with increased costs of living over time.

Despite saying before coming to government that there would be no changes to the pension, this government obviously tried to go back on that promise and ensured that the pension did not keep pace. They ripped away some of the indexation arrangements and made sure that the indexation did not increase, as Labor had put in place. It meant that pensioners would be worse off. The pensioners of Australia are no mugs. They knew that this government had broken its promise, and that is why the backbench got pretty nervous. I think it was one of the ingredients that led them to knock on Tony Abbott's door and say, 'You gotta go, mate.' Not only was this a broken promise; it also hurt those very vulnerable older Australians who had worked all their lives. Instead of the government listening to this message, we have now seen in this latest budget a new set of proposals that are also unfair, that also hurt many pensioners. They not only hurt current pensioners but also those looking to retire in the future. As a consequence of the measures before the parliament today, 327,300 current pensioners will be left worse off and, of those, 236,000 will have a reduction on average of $130 a fortnight, which equates to $3,380 per year. And 91,000 pensioners will have their pension cancelled entirely. That is a reduction on average of $190 a fortnight or $4,940 a year.

We know that this government is very fond of advertising. They like to advertise their small business measures and they like to advertise their changes to higher education—although, they do not get that advertising quite accurate. Indeed, they mislead a lot of Australians in their higher education advertising. I wonder if the Liberal Party will be transparent and spend some political advertising on all those pensioners who will be worse off. I have got a message for the Liberal Party: they do not have to advertise it, because the pensioners of Australia are well aware of what these changes mean. The weekend after the budget, I was at a shopping centre speaking to pensioners. In fact, I had a line-up of pensioners who were very concerned about these changes. One gentleman illustrated to me that, under these changes, especially with interest rates being so low at the moment, with his small amount of assets and his part pension he will have less income than a full pensioner. He will be living on less income. He was very, very worried about that. He also highlighted—and I think this was very eloquently highlighted by the Leader of the Opposition—that a lot of his assets that were counted in the pension test do not derive income. He particularly highlighted his furniture, to which Centrelink has added a significant amount of money. He highlighted to me that he cannot get any income from his couch or his refrigerator but, importantly, he might find himself needing to sell those assets to make ends meet. I think he tried to sell his couch on Gumtree the other week, and he could not get any money for it. So it is absolutely ridiculous for the coalition to suggest that furniture could be sold and an income derived from that asset. Not only is there no income derived but indeed you cannot get a return from a couch or a second-hand refrigerator. I think this shows that the government is very out of touch.

I had streams of comments come from people in my electorate. I will read some of them. Jessica said:

Elderly people should not be penalised for working hard during their lives to own their own homes. I was a single mother and one of my main goals was to pay off my house on one wage and call it my own. Now that I am 72 and looking after my son with an untreatable disease, I feel that there should be some reward for working hard for most of my life.

David and Lynette said:

Hitting the people who have worked hard all their lives, and paid their taxes, is a bullying tactic. It is just appalling, and will cause so many of us added stress at a time in our lives when we just want to have some peace and financial security: Shame, shame, shame!!!

Cath and Royce said:

The Prime Minister continues to tell us he is not getting the message across. Well he is, we simply don't think the message/policies are equitable.

Graeme said:

Most of us worked hard in our lives and paid our taxes and what for? To suffer mistreatment in our later years? It is obvious that those making these decisions don't have to live on the pension and never will. Shame!

Wayne said:

I condemn the Abbott federal government for not protecting pensioners and for Mr Abbott's tendency to continually break promises that he made when he was campaigning for his job as prime minister.

Lynette said:

You must look after pensioners, those who have worked all their working life and have put back into the community what they can, volunteering etc, like myself, have paid taxes for all that time and should be looked after in our retirement.

I could keep going. I am sure it would be very enlightening for those on the other side to listen to. If they listened to their electorates they would know that these changes are unfair and do hit many of those who rely on this income. They want security. They have made financial arrangements and they certainly were not expecting this broken promise.

These changes will also impact on people looking to retire in the future. Within 10 years around half of all new retirees leaving the workforce will be affected by these changes. For couples due to retire in 10 years time the largest impacts will be felt by those on just below average earnings. They stand to lose $4,300 a year, or $112,000 each over their retirement. This is a significant amount. As has been highlighted by these figures, this will not just affect those currently in retirement but people retiring in the future.

