Nigel Scullion (NT, Country Liberal Party, Deputy Leader of the Nationals) Share this | Link to this | Hansard source

In continuing my contribution from yesterday on the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009, I would like to preface my remarks by reminding those who were listening of the Prime Minister’s words in the media this morning. He stated that Labor have a mandate—they went to the election with a whole suite of promises, that was their mandate and they will honour all their election commitments. That is what we have heard. I just wonder how this bill actually honours Labor’s election commitment to help senior Australians make ends meet. On 1 November 2007 the Prime Minister released his election plan for older Australians. When you look at the election plan you would not think that we would be in a situation today where we could possibly even consider legislation in this place, let alone legislation that has been brought in by the government apparently to honour their commitment to senior Australians. This is straight from the election plan:

A Rudd Labor government will offer increased financial support—

for the benefit of the minister, that is ‘increased financial support’—

to older Australians …

I say that just in case I have missed something in the bill, which clearly rolls back support for seniors. The election plan states:

Federal Labor’s plan—

it is one of those beautiful little spin terms—

Making Ends Meetwill help around three million eligible Australians, including pensioners and self-funded retirees—

and, I am assuming, the 22,000 pensioners whose lives you are going to make a whole lot worse through the proposals in this legislation. That is something that those on this side of the chamber are not all that keen on. I believe that Kevin Rudd was elected because one of the fundamentals he persuaded Australians of was, ‘We are going to lower the cost of living.’ He went to great pains to say that he was going to bring down the price of petrol and that he was going to bring down grocery prices.

Government Senators:

Government senators interjecting—

Nigel Scullion (NT, Country Liberal Party, Deputy Leader of the Nationals) Share this | Link to this | Hansard source

We have some interjections from the other side. I can tell you what: any minute now, those on the other side are going to have to decide, in the full view of the Australian public, whether they are going to vote to put up the cost of prescriptions for older Australians by 600 per cent. My advice to them, if they are going to interject this morning, is that they are going to have to remember that their foot is well and truly on the sticky paper and older Australians in every one of their electorates—and, amazingly, this includes someone from a Queensland electorate—are going to have the capacity to ensure that Madam Bligh hears a bit of a thought process in relation to how you are voting. I say to those opposite—through you, Madam Acting Deputy President—who come from Queensland that I would be a little bit more careful about the sorts of interjections I made in this place just before a test time.

We have had the Prime Minister persuading Australians of two fundamentals—that he would bring down petrol prices and that he would bring down grocery prices. And of course he has become the gold-plated watcher: Fuelwatch, GroceryWatch. We watched carefully as prices went up. Not only did he let them go up; we now have the introduction of the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009. It does a couple of things, as I have just indicated. It will actually increase the cost of a prescription for older Australians by over 600 per cent.

Kerry O'Brien (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

No.

Nigel Scullion (NT, Country Liberal Party, Deputy Leader of the Nationals) Share this | Link to this | Hansard source

The senator opposite says no, but a basic calculator will tell you that going from $5.30 to $35 is an increase of 605 per cent. I think it would be entirely accurate to say that that is a tad over 600 per cent. And those 22,000 Australians will also miss out on the lump sum payment to help pay their utilities, which was part of this government’s attempt to woo older Australians. They have said: ‘Sorry: gone. Sorry about that. I know we promised it. I know it was a mandate. But we’ll introduce legislation that effectively says that we’ve promised with one hand—and you thought you were getting it—and now we’re going to take it away with the other.’ That is a disgraceful contribution to make to this place and this is a disgraceful piece of legislation.

That $34.60 every three months would help out with the telephone bill—and they need help. Everybody acknowledges that the cost of living is difficult for everyone. But our most vulnerable Australians, who have made such a fantastic contribution, have to suffer the memories of the campaign where those opposite said, ‘We’re going to ease the household squeeze. Somebody put that in—that’ll be really good. Everyone’ll remember that.’ The Australian people said: ‘No worries; we’ll vote for them: they’re going to make our lives better.’ Sorry! That was not a good move. If these people could be trusted on their mandates, they would now come in here and deliver. Their mandate was easing the household squeeze. They said, ‘No pensioner will be worse off’—and all those sorts of things that we can remember.

Of course they did not have a mandate to come to this place and make worse the lives of some 22,000 older Australians who built this country and who raised the generations who now occupy this country and make up this great nation of ours. They have made a fantastic contribution. That is what Australia is: our forebears. Now we are saying to those who are the most vulnerable that we are going to take away the support that they had before the election. We are not going to make their lives better; we are going to make their lives worse.

Anybody who even reads the explanatory memorandum for this legislation would agree that it is an absolutely disgraceful piece of legislation. As I indicated earlier, those on the other side will be judged. This morning, I was wondering why this legislation was brought to this chamber. I can recall the President coming in and saying, ‘When we’re in this place, it is to add to the true welfare of the people of Australia.’ That is one of those remarks that remind us what we are doing in this place. So to make the lives of our oldest and most vulnerable Australians worse by a piece of legislation is not on. And those on the other side are going to somehow describe how this is going to make it better—good luck in your own electorates, because I have looked at it carefully and it simply cuts away entitlements and benefits that have already been prescribed to older Australians. It is a disgraceful piece of legislation and should not be supported by anyone in this place.

Helen Polley (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009. I believe that this is an important piece of legislation. The Australian social security system does a tremendous job in assisting people from all walks of life during periods of crisis, change and upheaval and often just in the day-to-day necessities. Assistance can be in the form of information and referrals to other services. It can be direct assistance in the form of income support payments, which can help in the cost of raising children, offsetting the expense of child care or helping to pay the rent. It can be in the form of concessions or the healthcare card, which provides reduced cost pharmaceuticals as well as a range of other possible rebates and concessions.

No government would be unaware of the ever-increasing expenses faced by the average Australian. However, this situation becomes more of an issue for those who have finished permanently in the workplace and have a finite income to see them through the remainder of their retirement. It is the older Australians who have often worked all their lives, seen their children through school and into adulthood, bought the house, paid it off and left their workplace—some with a gold watch—looking forward to a retirement filled with gardening, grandchildren and well-earned R&R.

