Ursula Stephens (NSW, Australian Labor Party, Parliamentary Secretary Assisting the Prime Minister for Social Inclusion) Share this | Hansard source

I thank Senator Siewert for her comments. Of course she is absolutely right: the current system just perpetuates the inequities that were put in place by the actions of the Howard government in 1999. But her comments also really highlight the anomalies and the challenges in the intersection between the taxation and the social security systems. The government is very mindful of all of this in its treatment of the Commonwealth seniors health card issues and also much more broadly in terms of the support that it is continuing to provide for senior Australians.

If this were the only thing that the government was doing for pensioners and senior Australians then the argument perhaps would be quite clear. But I do think it is important to put on the record, in response to Senator Xenophon’s questions and to some of the issues raised by Senator Siewert, that the situation of the global financial crisis has really changed quite significantly the dynamics and the environment in which we are even thinking about this bill. The evidence is very clear, the information is very much on the public record, that self-funded retirees are in general seeing significant falls in their investment income and now many of them, as Senator Siewert said, will be eligible for a part pension. Current statistics about what has happened even since October show that the impact of the global financial crisis on senior Australians means there has already been a substantial increase in age pension claim rates from around 3,500 a week prior to mid-October to around 5,500 a week into December 2008. And 4,600 age pension claims were lodged in the week ending 16 January 2009. You can see that there is already an increase in the number of people who are becoming eligible for age pension payments.

The other point I want to make is that the government is absolutely committed to comprehensive reform of the pension system. We all know that the Harmer review has been incredibly detailed in its considerations, and some of the comments that were thrown around by the opposition in the second reading debate were really about the kinds of issues that were tested during the Harmer review, including proposals put up by various organisations and interest groups, and that is a fair and legitimate process. But to imply that that is the intention of the government I think is unnecessary and provocative scaremongering for senior Australians. The Harmer review actually handed down its report on 27 February, less than a month ago. It is a comprehensive review and goes to a massive reform agenda of Australia’s pension system. The government has committed to consider the report—and has restated that commitment—and will respond in the 2009-10 budget. So it is very important that we think about the amendments that are being proposed today by the Greens in the context that the budget comes down in May, and this Greens amendment is a short-term measure that could completely undermine some of the comprehensive reform that will be put in place in the budget in May, in a couple of months.

One of the issues that Senator Xenophon raised was the issue of indexation. The Commonwealth seniors health card was introduced by Labor in 1994 to support seniors of reasonable means who could not access the age pension. That was its original intent and purpose. But the indexation of the income limits was ceased by the Howard government in 1999 and last increased in a pretty ad hoc way in 2001, and they have stayed at the 2001 level ever since. It is a pretty clumsy process that the Howard government put in place. It has really deepened inequities in the system since that time. So we realise that we need to give fair consideration and, as Senator Siewert said, to focus our energy and our resources on those older Australians who are most in need of our support. We all know that there are going to be extraordinary pressures on public funds and public support for those who are caught up in the consequences of the global financial crisis. The issue is really one that cannot be dealt with in such a piecemeal way.

The income limits in the legislation are the current limits that have been set to determine the appropriate limit for access to government support. While the previous government changed the indexation arrangements, we are very aware that seniors have argued against that decision to stop indexation. But, as I say, the Harmer review is a comprehensive investigation into the Australian pension system. One of the review’s terms of reference is to consider the:

… structure and payment of concessions or other entitlements that would improve the financial circumstances and security of seniors, carers and people with disability.

So any reform to the pension system will obviously impact on the Commonwealth seniors health card, and a key consideration in addressing the term of reference will be the appropriateness of the income thresholds. As the pension review is being considered in the budget context, at this stage I must indicate that the government is unable to support the amendments moved by the Greens in this form and at this time, because the government will deliver that pension reform in the budget.