I started by saying that this was two broken promises. One was the broken promise of no changes to the pension and obviously Tony Abbott's broken promise of not doing dirty deals with the Greens. In a press conference on Monday, 27 February 2012 he said:

The … point I make is that I don't do deals.

At a joint doorstop in Perth on Monday, 30 April 2012 he said:

I don't do deals.

The Prime Minister of this country has shown spectacularly bad judgement again and again by doing these sorts of dodgy backdoor deals.

Brett Whiteley (Braddon, Liberal Party) Share this | Link to this | Hansard source

You know exactly what that meant.

Amanda Rishworth (Kingston, Australian Labor Party, Shadow Parliamentary Secretary for Health) Share this | Link to this | Hansard source

I know you on the other side are a little sensitive. I understand you are sensitive. You would be getting the emails like I am getting. You would be getting a flood of upset pensioners, who you said you would stand up for.

Brett Whiteley (Braddon, Liberal Party) Share this | Link to this | Hansard source

There is no deal. You know that.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

Order! The member for Braddon will cease his interjections.

Amanda Rishworth (Kingston, Australian Labor Party, Shadow Parliamentary Secretary for Health) Share this | Link to this | Hansard source

We had on radio 4KQ in Brisbane the then opposition leader saying:

… if you sit down and start doing deals with the Greens, who do you represent? What do you believe?

That question has to be posed to our Prime Minister. My favourite is this quote:

What this Prime Minister did was say one thing before the election to win votes and then do the opposite in a squalid, shameful deal with the Greens to stay in the Lodge. Shame, Prime Minister, shame!

That was the then opposition leader. Who would have thought he would be talking about himself? If we fast-forward a few years then we have a Prime Minister whose quote so aptly represents his position. He has now done a deal with the Greens to stay in the Lodge. That is shameful and a huge broken promise.

Brett Whiteley (Braddon, Liberal Party) Share this | Link to this | Hansard source

The Prime Minister has not lived in the Lodge yet.

Amanda Rishworth (Kingston, Australian Labor Party, Shadow Parliamentary Secretary for Health) Share this | Link to this | Hansard source

Unless he reverses his position, I am not sure he is going to get there. This is completely unfair. It is a complete broken promise.

Brett Whiteley (Braddon, Liberal Party) Share this | Link to this | Hansard source

You deal with your own battles.

Amanda Rishworth (Kingston, Australian Labor Party, Shadow Parliamentary Secretary for Health) Share this | Link to this | Hansard source

I understand why the member for Braddon is so sensitive. Of course he would be getting the emails that I am getting—email after email—and people coming to his electorate office one after another saying that this is unfair and showing him the calculations of how these pensioners will be worse off. I have had so many pensioners come and show how they will be worse off under this attack by the Liberal Party. It is very shameful that they will not look at those at the highest end with huge amounts of superannuation and not look at tax concessions that are unsustainable in the long-term and do eclipse spending in the budget. They will not look at that. Why won't they look at that? I am not sure. Instead, they will attack low- and middle-income pensioners who rely on that extra help. They have worked hard all their life.

Finally, I would like to make the point that I do not believe that these pensioners are welfare bludgers. Those on the other side have characterised them as welfare bludgers who need to be cut off from this welfare because they are just taking so much. I mean, quite frankly, that is an insult. Those on the other side should be embarrassed to hear the Minister for Social Services characterise our hard-working pensioners, who have worked hard all of their lives—as I have illustrated by so many in my electorate—as welfare bludgers. That is an absolute shameful position. They need to rethink this policy. Unfortunately with this dirty deal with the Greens, there is only one party in this place that will stand up for pensioners. That is the Labor Party. We are proud to stand up for pensioners, we will continue to stand up for pensioners and we will be their voice in this parliament because the Liberal Party and the Greens have abandoned them.

Clare O'Neil (Hotham, Australian Labor Party) Share this | Link to this | Hansard source

It is a huge privilege to speak this morning on the Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015. I do so on behalf of many thousands of older Australians and pensioners that I represent as the member for Hotham. I take that responsibility very seriously. In many ways, I am very much in awe of some of the older people who I represent in terms of what they have done to build up this incredible country that we get to play a privileged role in.