It is therefore the obligation of any social security system to make provisions for senior Australians to ensure that the mounting costs and finite income can be balanced as best they can. This allows older Australians to enjoy their retirement rather than worry about making ends meet. The task for any government is to ensure that the social security system provides well-targeted assistance at the right time to the right groups and that this assistance is fair and consistent in its treatment of people and their circumstances.

The Commonwealth seniors health card is one such measure designed to reduce the burden of the ever-increasing cost of health care for older Australians. The core benefit offered to holders of the Commonwealth seniors health card is a discount on prescription medicines that fall under the Pharmaceutical Benefits Scheme. However, there are several other services that people may benefit from, such as: bulk-billing for visits to the local GP where the GP is a participating doctor for bulk-billing purposes, bearing in mind that the government offers financial incentives for doctors to bulk-bill concession card holders; and reduced cost for out-of-hospital expenses above a concessional threshold through the Medicare safety net.

Additional benefits and services are also offered by state, territory and local governments, as well as some private enterprises. These can include concessions in the areas of health, household running costs, transport, recreation and education. Holders of the Commonwealth seniors health card are also often eligible to receive some additional allowances and certain cash payments through the social security system. These include the seniors concessional allowance. This is a non-taxable payment, made quarterly, to help with the costs of power, vehicle registration and rates. This allowance was increased by the Rudd Labor government in March 2008 and is now $518 a year. There is also a telephone allowance. This is provided to concession card holders with a telephone service connected and has recently been expanded to include additional allowances for those with an internet connection as well. This allowance currently stands at $138.50 per year.

The Rudd Labor government, as part of its Nation Building and Jobs Plan, also recently provided lump sum payments to holders of the Commonwealth seniors health card of $1,400 for singles and $2,100 for couples, on top of a seniors’ bonus of $500 delivered in the 2008 budget. The length and breadth of all services, concessions and allowances available to those who qualify for the card indicate the importance and value of this entitlement to many older Australians—retired or otherwise—and the extent to which this government will go to support them in meeting their costs of living.

To qualify for a Commonwealth seniors health card, a person must be an Australian resident living in Australia, have reached age pension age, being 65 for men and 63½ for women, not be in receipt of an income support payment from either Centrelink or the Department of Veterans’ Affairs, not be qualified to receive the age pension, and have an annual adjustable taxable income of $50,000 for singles, $80,000 for couples or $100,000 for couples separated due to ill-health. This limit is also increased by $639.60 for each dependent child in their care. Adjustable taxable income, under the current definitions contained in the Social Security Act 1991 and the Veterans’ Entitlement Act 1986, includes a person’s taxable income plus any rental property loss, foreign income or employer provided fringe benefits. This definition of adjustable taxable income has, over recent times, become increasingly unable to reflect a person’s true financial circumstances, as well as being more and more inequitable in its application. This definition has also been the impetus behind the proposed amendments to the eligibility criteria for the Commonwealth seniors health care card.

The amendment proposes the inclusion of three new forms of income in the definition of adjustable taxable income for the purposes of the Commonwealth seniors health card. Income from a superannuation stream with a taxed source, including lump sum withdrawals, will be included. For the last 18 months, a superannuation benefit paid from a taxed source has been tax free for those aged 60 years and over. This includes superannuation funds where the contributions and their earnings have already been taxed at the 15 per cent rate. Up until now, these forms of income have not been included in the assessment of adjustable taxable income. However, people who receive income from this source have already benefited from the concessional tax rate that is applied to these funds, which is 15 per cent upon contribution and zero upon receipt of the income stream. It is therefore considered appropriate to consider such forms of income as part of a person’s adjustable taxable income as this has a considerable bearing on the person’s overall financial circumstances. Indeed, it would seem unjust if one person with an income of, say, $50,000 per annum were not eligible for a card, while someone with an income of $45,000, with an additional $20,000 from a superannuation income stream with a taxed source, were eligible, despite having a higher overall income. The inclusion of this income stream will allow income received by seniors to be treated in a similar manner and will ensure that the Commonwealth seniors health card is better targeted at those who need the services the most.

In addition, lump sum withdrawals from superannuation income streams derived from a taxed source will also be included in the definition of adjustable taxable income, once again due to the concessional tax advantages that these amounts have received. Any rollover of moneys between superannuation funds, however, is not considered to be a withdrawal and will therefore not be included in this scenario.

The government is aware that from time to time older Australians may be required to access retirement savings in order to meet large one-off expenses such as replacing a car, making repairs to their homes or paying fees and bonds associated with entering aged-care facilities. There are many legitimate and necessary reasons for making such a lump sum withdrawal and, in keeping with the spirit and the intent of the Commonwealth seniors health card, it would be unjust to automatically include the full amount of such withdrawals as adjusted taxable income. Therefore, the amendment allows for card holders to ask Centrelink to reassess their eligibility by using an estimate of the current financial year’s expected income rather than relying on the previous year’s assessed income, which is skewed by the lump sum withdrawal. Centrelink will then be able to take a holistic look at a person’s financial circumstances, the reason for the lump sum withdrawal and the person’s income in the previous year and make a sensible and fair decision about that person’s ongoing eligibility for the Commonwealth seniors health card.

The second form of income that will be included in the definition of an adjusted taxable income for the purposes of the Commonwealth seniors health card under this amendment is the voluntary sacrificing of salary into superannuation. Presently, income from that voluntary sacrificing of salary into superannuation is excluded from the person’s accessed taxable income, allowing that person to increase their superannuation savings whilst simultaneously lowering the income upon which they pay standard income tax. This is a sensible measure that offers financial incentives to people to save that little bit more for their retirement.

However, even though such salary sacrificing is included in income definitions for the age pension, it is not included at present in the definition of income for the Commonwealth seniors health card. This could be easily rectified by including this form of income in the overall definition, thereby making it consistent across social security and veterans’ affairs legislation in relation to payments and services to seniors. At the same time it would allow people to be treated sensibly and equitably in relation to their eligibility by looking at their financial circumstances and their financial capacity.

