Nick Sherry (Tasmania, Australian Labor Party, Assistant Treasurer) Share this | Hansard source

I am anxious to conclude. The increase in the qualifying age for age pension will begin to be phased in from 1 July 2017 and will be fully implemented on 1 July 2023. Phasing in the change over this period will allow affected individuals time to plan for their retirement. The change to the age pension age will allow the government to respond to the long-term cost of our demographic changes.

This Labor government is serious about addressing these demographic changes. We are determined to make our pension system both adequate and sustainable over the long term. That is why we had the pension review that was initiated in May last year, receiving almost 2,000 written submissions. The review was supported by a reference group made up of a range of experts and industry organisations. The reference group canvassed all the issues surrounding pension reform.

The need for action has been reinforced by a recently released report by the OECD, Pensions at a glance, which shows that the poverty rate for older Australians is double the OECD average. The report’s analysis is based on pension figures from 2006, during the time of the previous government. Australia has the fourth highest poverty rate for people aged over 65 in the OECD. Only Ireland, Korea and Mexico have higher rates of old age poverty. Along with Ireland and Switzerland, Australia’s old age poverty rates are double those of the rest of the population, and poverty rates for singles are worse than for couples. The reforms to the pension system contained in this bill will improve its adequacy, make the system simpler and more responsive to pensioners’ needs and secure the sustainability of the pension system as the Australian population ages.

These reforms to Australia’s pension system are essential and they are overdue. In the early months of this Rudd Labor government, we heard extensively from the former Liberal-National government and, indeed, from the crossbenchers, about the need to increase the base pension. I accepted the argument being put from the crossbenches—the Greens and Family First and Senator Xenophon. They had raised that issue consistently over a long period of time. But, upon moving into opposition, the Liberal-National coalition, after almost 12 years of doing nothing about the age pension, finally decided it was time to increase the age pension after they had done nothing about it for almost 12 years.

Then we have the rank hypocrisy from the opposition, who attack the government for debt—given the outcome of the global financial economic crisis—and who were demanding an increase in the age pension, having done nothing about it for 12 years. The cost over the forward estimates I think is between $11 billion and $12 billion approximately. But, of course, they did not indicate any way where savings could be made, either direct monetary or savings via the recognition of the demographic changes and the age at which the age pension should be accessed. It is sheer hypocrisy from the Liberal-National coalition: do nothing for almost 12 years, go into opposition and demand an increase in the age pension—having done nothing about it for 12 years—without even bothering to indicate how it would be paid for. It is absolute hypocrisy from those opposite.

We are, indeed, very proud of these changes. The increase in the age pension in this country is long, long overdue. The changes will improve long-term security and certainty and ensure that over time the pension system is both adequate and sustainable. The reforms included tackle the reality of the ageing population and the challenge this represents.

I know concern has been expressed about the increase in the pension age. The longer you leave reforms in this area, the more difficult reform will become.