I do not want the House to forget about the people whose incomes are affected by the legislation that is before us today. They created so much of what we love about Australia. One of the things that is so much at the heart of the Australia they created is a feeling of egalitarianism amongst Australians. We have a social compact in this country that says that when you grow older, when you have worked your whole life, when you have paid your taxes and when you have worked to build this country then the government is going to do its part by helping ensure that you live a reasonable retirement. And it is not a retirement that merely keeps people with enough food on their plate; that is not sort of country that those people worked for and that we represent in this House. We want in Australia, as the country grows more prosperous, for everyone to benefit. That is fair. That is the fair way of doing things. That is why I am proud to stand today to say that Labor will not be supporting the essential measure of cutting pensions for part pensioners that lies at the heart of this legislation. We will not do that to the pensioners who rely on government to live in a reasonable retirement.

The conservatives on the other side of the House have a lot of things to say, a lot of talk about how much they respect older Australians and want to protect them in their retirements. But there is a big difference between the rhetoric that you hear on this side of the House and the rhetoric that we hear on the other side of the House—that is, as well as talking the talk we in Labor walk the walk. Older Australians, as I have said, deserve a retirement does not see them living in poverty. When Labor came to government under the Rudd government one of the first things that the government did was ask the department to come back to the government with a proposal that will see retirement incomes for older Australians lifted up, and the former minister for social services, Jenny Macklin, was in charge of that process. What we found was something very concerning and that is that when the Howard government left office there were literally millions of older Australians in this country—having worked their whole lives, paid taxes their whole lives, raised children, built business—living in poverty. What the Rudd government did was make the increase to the base pension rate that occurred in this country for a hundred years. In a single act, that government brought millions of Australia people out of poverty.

We have something in economics called revealed preferences. That is a way of saying that the only way to really judge what people really value is to watch their behaviour. I would say to you that, if you look at the behaviour and the record of Labor, you will see that every time a Labor person comes into this House and talks about how seriously they take the representation of older people in their electorates we back that up with real policies and real protections for people. That is not what we see today by people on the other side of the House.

Let me get to what we have seen from this government so far. We saw the conversation about retirement incomes very much as one of the 'unity ticket' items of the last election. We saw Tony Abbott walk around the country and say to Australia's pensioners that there would be absolutely no changes to pensions and no cuts to pensions. He said it over and over and over again. Yet what we have seen since this government has been in office is more or less constant attempts to try to change and cut pensions. They have tried it one way and they have tried it other ways. They have done many other things that will affect essentially the retirement incomes of Australians such as the GP tax and raising the cost of meds for older Australians, and we know that all of these will increase the burden and the cost of living on older Australians.

What we have seen Labor do is fight them on really all of the essential measures that would see the incomes and standard of living of older Australians cut. Again, I would say that I am really proud of that. What we have seen the government try to do is cut the indexation rate of pensions. That would have seen, over 10 years, older Australians $80 a week worse off as a consequence of that change. The policy itself was an absolute shock, coming as it did on the back of a sort of parade around the country stating the level of commitment the Abbott government would have in protecting retirement incomes. But what really upset me about this was the falsehoods and the lying that went on about what this change really was. During question time after question time we sat in this chamber and we asked the Prime Minister why he was cutting the indexation rate of pensions, and he would stand up and talk about how pensions were going up. You can probably hear it ringing in your ears as I can.

Older Australians are not silly people. They are not the silly people that the Prime Minister would take them for. They know that when the indexation rate of their pension is being cut, over time that means that they will end up with less money in their pockets than they otherwise would have. I hope that what we see during the course of this debate about retirement incomes is some level of respect shown to older Australians and that when you are cutting their pensions you will be up-front and tell people that is what you are doing. With the changes that we see in the bill before us, we know we are going to see 327,000 current pensioners worse off and over time about half of all pensioners will be worse off as a consequence of the changes.