In all reality, someone on a good income can salary sacrifice all but $1 of their taxable income to a superannuation fund, thereby paying no income tax and having an adjusted tax income of $1 for the purposes of applying for a seniors health card. Then upon retirement, they have the added advantage of a higher retirement nest egg than otherwise they would have had. It does not seem fair and equitable that this person should be eligible for a Commonwealth seniors health card in addition to the other tax concessions received through their salary sacrificing arrangements, while another person, who does not salary sacrifice into superannuation, may not be eligible. This person’s taxable income may appear as $1 but their financial circumstances are very different in reality. Their financial capacity is actually their full gross taxable income prior to any salary sacrificing, because the sacrificing is purely voluntary. Therefore it is a sensible amendment that is proposed, one that allows like to be compared with like.

The third change to the definition of adjusted taxable income will be the adding back in of net financial investment losses. A net financial investment loss occurs when the allowable tax deductions relating to an investment exceed the gross income of that investment. This can also include borrowing money to purchase shares and using the interest paid on the loan as an allowable deduction for offsetting the income derived from the share dividends.

People are always encouraged to look at new and innovative ways to create wealth if they so choose. It is expected also that during their attempts to create wealth money needs to be spent along the way and losses will be incurred. As a means of encouraging such initiatives, people are given concessions through the taxation system by being able to offset expenses against income. It would therefore seem inequitable to allow a double concession by precluding these losses from assessment of a person’s overall adjusted taxable income for the purposes of the Commonwealth seniors health card.

Already, in many payments and allowances, the losses incurred from rental property ownership are added back into a person’s overall income to ensure people who are given such tax concessions are not benefiting twice for their losses. Extending this to include the net losses from investments allows those without the capacity to buy rental properties, or invest in shares, to be treated the same as those with the capacity. It does not favour one over the other, whilst still retaining those key tax incentives that encourage people to invest.

The Commonwealth seniors health card is an important service offered to Australian seniors to meet the ever-growing costs of health and wellbeing for older Australians. It provides multiple benefits, from cheaper prescriptions to offsetting the cost of out-of-hospital treatments and allowances for phones and electricity costs. It is also sometimes used as a benchmark for determining who is eligible to receive such additional payments as those recently delivered under the Nation Building and Jobs Plan. It is because of the strong benefits this card can deliver that we must ensure it remains targeted at those who truly require that assistance.

Sensible changes to the type of income included in a person’s adjustable taxable income ensure that a realistic understanding of a person’s overall financial capacity and circumstances is achieved and that benefits are distributed evenly and equitably and not doubled up so as to advantage some more than others. These amendments will ensure that those who are entitled to the benefits offered under the card and most in need of these benefits remain entitled. However, those who have different types of income at their disposal must endeavour to rely on those income streams or rearrange their finances accordingly. That way, the system remains fair and those who it is intended to support are indeed supported. It is a common-sense amendment and, as always, common sense should prevail. I commend the bill to the Senate.

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

The government tells us that the amendments proposed in this bill, the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009, will make the income test for eligibility for the seniors health care card better targeted to older Australians who most need the benefits. The bill overturns changes introduced by the Howard government which allowed certain superannuation payments to be excluded from taxable income assessments. Under this bill, income from a superannuation income stream from a taxed source and income being salary sacrificed into superannuation will now be included as income in the eligibility assessment for the Commonwealth seniors health card.

The passage of this legislation will see the removal of a significant loophole that otherwise creates a situation where some people qualify for the CSHC and others do not despite having the same income. The Greens support the broad principle to increase fairness in the support system for older Australians. However, we are concerned that the amendment fails to address what was a random approach employed in determining thresholds in the first place, thus potentially continuing inequity and hardship for those who are in fact in need of support.

The plight of older Australians on low incomes is an issue that should receive a lot of focus. Fortunately, it has received a lot of focus recently, and the Greens would say that it is about time. It is well recognised that older Australians, particularly those on low fixed incomes but also many self-funded retirees, experience great financial hardship, and will even more so in these difficult economic times. As the Senate Standing Committee on Community Affairs reported last year, those with the capacity for little discretionary spending are most vulnerable to the rises in the cost of living and they are disproportionately affected by increased costs of rent, petrol, household utilities and health care. All the essential costs of living are continuing to rise. Health costs, such as the costs of medical care and particularly pharmaceuticals and dental care, are clearly of great concern to older Australians. Because increasing numbers of older Australians will be experiencing financial hardship and rising cost-of-living pressures in the future, it is particularly important that government benefits such as the seniors health care card are being accessed by those who need them most.

Our population is ageing, and caring for older Australians decently and fairly should be a priority of government. Projections show that by 2042 the proportion of the population aged 65 and over will double to be one in every four people, while growth in the labour market is likely to remain stagnant. Taken together with increased life expectancy, these trends have the potential to slow economic growth and reduce older Australians’ standard of living. That particular projection was written before this year’s global financial crisis took hold and pushed all projections on economic growth out the window.

The Greens have been calling for an increase in the age pension for a number of years and we are pleased to see that both the government and the coalition have picked up on our campaign to provide older Australians with a decent level of income. We await with interest the government’s response to the Harmer review, which we hope will increase the level of the age pension to ensure all older Australians will have a decent quality of life.

However, this bill is not concerned with eligibility for the age pension; it concerns concessional benefits for those older Australians whose income is high enough that they do not need that level of income support yet not so high that they do not warrant some government assistance to help them manage the high cost of health care in particular and other costs of living. The issue at stake is how those income levels are defined and whether the substantial benefits of the seniors health card will go to those who are most in need.

The benefits of the seniors health card are substantial. As I said, health costs are a major expense for older Australians and a cause for major concern and anxiety for many. The CSHC provides access to concessional pharmaceuticals under the Pharmaceutical Benefits Scheme. It also provides, at the discretion of the general practitioner, bulk-billed GP appointments and a reduction in the cost of out-of-hospital medical expenses above the concessional threshold through the Medicare safety net. In addition to health benefits, the card also provides a seniors concession allowance—a non-taxable payment of $128.50 made every three months to help with regular bills such as energy, rates and motor vehicle registration fees that are not available at a concessional rate—and a telephone allowance and also an allowance for internet connection.

