Judith Adams (WA, Liberal Party) Share this | Hansard source

I rise to take note of the answer given by Senator Sherry this afternoon. This week Australian shares have tumbled following Wall Street’s worst day since the September 11 attacks, after Lehman Brothers filed for bankruptcy and the insurer American International Group revealed it was struggling to survive. The stock market was not well off before this due to the global credit crisis. Australia’s listed funds management industry has suffered its worst half-year performance for two decades. Now, with the downfall of Lehman, the industry faces even further problems for 2008-09 as asset markets remain volatile. Listed fund managers suffered an average fall in funds under management of 14 per cent in the first half of the calendar year 2008. In the industry as a whole $75 billion in funds under management was withdrawn, resulting in a 5.4 per cent fall in the $1.1 trillion superannuation fund. These figures come from a report by Merrill Lynch published last Friday, 12 September. The analysts say that the lower discretionary superannuation contributions, the move by investors to cash and stronger relative growth in the do-it-yourself superannuation funds also weakened fund flows.

These figures worry many Australians investing in the superannuation funds. They fear that their return will not last to enable them to live their lives as self-funded retirees. This fear is not without reason as the Rudd government fails to outline how to react to this difficult situation. Senator Sherry demonstrated this lack of policy idea very well during question time today when asked about the government modelling of superannuation funds with this big loss. The aim of superannuation is to reduce reliance on the age pension by making super the preferred method of retirement income. With the fading trust in superannuation, the Rudd government risks putting even more pressure on the age pension. Delaying the decision on providing seniors with more financial assistance until the review of pensions and carers payments is finalised in February next year does not help. We already have one generation which has not had the opportunity to invest in superannuation. We cannot risk having even more people relying on the age pension. The Rudd government may hope that the issue of the age pension will just go away. However, despite the rising proportion of self-funded retirees, the issue is not going away.

The Howard government’s 2007 Intergenerational report projected that the government’s spending on the age pension will rise by 1.9 per cent as a share of the national economy during the next 40 years. Even though the proportion of people of eligible age receiving the full pension will decline from 55 per cent to 35 per cent, the number of those eligible will double as a share of the total population. The net effect is a much higher bill to the taxpayer of a 1.9 per cent increase in the average tax rate. The answer is not to further squeeze age pensioners but to fix the retirement income system to improve both work incentives and fairness and to reduce the future cost to the government’s budget. Prime Minister Kevin Rudd said that living on the single age pension is very tough, yet he expects over 850,000 older Australians to keep doing it tough because he is too much of a bureaucrat to make a decision. Mr Rudd keeps saying that Labor assisted older Australians in the budget by paying a one-off bonus. This is the bonus that Mr Rudd was going to scrap before the coalition and the groups of pensioners put considerable pressure on him to continue with it. Imagine the position older Australians would find themselves in today if the bonus had been scrapped, as Mr Rudd intended.

Mr Rudd went to the election last year promising to ease the cost of living pressures for all Australians and this year Mr Rudd promised those on pensions would not be worse off under a Rudd government. If the Rudd government were serious about helping out people on single age pensions, they could fix this now. They are in government and they have the power to make a change. I would ask that they get on and make the change. My question also today to Minister Evans was: how many of the Labor Party backbenchers were asking that pensioners be given a one-off $30 rise to help their pensions? (Time expired)