I was very lucky to host a morning tea in the last few weeks for seniors in Hotham. The shadow minister, the member for Jagajaga, was there with me. You probably will not be surprised to know that we had a flood of people. We had about 150 people there with 90 people on a waiting list because we were not actually able to fit the people that wanted to be there in the room. And I would say that, despite the upbeat nature that we usually see in our older Australians, there is a real feeling of deep anxiety out there amongst our seniors—and they have got pretty good reason to be anxious, because all we have seen on the other side is constant attempts to reduce their incomes.

It is an important moment today for us to pay tribute to the work of the member for Jagajaga and what she has done for older Australians over the time that she has been in this place. Although the people in the room with us at the morning tea did feel a lot of anxiety, everyone who was there—and I think everyone in this House—would acknowledge that the member for Jagajaga has fought with everything she has to protect the incomes and the quality of life of senior Australians. I think the seniors who were at the morning tea are so grateful that there is a politician at a senior level who they know they can trust, who they know is going to go into bat for them. She is doing that again in Labor's stance on this legislation today.

We were able to talk to a lot of seniors who will be affected by the bill that is before the House today. A lot of part-pensioners were there. Again, there was a lot of anxiety about what this legislation is going to do to their incomes. I want to make it really clear that the people who were there with us at the morning tea are not millionaires—absolutely not. They are people who have worked in ordinary jobs for their whole lives, people who have been prudent, people who have put aside a bit of something extra where they can and people who, over time, have been able to put themselves in a position where they are accessing a part-pension and not a full pension. The implication that the people affected by this bill are millionaires is brutally offensive, and I think, again, just getting the politics of this so wrong. I will give a bit of free advice to those on the other side. The people who will be affected by this legislation know who they are. They know they are not millionaires. You going out there and telling them how well-off they are and how little they need government support is neither going to get the legislation across the line nor win you any votes at the next election.

The Leader of the Opposition and the shadow minister have done a lot of detailed policy work together that has helped us reach the conclusion that we will not be supporting the central change in here about the part-pension. As the detail of the legislation has become clearer and as we have seen some modelling that has been done, we have seen a lot of reasons that this is a really regressive proposal. There are people in Australia, single pensioners, who will be $8,000 worse off as a consequence of the measures in the legislation here. Couple pensioners will be up to $14,000 worse off. Two hundred and thirty-six thousand pensioners will be $130 a fortnight worse off. That is almost $3½ thousand a year. A further 91,000 Australians will lose their pension altogether. Modelling by Industry Super Australia has shown that, as a consequence of this legislation, in 10 years time half of all future retirees will end up with less money in their pockets than they would have had otherwise.

There are a lot of confusing things about our retirement income system. I would say to people who are listening at home, trying to make their own view about these proposals: what you really need to know here is that this is a cut to the pension of $2.4 billion. Whatever is going on here, whatever machinations there are, whatever different proposals come forward over the coming months, just remember that this government is trying to cut your pensions, and that is what it has been trying to do since it was elected to office.

I referred before to some of the equity issues here. The government has been saying again and again in question time that this is a policy that is about millionaires who are accessing a pension. NATSEM, which is one of the most robust and authoritative modelling organisations in Australia, has looked at the impact of this legislation on older Australians, and it has found that $8 in $10 of the savings in this measure will be paid for by the lowest fifth of income earners. So I just want to absolutely put this to bed. This is not about millionaires; this is about middle Australians who are going to see significantly lower incomes and cuts to the pension as a consequence of what is in the legislation.

We do need to have a conversation about retirement incomes in this country, and Labor is trying to be a constructive voice in those discussions. We know that over the next four years we are actually going to see the tax concessions that apply to superannuation outstrip the amount of federal budget that is going towards the pensions. Most commentators in Australia agree this is becoming unsustainable. A tax system which was trying to do something very sensible, which is encourage Australians to put money into their super, will see tax concessions actually outstrip our expenditure on the pensions. We do need to look at this, and Labor wants to have a serious debate and a serious policy conversation about whether this can continue.