To assess this proposal it is worth looking briefly at the history of the seniors health card and in particular the changes introduced by the Howard government which this bill seeks to address. The Commonwealth seniors health card was introduced in 1994 by the Keating Labor government to ensure that retirees who were on a low income but not eligible for a pension would have access to some health benefits. The income test limits then were indexed and were the same as for the age pension. So it was targeted at those older Australians who did not qualify for the age pension because they were asset rich but income poor—primarily farmers—and also those who did not qualify because of insufficient length of residency.

The changes introduced by the Howard government since 1999 have substantially altered the original purpose of the Commonwealth seniors health card, making the benefits available to more people and creating the situation we are now in where there is a potential for people to actively manage their income in such a way that they are able to meet the current income thresholds. The Howard government changes in 1999 significantly increased the threshold from $21,460 to $35,859.20 for singles and to $67,000 for couples. The thresholds were increased again in 2001 to the current level of $50,000 for singles and $80,000 for couples. The Howard government also stopped the eligibility threshold from being indexed, leaving both the timing of changes and the thresholds to be determined by a government decision. The income test was also altered from income assessed under the far more rigorous Social Security Act 1991 to adjusted income assessed under the Income Tax Assessment Act 1997, which serves a very different purpose from the welfare act. This fundamentally changed the purpose of the Commonwealth seniors health card from being a benefit for low-income Australians—and this is very important—to a government benefit available to all older Australians, specifically allowing more self-funded retirees access to the concessions. This is the issue at the heart of this piece of legislation.

The income test change is all the more significant following the changes to the taxability of superannuation made in 2007. Since July 2007, superannuation income from a taxed source—that is, superannuation funds where the tax has already been paid on employer contributions to the fund and on the fund’s earnings—is tax free. Under the adjustable taxable income test which is used to assess eligibility for the seniors health card, this income is not included as part of the applicant’s income. By contrast, people whose superannuation funds did not pay tax on those earnings must pay tax on income from those sources, and this income is included in assessing eligibility for the seniors health card. This creates an inequity between holders of the two types of super accounts. Both may have the same income, both have had their super taxed, yet by disregarding income from super funds with a taxed source the holders of these accounts can have a high income and remain eligible for the seniors health card.

Similarly, under the current provisions, people who have salary sacrificed into a super account also benefit from earning more than other applicants for the seniors health card but remain eligible. In our view, this further undermines the purpose of the seniors health card by allowing those who through good luck or intention have achieved eligibility for the concessions but may not fit the definition of an older Australian who cannot manage financially without government support. I put it to this chamber that in these times of economic stress this is an extremely important point: who will be affected?

In June 2008, there were a total of 278,378 seniors health care card holders, and the government estimated that approximately 22,000 would lose their benefits if this legislation passed. Clearly these figures are no longer applicable in the current circumstances, as the income of self-funded retirees has dropped dramatically over recent months, with the crashing of the share market and poor performance of private superannuation funds as a result. The government maintains it is unable to provide any current data to give a more accurate picture of who will be affected by these changes. The Greens have sought figures in particular on the number of those who are just above the threshold and those whose income will be substantially above the threshold when their superannuation income is included in their adjusted taxable income, but the government tells us that it does not have any accurate data at this stage.

Unfortunately and somewhat ironically, the purpose of these changes announced by the government in last year’s budget has been overtaken by the global financial downturn. Sadly, it is reasonable to conclude that in the current economic context many self-funded retirees currently eligible for the seniors health care card will be eligible for the age pension. An estimated 30,000 people, for whom six months ago the inclusion of their super income would have put them over the threshold, will now meet the new threshold assessment test, even with their taxed super included.

However, the Greens realise that there are many self-funded retirees who are not on high incomes who would, under these changes, lose their eligibility for the seniors health care card because they will be just over the existing threshold. We believe that this group should be protected by raising the taxable income limit to a level that more accurately reflects the current economic climate. Much has changed since 2001, when income limits of $50,000 for singles and $80,000 for couples were set. In keeping with our position that this assistance should go to those most in need, we believe the income thresholds should be raised. The Greens will be moving amendments requesting that the government sets a new income test limit for eligibility for the seniors card for $60,000 for singles and $85,000 for couples. These figures are based on the average weekly earning of $60,450. We believe that this is a fairer and more realistic income limit in the current economic climate. While we support the move to tighten up eligibility for the card, we want to ensure that we do not unfairly penalise older Australians who will genuinely need this assistance.

Notwithstanding our forthcoming amendment, the Greens are concerned about the arbitrary way in which this income level has been set by government in the past, leaving it open to political will or opportunity. To ensure that threshold levels are reflective of the Australian economy and independent of political intention, the Greens have written to the minister, proposing that the government consider linking the seniors health care card income eligibility test to the consumer price index as part of the restructure being considered on the recommendations of the Harmer and Henry reviews. More broadly, the Greens believe that a better outcome would have been achieved if both this bill and the measures addressed in schedule 3 of the Tax Laws Amendment (2009 Measures No. 1) Bill 2009—which I will come to a minute—had been addressed as part of the comprehensive restructure the government is undertaking based on the recommendations of the Harmer and Henry reviews.

At the current time, much is being made of the impact of the economic crisis on self-funded retirees. If their income falls below $80,000, if their superannuation has crashed, they will be eligible for this card—and, in fact, many are becoming eligible. This card is available to people who are facing financial hardship. If the Greens amendments are accepted by the Senate, it will be available to older Australians who are on $85,000. Given the hardships many are facing in the current climate, many Australians would say that is a significant income—when you consider that many people are currently losing their jobs. While the Greens would like us to be able to support everybody, particularly in retirement, we are also aware that at this time we need to also be focusing our scarce resources on those most in need. Therefore, we believe that addressing this loophole is important in ensuring that we have a safety net for our older Australians who need it most.

The Prime Minister has made it very clear that self-funded retirees who fall into the category of needing assistance through income support and the age pension will be facilitated onto the age pension. I understand that an increasing number of people are accessing that. I have been given a figure of 30,000, although I am not sure of its accuracy because the government is still confirming that. So it is wrong to claim that this is unfairly targeting people who have suddenly suffered a significant loss in income, because they are being assisted. We have heard stories of people deliberately salary sacrificing very large amounts of money in order to be able to gain access to the seniors card. For example, two couples on the same income can be treated differently because of loopholes. Of course it is legitimate to use the existing provisions, but to us it is unfair that, of two couples that are on the same income, one couple does not get the seniors health card and one does because they have managed to access the current provisions.

Given that the threshold has not risen since 2001, we believe it is fair to increase it to $60,000 for singles and $85,000 for couples. We are particularly keen to ensure that the threshold for singles reflects the needs of singles. The Senate Standing Committee on Community Affairs looked into the cost of living for older Australians and identified single Australians, principally women, as one sector that were particularly vulnerable. So we are very keen to ensure that that threshold does provide for those people who are struggling. We believe that a fairer level would be $60,000.

That is why, when we come to discuss this in the Committee of the Whole, we will be moving amendments to address that threshold. We are refraining from moving amendments linking it with the CPI because we think it more appropriate that it be dealt with in the context of the Harmer and Henry reviews. That is why we have written to the minister asking for those thresholds to be included in the revision. We thought that was the more appropriate move. If the thresholds are accepted by the Senate, the CPI increase will not kick in for a little while anyway. So there is time for those two reviews to take that into account. In the meantime, we will have increased the threshold to meet people’s needs in 2009. I will talk further on the amendments when we come to the Committee of the Whole stage. We commend those amendments to the chamber in the belief that they will provide a little bit more robustness to the seniors health card.

Catryna Bilyk (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I rise today to speak on the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009. Our senior citizens and those people who have served in the Defence Force have contributed enormously to our nation and they deserve to be respected and looked after. The Rudd government is committed to giving these people what they deserve—that is, respect and an easier way of life. The Rudd government knows some people are doing it tough and is committed to helping pensioners and seniors to make sure that they get the maximum help they can.

This amendment will help make the lives of these important citizens better. Anything that improves their way of life is a worthwhile exercise for the Rudd government. The Rudd government genuinely cares for seniors and will continue to make improvements in their lives. One way is by refining the adjustable taxable income test for those people holding a Commonwealth seniors health card. In this situation, the Rudd government is making life fairer and treating similar sources of income in a similar way. The amendments will ensure that the income test is applied consistently for all cardholders.

In the 2008-09 budget, the Rudd government made a promise to create a fairer system for eligibility for the Commonwealth seniors health card. This program is just one of a number designed to create equality among Australians. There are processes in place to review the pension, and there have been one-off bonus payments. As I have stated, this is a government that cares for seniors.

The budget estimated that the cost of creating a fairer system would be more than $19 million for administrative purposes over four years. It is predicted that $12.3 million will be spent in 2008-09 but with significant savings being made over the next three years. A net saving of $84.8 million will be made, with $34.6 million coming from the 2011-12 year.

The Rudd government is spending money now to save money in the years to come, investing in the future—something the Howard government failed to do. We know they failed to invest in schools and in skills training. They should hang their heads in shame for their lack of action over the 12 years they were in government.

This amendment legislation applies to Commonwealth seniors health cards issued under the Social Security Act 1991 as well as those issued within the Veterans’ Entitlements Act 1986. The Commonwealth seniors health card was a Keating Labor government initiative introduced in July 1994. Its original intent was to help those people who failed to qualify for the age pension. It was to help people who lacked resident qualifications or whose assets meant they did not qualify for the age pension.

In 1999 eligibility for the card changed when the previous government abolished indexation on the adjusted taxable income test. Currently the Commonwealth seniors health card is available to men and women who are of the right age to receive the age pension but are not eligible because their income is above the limit. In order to be eligible for the Commonwealth seniors health card, people must have an adjusted taxable income of less than $50,000 for singles and $80,000 for couples, and they must be an Australian resident or hold a special category visa. As of 1 July 2009, adjusted taxable income will be determined by adding the taxable income, employer provided benefits, target foreign income and net rental property loss, superannuation, money that is salary sacrificed and net financial investment loss.

Currently superannuation income is not considered when determining eligibility for the card, provided the individual is unable to access the money. Money that goes into a superannuation fund as part of a salary sacrifice scheme is also excluded when determining eligibility. This bill will change these provisions and will ensure that income received by seniors is always treated in the same way, therefore creating a more consistent and just approach. For example, if you are a member of a defined benefit superannuation scheme and receive income, it is treated as income; however, if you receive income from a private, industry based or retail based super fund, it is no longer taxable and is not counted as income for the purpose of the card.

If you work in the retail sector or do some relief teaching or gardening, your income is taken into consideration. This is obviously a disadvantage, and we believe that it is inequitable. The income test will be changed to include income from a superannuation income stream with a taxed source and income that is salary sacrificed to superannuation. This will make it fairer for all Australians. This is, after all, what the Rudd government is about: making life better for all Australians and ensuring that people are treated equally.

The card is available to women who are over 63.5 years of age, but the age limit is gradually increasing so that all women must be 65. The progressive change in the eligibility age of women will see 65 as the age for all women to access the CSHC from the beginning of 2014. Men are eligible from the time they turn 65. Increasing the eligibility age for women to 65 to receive the age pension and in turn the Commonwealth seniors health card will create greater equality between men and women.

If you are eligible for a Commonwealth seniors health card under the Rudd government, you will also qualify for some cash payments such as the seniors concession allowance. We increased this allowance in May 2008 to $500 per year and we pay it quarterly, which helps people meet ongoing costs as they arise. Also, under the Rudd government’s Economic Security Strategy, Commonwealth seniors health card holders received $1,400 for singles and $2,100 combined for couples. This is a government that not only cares for seniors but acts for them.

Veterans are eligible for the age pension at the age of 60. It is most important to look after our retired servicepeople, as our nation would not be what it is without their sacrifice and hard work.

In June 2008 there were 278,738 Commonwealth seniors health card holders. This figure will most likely have increased and continue to increase with the change in the global financial situation, meaning that previously ineligible people may now be entitled to the Commonwealth seniors health card. Even more people will become eligible once this bill becomes legislation. Holders of the card are entitled to discounted prescriptions listed on the Pharmaceutical Benefits Scheme. They are also eligible to be bulk-billed by participating health professionals, and the government provides incentives to practitioners who will bulk-bill. In addition to this, cardholders can also be helped out with hospital expenses through the Medicare Safety Net program.