A third of superannuation tax concessions go to the top 10th of income earners, and 70 per cent of capital gains tax concessions and one-third of negative-gearing concessions also go to this group. So I think we do have an issue to address here. Labor wants to have a real conversation about it, but the narrative and the rhetoric that are coming from the other side are not actually going to any of these important strategic fiscal issues that we face as a nation. What we have heard from the other side since they were elected to government is a lot of noise about how unsustainable the budget is, but then the first thing they did was get rid of a tax that applied to some of the biggest-polluting companies in Australia and change our carbon-trading system into something that means that we now have taxpayers paying big polluters to try to reduce their pollution. They ditched the mining tax and they spent the next two years crying poor and saying that pensioners are the ones who have to pay—when effectively the two first things they did as a government cut taxes to some of the biggest companies in the country.

When we have the discussion about retirement incomes which I hope will follow in the coming months, I want to make it clear that Labor is not going to be buying into this bogus dichotomy between superannuation tax concessions and the pension. If we were to take the government's argument that this distinction exists to its logical conclusion, we would not really have a tax system in Australia. A lot of Australians with high incomes actually acknowledge that a lot of their wealth comes from the fact that government provides lots of infrastructure and other things that have allowed them to run successful businesses and so on. Many Australians have planned for their retirement on the basis of a fair pension, and, as Labor people, that is what we will be fighting for.

From what we hear in question time and in these debates, there is a bit of an undercurrent that people do not do need or deserve certainty, because they are relying on the government for a pension. That is absolute tosh, and I will be fighting against that rhetoric. If anyone needs certainty about their incomes in this country, it is pensioners, because at their stage of life they cannot do anything to change their incomes. That is why government needs to be clear about what it wants to do and be consistent in the policy that it puts in place.

I am very pleased and proud to continue a Labor tradition in this House, which is standing up for Australia's pensioners, standing up for fair retirement incomes and standing up for the seniors that I represent in my community of Hotham. I am very pleased to say today that yet again we will not be supporting cuts to pensions, and yet again we are standing up for senior Australians.

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for External Territories) Share this | Link to this | Hansard source

I thank the member for Hotham for her very erudite contribution to this debate on the Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015. She highlighted a range of issues around retirement incomes and referred to the obvious dichotomies between the superannuation system and the age pension.

I actually see this debate as being more about the Prime Minister and the government than about pensions. Where we are at today says a lot more about them than it does about anything else. We have had a series of issues emerge; we know that prior to the last election the Prime Minister made it very clear to the Australian people, on a number of occasions, 'There will be no cuts to pensions—I repeat, no cuts to pensions, no cuts, no change.'

Those who may be listening to this debate will well recall that when the Prime Minister was the Leader of the Opposition he embarked on what I believe to be a really scurrilous and dirty attack upon then Prime Minister Julia Gillard. He did this around the issue of the environment and the system which was put in place by Labor for making sure that big polluters paid. I well remember the current Prime Minister standing at a demonstration at the front of this place and behind him was a big sign that said 'Juliar'. He did not seem to be embarrassed by that—he did not seem to be embarrassed by that a bit—because what it did for him was confirm his depiction of the then Prime Minister. His years as opposition leader were marked by these sorts of really venomous attacks on the individuals who were the prime ministers at the time, either Kevin Rudd or Julia Gillard.

He attacked them on issues to do with honesty—he made great thing of it. Of course, it was picked up by the shock jocks around the country and all sorts of lunatics who adopted the same propositions. They canvassed it in the community, trying to depict the successive prime ministers and the Labor government as being dishonest. He came into this parliament having said to the Australian people that there would be no cuts and no changes to pensions. Yet, last year, he determined to take the razor to pensions in this country through his plan to cut indexation arrangements, which would have left every single pensioner in this country worse off. Over 10 years this cut would have amounted to $80 a week. He did not blanch about that at all; he was not embarrassed. He just stood up at the dispatch box and said, 'We're doing this because it is for the good of the nation, and the country needs it.' That is despite the fact that, immediately prior to the last election, he guaranteed Australian pensioners that there would be no cuts.