It is also possible to access a range of other services at a discounted price through local, state and territory governments and the private sector. These services include areas such as transport, education and recreation. This makes it cheaper for the elderly to participate in life whether it be by undertaking an adult education course or going to the cinema, and in my state of Tasmania the elderly are a very active group of the population. As I have said already, certain cash payments are available through the federal income support system, including the seniors concession allowance which is paid in quarterly instalments. Telephone services, including the internet, are also subsidised to the value of $138.50 per year. The card will now target a larger group of people who need government assistance.

The changes in these provisions will see eligibility for the seniors card come in line with the requirements for the age pension. This will limit any confusion that currently exists. Seniors will be able to access some of their superannuation fund for medical expenses and to pay the costs involved in going into an aged care facility. In order to do this, people will be able to request that the lump sum they need be exempt when an assessment of their eligibility for the card is made. One-off payments can also be excluded from the assessment in order to prevent people from being disadvantaged by unexpected payments. In order to receive an exemption the individual must put in a written request to Centrelink. The request must provide information on the payment and the reason it is a one-off payment and give an estimate of the income for the current financial year. Centrelink has the discretion to grant an exemption based on the information provided. Centrelink will also take into account the person’s disposable income for the previous few years.

By giving people the opportunity to apply for exemptions the Rudd government is stating that it understands that there are exceptions to the rule and that cases need to be considered on their merit. Since coming to office the Rudd government has given single pensioners an extra $2,337 and couples receiving the pension an extra $3,537. This is a considerable amount in less than 18 months. Approximately 290,000 older Australians will receive additional funds as part of the $42 billion Nation Building and Jobs Plan. Eighty per cent of the 2.8 million people in Australia over 65 years old are benefiting from the Rudd government’s Economic Security Strategy, and I know many senior people in my home state of Tasmania are pleased about this.

Self-funded retirees who lodged a tax return for 2007-08 and people who receive a partial pension will be given a tax bonus of a maximum of $900. Almost 3.5 million Australians will receive an increase in their pension and other financial support from 20 March this year. The government will continue to support our elderly citizens through further pension reform as part of the 2009-10 budget. The findings of the pension review will be released in due course. The Commonwealth seniors health card requirements will be continually reviewed to ensure that the card is only available to those people it is intended for. This ensures that the money is being spent on the people who need it the most and saves government funds for other purposes.

I believe in helping Australia’s older citizens and veterans of Australia’s defence forces and making a difference to their lives. I believe they have earned all the support the nation can give them. The Rudd government believes in equality, and I am pleased to see a system that introduces equality in another area of life for these members of our community. I am proud that the Rudd Labor government continues to help those who need it the most and is working towards a more just Australia.

I reiterate that this bill is just one of many moves being made by the Rudd government that will help our senior citizens and veterans live the more comfortable life which they thoroughly deserve. The Rudd government will continue to support the elderly people of Australia in as many ways as possible. The Rudd government will continue to deliver for seniors. This is important legislation that needs to be passed. It is in stark contrast to the way the opposition treated seniors and pensioners. In fact, it is in stark contrast to the way they still want to treat them. Earlier in the year we saw feigned concern for pensioners and the then opposition leader calling for $30-a-week pension increases. Then there was a change of leadership on that side—and we all know that is not settled yet—and we saw, firstly, support for our stimulus package and then a change of heart.

Almost everything we hear from the opposition involves opposing the stimulus package, so I ask: where do they stand, especially in relation to pensioners? They have moved very quickly from, ‘We care for seniors,’ to: ‘We do not support the one-off payments. We do not support a review of the pension or whatever that review might recommend. We do not think it can be afforded anyway.’ I presume they saw some political gain in their comments earlier in the year. They continually show a callous disregard for pensioners and deserve to be condemned. Older Australians are one of Australia’s greatest assets. They have helped shape modern Australia and continue to make significant contributions to society. I commend the bill to the Senate.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I note that the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009 makes superannuation income and drawdown as a salary-sacrificing part of assessable income when qualifying for the seniors card. Also, as I understand it, super lump sum withdrawals for cars, bonds and health will not be included in assessable income. That is something I would like to clarify during the committee stage if we get to it. I also note that the government is proposing a threshold of $50,000 for individuals and $80,000 for couples to be assessed annually but not to be indexed. Again, that is a question I would like to have addressed. I understand that the Harmer review is looking at these things, but I would have thought that as a safeguard there ought to be consideration of indexation, at the very least based on CPI. Of course, another method of measurement is the average weekly earnings form of adjustment.

My office has had a number of complaints in relation to this bill about people losing their health card benefits, and it is an issue of concern. I think it should be noted that with the global financial crisis many more self-funded retirees will be able to qualify for a seniors card. I would like to get some confirmation from the government as to how much this will save over the next four years and whether there have been any further assessments in relation to that. Regarding some of the media commentary, which I think reflects a number of the complaints that my office has been getting about this, I note that there will be individuals who will be worse off by several hundred dollars a year as a result of the additional pharmaceutical costs alone. That is an issue of concern.

I also understand the equity arguments—that if you have an income of $50,000 as an individual or $80,000 as a couple then you are in a better position to absorb those costs. I note the Greens plan to move amendments to the bill that would lift the threshold, and I would certainly prefer that position to the current thresholds proposed by the government. I will support the second reading of this bill, but I would like to reserve my position in relation to the third reading on both the issue of indexation and the thresholds. I am mindful about the balancing act between providing benefits as broadly as possible and managing the costs of those benefits and the ability of individuals to pay. I indicate that I am not satisfied with the current thresholds being proposed by the government and that this is an issue that will need to be appropriately ventilated during the committee stage.

Fiona Nash (NSW, National Party) Share this | Link to this | Hansard source

I rise to make a few remarks about the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009. Quite frankly, removing the Commonwealth seniors health card from around 22,000 senior Australians is simply wrong. This is absolutely appalling, and I think the Labor government should be holding its head in shame at even putting this forward. We have a situation now in this country which, by all accounts, is going to be one of the most difficult we have seen for decades. Yet what is the Labor government doing? It is trying to put a measure in place that will hurt those people who quite simply are least in a position to afford it.

During the 2007 election campaign, the now Prime Minister, Kevin Rudd, said he was going to ease the cost-of-living pressures for senior Australians. This bill is exactly in opposition to what he said at that time. This is going to do completely the reverse. This measure is going to make it more difficult for senior Australians. It is not going to ease those cost-of-living pressures, as the now Prime Minister said at the time. Instead of the strengthened support that the government said that it was going to give to seniors, this is going to roll back the support that the coalition, in government, had in place. To me, it is just the ultimate in hypocrisy from the Prime Minister to have said through the election campaign, ‘We’re going to do everything we can to ease the cost-of-living pressures for senior Australians,’ and yet here we are standing in the chamber today debating a bill that is going to do precisely the opposite.

We have seen debated in this chamber and also in the other place the recent $42 billion stimulus package. I think people will find it quite incongruous when they look at that $42 billion package that the Rudd government has put in place and compare it to the fact that the Prime Minister is going to strip away money and assistance from senior Australians. He can find $42 billion to put in a whole range of measures that the government says are going to assist the economy in Australia to get through these difficult times and yet, at the same time, this relatively tiny amount of funding is going to be stripped away from seniors. Seniors are the last people, the very last sector in this society, who should be having assistance taken away from them at this time—absolutely the last. We can find billions of dollars for pink batts and for boom gates, and yet senior Australians are expected to take a hit by having their seniors health card taken away. That is just wrong. It is not right.

Nigel Scullion (NT, Country Liberal Party, Deputy Leader of the Nationals) Share this | Link to this | Hansard source

Shame!

Fiona Nash (NSW, National Party) Share this | Link to this | Hansard source

Thank you, Senator Scullion. It is a shame. It is not right, it is not fair and it is not on, because these are the people who should come first. The question was asked: how much will it save? I do not know about others in this chamber and I do not know about others around this nation, but I do not think it is our seniors who should be paying or having things stripped away from them. It is simply not right.

A comment was made earlier by one of the previous speakers about the proposed increase in the pension that the coalition put forward towards the end of last year. It was said that we ‘feigned’ interest. It is not feigned interest; it is very genuine interest, and those on the other side know it. To play politics with this, an increase of the pension, when these are the very people who need it the most! What have we seen from the other side? Nothing. Not a thing. There is nothing about increasing the pension, but, gosh, what do we see today? ‘Let’s just rip a bit more away from the seniors.’ It simply does not make sense and it is simply not fair. These are our parents and our grandparents who have built this nation, and they are the last people who should be getting targeted with this kind of measure that is going to do nothing but hurt those people who most need the assistance.

Let us look at what is actually going to be taken away from those seniors who lose their card. There are the prescribed pharmaceuticals under the PBS. The CSHC holders pay $5 per script. After losing the card, they are going to pay $31.30. With the card, a senior reaches the PBS safety net threshold when they have paid a total of $290 for their scripts. Scripts after that are free. Without the card, the threshold rises to over $1,000. As regards the seniors concession allowance, with the card, a senior is eligible to receive an annual allowance of $500 to assist with the payment for essential services for which pensioners are granted concessions. At the beginning of July, many of those seniors are going to lose their entitlement. The seniors bonus payment is going to be affected. If they lose their card because of the eligibility changes, they are not going to receive any further bonus payments. There is the telephone allowance and there are other benefits. There is a whole range of things here that our seniors rely on to help them through what are increasingly difficult times, and that is what is so incongruous about this. Things are getting more difficult out in our communities for people, particularly our elderly, and what is the government doing? It is taking assistance away from 22,000 of our seniors.

What I find even more interesting are potential future changes. Goodness knows where Labor are going to go in rolling back support in the future. We have no idea. But interestingly in some recent reports in the media we have seen it flagged that they may do such things as include the family home in the assets test, which is going to force senior Australians to sell their homes. They are going to include an increase in the assets test taper rates, which will reduce the incentive to save for retirement. They are potentially going to increase the income test taper rates, which will be a disincentive for people to earn additional money. These are the types of things that are being spoken about in the media at the moment. People need to be very, very wary of what this government is planning for senior Australians. I come back to the point that these are the people who need the assistance most, not least.

I mentioned the concession card earlier, so let us have a look at the concession allowance. One of the things that that applies to is reduced train fares. There is a particularly good example of this up on the North Coast of New South Wales, where I spend quite a lot of my time. It is interesting to note that the state Labor government closed the Casino to Murwillumbah railway line five years ago. I do not know how many of those in this chamber actually spend much time up there, but let me tell you that the public transport system is appalling, particularly as it is our seniors who are again the most affected. Seniors are least able to get themselves around. They need public transport and it is completely lacking.

I know that some of the federal Labor members of parliament would say that this is a state issue, but are there two separate Labor parties? Is there the ‘good’ federal Labor Party and then the ‘bad’ state Labor Party, which has not delivered this?

Nigel Scullion (NT, Country Liberal Party, Deputy Leader of the Nationals) Share this | Link to this | Hansard source

They are both bad.

Fiona Nash (NSW, National Party) Share this | Link to this | Hansard source

Thank you, Senator Scullion. I will take that interjection. Absolutely—they are both bad. What is quite extraordinary is the hypocrisy of some of our state and federal Labor politicians. One example of such a federal Labor politician is Justine Elliot, the current member for Richmond. Looking at the rail line that Labor closed five years ago even though it is so desperately needed up there in the north, I was flabbergasted to come across a letter from Mrs Elliot in a previous campaign. In this letter to the residents she spoke about how she had got a commitment for some funding. She said: ‘This is a great victory for our community, which has run a tireless campaign to save the train. Thank you.’ This is about providing transport for seniors, and where is Justine Elliot, the local member, now? It is such hypocrisy when on the one hand you say you are going to look after seniors but on the other hand you do exactly the opposite.

Seniors should realise that this government is doing nothing for them. But not only is it doing nothing; it is ripping away the things they need the most. I recently attended a rally in Murwillumbah about the closure of this railway line. It was attended by a number of seniors who said to me, ‘We absolutely need this railway line for a whole range of reasons.’ They want to be able to see their children and grandchildren and to attend their schools at Casino down at the other end of the railway line. They talked about what it could do to open up the whole area for them.