I take you back to his role as the Leader of the Opposition and that demonstration in front of Parliament House. Would it be fair for us to now put signs behind the Prime Minister which describe him as a liar? Would it be fair for us to attack him, because of his dishonesty, in the way in which he attacked the then Prime Minister? Would it be fair for us to attack him as he attacked the former Prime Minister, talking about her 'fraudulent behaviour' or the government's 'fraudulent behaviour'? I suspect that those listening would say: to be consistent, if he is arguing that dishonesty is a key issue around prime ministership, that we cannot have a person who is dishonest as our Prime Minister, that we cannot have someone who tells lies as our Prime Minister, why is he still in the position? That is precisely what he has done. He has done this without any embarrassment whatsoever. He just pouts his lips and struts around the place arrogantly as if it did not matter, as if he can say what he likes and do what he likes whenever he likes without fearing any retribution or without acknowledging any inconsistency or the fact that he is actually telling lies to the Australian people. 'By their actions we will know them.' And by the government's actions we know them.

As successive speakers have said in this debate, what they have done through the measures in this piece of legislation—as they tried to do last year—is attack the incomes of Australian pensioners. Last year's cut would have seen $23 billion ripped out of the pockets of Australian pensioners. That is not a problem for the Prime Minister—just another broken promise, just another lie. And we all know, including the pensioners around the country who might be listening to this debate, that that would push many pensioners into poverty and hardship.

I am really proud of being a member of the Labor Party. I have been a member for 40 years. I first got elected to this place in 1987 and not one day has passed when I have not been proud to be a member of the Australian Labor Party and fight for the good people of Australia, particularly those most in need. People work hard in this country understanding that, at the end of their working life, there will be income support, through a pension system, which they can rely on and plan for. Of course, it was Labor who made dramatic changes to the income levels of Australian pensioners. It was not the conservatives. It was not John Howard. And now we are seeing a very vicious attack by the current Prime Minister on the incomes of Australian pensioners and their families.

Last year, we fought and we won. We stopped the government from imposing the proposal to change the indexation arrangements for Australian pensioners—for now anyway. But I do not believe that any Australian who understands what the Prime Minister has been doing this space will ever trust him again. How can there be any basis for trust when he deliberately lies to the Australian people? In fact, it is almost as if—

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

Order! I would ask the member for Lingiari to withdraw.

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for External Territories) Share this | Link to this | Hansard source

With respect, what am I withdrawing?

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

The member for Lingiari knows very well that that is an unparliamentary term, and I would ask him to withdraw.

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for External Territories) Share this | Link to this | Hansard source

I withdraw.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

I thank the member for Lingiari.

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for External Territories) Share this | Link to this | Hansard source

Lies have been told by the Australian Prime Minister—

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

Order! The member for Lingiari knows that that is an unparliamentary term. I have asked him to withdraw once. I warn him and I ask him to withdraw again.

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for External Territories) Share this | Link to this | Hansard source

With respect, I withdraw. But lies have been told to the Australian public—

Michael Keenan (Stirling, Liberal Party, Minister for Justice) Share this | Link to this | Hansard source

Oh really!

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for External Territories) Share this | Link to this | Hansard source

Aren't lies being told to the Australian public?

Michael Keenan (Stirling, Liberal Party, Minister for Justice) Share this | Link to this | Hansard source

No, they are not!

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for External Territories) Share this | Link to this | Hansard source

You have not told lies to the Australian public! Are we listening to this? What was said before the last election? You said there would be no cuts to pensions. What have you done since the election? If they are not lies, what are they?

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

Order! The member for Lingiari will resume his seat. The member for Casey.

Tony Smith (Casey, Liberal Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, on a point of order: for a tightly defined piece of legislation it is the custom of this House that we have a free-flowing debate. This debate has been more than free flowing, and I think the minister at the table has been more than patient as the speaker has strayed very widely—

Lisa Chesters (Bendigo, Australian Labor Party) Share this | Link to this | Hansard source

How is this a point of order? What are you referring to?

Tony Smith (Casey, Liberal Party) Share this | Link to this | Hansard source

I do not need your interjection. Frankly, I cannot understand what you are saying anyway.

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for External Territories) Share this | Link to this | Hansard source

Have you finished?

Tony Smith (Casey, Liberal Party) Share this | Link to this | Hansard source

No, I have not finished.

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for External Territories) Share this | Link to this | Hansard source

Have you got a point of order?

Tony Smith (Casey, Liberal Party) Share this | Link to this | Hansard source

Absolutely.

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for External Territories) Share this | Link to this | Hansard source

What is the point of order?

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

Order! The member for Casey is making a point of order. The member for Casey has the call.