Yet what have we seen from the Labor government? Absolutely nothing. In spite of a promise from the local member years and years ago that they would find the money, now there is absolutely nothing. I was very proud to stand up there with those seniors and my Nationals colleagues Geoff Provest and Jenny Gardiner to say that we will do what we can, everything we can, to try and help, because there was no sign of either Justine Elliott or Janelle Saffin at that rally. What the government is putting forward today is about taking away those concession cards from some of those seniors on the North Coast. They need those concession cards to be able to use public transport to get from A to B. I get sick and tired of our seniors being the last cab off the rank, being the ones who are least thought about and least considered when we are formulating what should be good policy for the future of those people. It is, simply, wrong.

It is also interesting to note what is going to be taken away from health—the prescribed pharmaceuticals and the PBS safety net. These are things that our seniors really rely on, and I can only think that this is indicative of Labor’s approach to health in general. If they think that taking those things away is an appropriate measure, they are just wrong. The attitude to health from this government is, quite frankly, appalling—even more so when we look at the comments the Prime Minister made during the election campaign. He said, ‘Kevin Rudd will fix our hospitals.’ He said, ‘The buck stops with me.’ And what have we seen? Absolutely nothing from this government—and this was from a Prime Minister who said he would honour all his election commitments.

He made an election commitment to fix our hospitals, and he has not done it—and there is no sign that it is going to be done in the future. It is an election commitment on which nothing is being done from the other side. It is particularly notable on the North Coast. We are seeing our hospitals up there in crisis. We are seeing maternity units being shut down—and everybody knows how important it is that women in regional communities have access to a decent level of health care when they are having their children. Even more importantly, our seniors on the North Coast cannot access a decent level of health care. Many will say that it is a state issue, and in many respects it is, but this became a federal issue when the Prime Minister said that he would fix the hospitals and that the buck stops with him. That is when this absolutely became a federal issue. He took responsibility and he has delivered absolutely nothing.

It is very interesting to look at precisely that issue of the Prime Minister’s election commitments. I was listening to him this morning on the radio when he was talking about the mandate that he had from the last election and the fact that he would honour his election commitments. I just wonder whether those election commitments and that mandate apply only to IR, because they certainly do not seem to apply to seniors. We are seeing that through the measures that the government is trying to introduce today. The Prime Minister said that he would make ends meet, that he was going to offer increased financial support and ease the burden for our seniors. Those were his election commitments; they were absolute commitments from the Prime Minister. But apparently they do not matter. The mandate and the election commitments apparently only matter if they relate to IR, because he made the same types of commitments during the election about seniors and he is not honouring them. That is absolutely clear through this bill today, and seniors should be very, very concerned about what the Labor government have in mind for the future of our senior Australians.

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

I thank those who made a thoughtful contribution to this debate and who actually made an extraordinary effort to understand what this legislation is about. I am flabbergasted by the contribution from Senator Nash. She obviously has not read the bill or listened to the debate. I think she should be ashamed of herself—that confected rage about this legislation and the scaremongering tactic, frightening pensioners unnecessarily—when this bill is all about fairness and equity in the pension system. It really is unforgivable.

Nigel Scullion (NT, Country Liberal Party, Deputy Leader of the Nationals) Share this | Link to this | Hansard source

They will lose their healthcare card: that’s frightening.

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

Senator Scullion, you are the same, with your confected rage yesterday when you were trying to argue and justify a change to the system for the Commonwealth seniors health card, which was introduced by the Howard government and which has continued to produce and compound inequities since that time.

Let’s just get to the reality of what this bill is all about. First of all, it amends the test to create a test that is simpler and fairer by treating income from different sources in a similar way. To me, that seems to be a very fair and equitable thing to do. Under the current rules, income from a defined benefit scheme, such as the Commonwealth Superannuation Scheme for public servants and some state government funds, is treated as income when determining eligibility for the card but income from some private, retail or industry superannuation funds and account based pensions is not counted as income for the purposes of the Commonwealth seniors health card. This has meant inequities over time, as people with substantial incomes from superannuation income streams from a taxed source have had this income disregarded for the purpose of assessment for the Commonwealth seniors health card. Individuals who have income that is non-assessable and non-exempt under the Income Tax Assessment Act 1997 have already had the advantage of accumulating their superannuation savings in a concessional tax environment. They have also benefited from the ongoing tax treatment of their superannuation pension payments after age 60.

By treating all income received by seniors, whether received from superannuation or another source such as employment income, in the same way this proposal will ensure the income test is applied to all cardholders consistently. Currently, the test does not include income of those who are salary sacrificing into either a superannuation fund or a retirement savings account, as Senator Siewert so ably pointed out. The definition of ‘income’ for qualification for the age pension already includes income salary sacrificed into superannuation. Accordingly, the changes introduced in this bill align the salary sacrifice definition of income for the Commonwealth seniors health card with the existing definition for age pensioners. The changes will ensure fairness and equality in determining eligibility for the Commonwealth seniors health card.

It is anticipated, as Senator Nick Xenophon suggested, that the number of cardholders expected to lose access to their card will actually be reduced, due to the global financial crisis. However, for Senator Xenophon’s benefit, if a retiree’s income has dropped due to the global financial crisis to below existing income levels that already exist then they will not be affected by these changes.

However, as indicated privately to both Senator Xenophon and to the Greens, to date the government does not have a final revision of these figures because full-year impacts of the global financial crisis on relevant superannuation incomes are yet to be made public. Therefore, there has been no formal change made to the published estimates. However, work on providing up-to-date figures is progressing.

Some seniors groups have been worried that these changes will mean lump sum withdrawals from superannuation will be counted as income. They are concerned that this could lead to unfair and unintended consequences. The government acknowledges that and understands that, in certain circumstances, cardholders may need to make lump sum withdrawals from their superannuation to pay for unexpected costs, such as medical expenses or modifications to their home to ensure that they can stay in the home.

These lump sum withdrawals may have the effect of increasing an individual’s adjusted taxable income for the test year. To safeguard against people losing eligibility for their card they can request that their qualification for the seniors health card be determined with reference to an estimate of their income for the current financial year. This may result in discounting the lump sum where it is shown to be one-off, not ongoing, income. These safeguards exist in current legislation. The changes contained in this bill apply to both veterans’ entitlements and social security based senior health cards.

Question put:

That the bill be now read a second time.