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for External Territories) Share this | Link to this | Hansard source

What is his point of order?

Tony Smith (Casey, Liberal Party) Share this | Link to this | Hansard source

You can shout as long as you want.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

I am waiting to hear his point of order. If the member for Lingiari would not interrupt, I would be able to finish hearing his point order.

Tony Smith (Casey, Liberal Party) Share this | Link to this | Hansard source

Absolutely. You can shout for as long as you want, you can shout for four minutes and 20 seconds if you feel like it, but I will finish my point of order.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

I would ask the member for Casey to bring to my attention his point order.

Tony Smith (Casey, Liberal Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, the point of order is simply this: the speaker knows he needs to confine himself to the legislation. He has had a good go; the minister has been very patient. It is confected outrage. He is winking at the member for Chifley and he is playing you off a break.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

I thank the member for Casey. The member for Lingiari has the call, but I would remind him not to use unparliamentary terms.

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for External Territories) Share this | Link to this | Hansard source

With great respect, I am not referring to any particular persons being a liar, I am saying lies have been told to the Australian people. And now we are seeing another attack on Australian pensioners by this government. They were told prior to the last election that there would be no attacks on Australian pensioners and no cuts to Australian pensions. They were told there would be no change. There are cuts and changes proposed in this legislation. I describe those sorts of things as fibs, untruths. Some others might call them lies. Let me make very clear the impact this legislation will have on some people. As a direct result of this legislation, because of the measures within this legislation, some single pensioners will be $8,000 worse off. Some pensioner couples may be up to $14,000 worse off as a result of the measures in this legislation.

Let me tell you about a mate of mine who is a teacher. Peter is aged 60 and he has a wife who is aged 60. Both of them were fully employed until the end of last year. They have worked for close to 40 years teaching in Victoria, the Northern Territory and Western Australia, sometimes in remote communities, whilst raising four boys with all the educational, cultural and sporting needs to be satisfied in any family. This couple is now in the process of winding down to retirement. The wife has retired and Peter is using his long service leave and reducing his employment from full-time to part-time, and he plans to retire in a couple of years. Until budget night this year, Peter and his wife felt secure and safe that their retirement years would be comfortable, and they were looking forward to a bit of travel and devoting the coming years to their sons' families with a growing number of grandchildren. This is not an unusual scenario for people around retirement age.

The 2015-16 budget, this legislation, introduces savings measures which will tighten the assets test for pensions payments. This consists of two parts: raising the asset test thresholds and increasing the rate at which pension payments are reduced, which is known as the taper rate. Peter and his wife are members of that group of about eight per cent of all pensioners who are estimated to have their part-pension reduced as a result of this measure. They have to sit down and work out precisely what it will cost them each year. It could be well over $10,000 and it may well be $14,000. I go back to what I said at the start. This government, prior to the last election, said there will be no cuts and no change. What are Peter and his wife looking at? No cuts and no change? What they are looking at is potentially impecuniosity as a result of deliberate measures being taken by this government. I know members of the government are embarrassed by it; but it is the truth—and they ought to be embarrassed. I see that the minister is here. I am pleased that he is here.

Michael Keenan (Stirling, Liberal Party, Minister for Justice) Share this | Link to this | Hansard source

He has a great regard for you!

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for External Territories) Share this | Link to this | Hansard source

Well, I have no regard for his legislation. And, I have to say, I have no regard for the Prime Minister. I make it very clear and I am not embarrassed by saying it: I have no regard for this Prime Minister because of what he said prior to the last election, how he acted as the Leader of the Opposition and now how he is acting as the Prime Minister. He does not deserve the respect of the Australian community, despite his high office, which normally, I would say, deserves our respect. He, as the Prime Minister, does not because of the fibs he told prior to the last election and for which we are now seeing in evidence in this legislation.

Michael Keenan (Stirling, Liberal Party, Minister for Justice) Share this | Link to this | Hansard source

After a typically ill-considered contribution, I move:

That the question be now put.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

The question is that the question be now put.

The question is that the bill be now read a second time.

The House divided. [12:35]

(The Deputy Speaker—Mr Craig Kelly)

Question agreed to.

Bill read a second time.