Claire Moore (Queensland, Australian Labor Party, Shadow Minister for Women) Share this | Link to this | Hansard source

I move:

That the Senate take note of the answer given by the Assistant Minister for Social Services (Senator Fifield) to a question without notice asked by Senator Moore today relating to the indexation of pensions.

We know, and we have gone over this numerous times, that before the last election there was no discussion with anyone in the wider Australian public about any changes to the rates of payment for pensions. In fact, to the contrary, there were assurances made quite strongly that there would be no change. In fact, we were told very clearly that pensioners would welcome the new government.

However, in the very first budget there were changes put in place to pensions and, contrary to what we hear consistently from the other side, these changes to the indexation of pensions will remain a cut to the take-home payment of pensions for many pensioners in our country. This is not just for aged pensioners but for carers as well—people who, in many cases, are totally reliant on that pension for their livelihood. That is something that we took very seriously in government.

Mr Deputy President, you would remember that in 2009 there was a very detailed inquiry done that looked at pensions in Australia. It looked at the rates, it looked at the processes and it looked at the kinds of issues that were alive in our community and how people felt about this payment. As a result of that review, we brought in changes that actually made a significant difference to the way that pensions were indexed. But this was actually building on really strong work that had gone on before. Indeed, it was Mr Howard who was most vocal about the importance of the rate of pension to pensioners. He was very proud of the work that his government had done and looked at maintaining an appropriate relationship between wages across the community and those people who were in retirement, or who were caring for others and who needed that kind of support.

But what we have seen is not just a rejection of the concerns raised about the reduction in pensions but arrogance—a statement that pensions are not being cut. And there was a statement of what we could say was the 'bleeding obvious', that pensions have risen at the stated times in the cycle over the last 12 months. No-one denies that. The argument that we have been raising is quite clear: the way the age pension works—and the other pensions that come off that—is by indexation of those payments to keep the actual value of the pension real in comparison to what is happening across the community.

That, indeed, has been changed by this government. And today we heard from Minister Fifield that this change—the 2014-15 change—is still on the table. It is on the table of the minister. However, we were also told that while these things are lying on the table, that actually anyone is able to come forward with suggestions and concerns. Well, what I know is that many people have come through to all of us—and I know it would be to the minister as well—with their concerns about the real value of the pension. This is talking about people who rely on this payment. It is not necessarily people who are able to move in and out of the pension system—and there are some of those. These are people whose fortnightly livelihoods are their payments from their government.

There have been a number of surveys done by the National Council on Ageing and ACOSS, and a number of people who have looked seriously at the rate of pensions and the real impact of indexation. Calculations have been made—and they do vary. The way the current system works is that the pension is indexed by the higher rate of the three models that could be taken: CPI, wages and a particular variant that we introduced which looks at costs and issues for pensioners—three models. Depending on what is happening at the time of the change, the higher of those three indexation rates is put onto the pension. That will change from 2017 if these 2014-15 budget ideas are still on the minister's table. What we want to know is whether there has been any response to the number of concerns that have been raised about what could lead to a significant reduction in the fortnightly pension income for people reliant on that payment.

We have heard figures of $80 a week—that is a lot of money if that is your sole income. It is a lot of money for anyone who is looking at the rate— (Time expired)

Zed Seselja (ACT, Liberal Party) Share this | Link to this | Hansard source

I thank Senator Moore for bringing this very important discussion forward. Before I comment on the question that Senator Moore was taking note of, it is hard to go past the contribution of Senator Cameron in question time—

Gavin Marshall (Victoria, Deputy-President) Share this | Link to this | Hansard source

Senator Seselja, there is only one question before the chair—

Zed Seselja (ACT, Liberal Party) Share this | Link to this | Hansard source

I understand that, Mr Deputy President, but I did want to give credit to Senator Cameron for his acknowledgement that the 457 visa for John McTernan was the worst 457 visa ever. It is interesting how quickly Labor turns upon itself.

I will come to the question before the Senate. Indeed I will, because it is very important that we make our pension system sustainable, and keep it sustainable. It is also very important that we do not have scaremongering from the Labor Party and that we do not allow the scaremongering of the Labor Party to go unchallenged.

So I want to make a couple of points about the need for fiscal sustainability and the reality of what is happening to pensions, not what Labor claims is happening to pensions. Labor has claimed that pensions are going down, that pensions are being cut, when in fact that is absolutely not the case. They are doing their best to scare pensioners in this country in a disgraceful scare campaign, which seems to be all that the Labor Party has left. But of course we know that in fact that is not true. So let us deal with the facts rather than what the Labor Party is saying.

We are seeing pensions going up twice a year, as they always have. Let us be clear on that. So we have seen in fact no changes yet to the way pensions are indexed. In fact, what we have seen is pensions going up twice a year. In March of 2014, the total age pension—which comprises the basic rate, the pension supplement and the energy supplement—increase from $827.10 a fortnight to $842.80 for singles, and from $623.40 a fortnight to $635.30 each for couples. In September 2014, the total age pension increased from $842.80 a fortnight to $854.30 for singles and from $635.30 a fortnight to $644.00 each for couples. Both of these pension increases were in line with cost of living increases, which were higher than the alternate indexation option of MTAWE. So, instead of taking at face value what the Labor Party claims, let us deal with the facts: pensions will continue to go up twice a year.

In addition to that, we have gotten rid of the carbon tax, which has seen electricity prices, for the first time in living memory, come down. So one of the great costs for pensioners has been reduced. For the first time in living memory we have managed to lower the cost of energy in the country by getting rid of Labor's and the Greens' carbon tax. So pensions have been going up while we have been working on other areas, such as cutting the carbon tax, to lower costs for pensioners and families in this country.

In the time that I have left, I want to make the point—and it needs to be said—that the situation we face where we are looking to make our budget sustainable is not an insignificant one. We have inherited a challenge from the economic vandals in the Labor Party; they thought that they could just spend their way out of trouble, that they could consistently spend more than we earn. And they left us with a debt legacy of $1 billion a month in interest payments. At the moment that is projected to rise to $3 billion a month. That is $100 million more in spending a day than we have in revenue. That is completely unsustainable.

The Labor Party should be condemned for their economic vandalism when they were in office. Our job is to try and restore that. When it comes to pensions, we want to do it by ensuring our pensions remain sustainable so we can look after the most needy, instead of wasting money the way the Labor Party did on all manner of inefficient spending. That is the challenge that we have inherited; that is the challenge that we are up for. We want to make sure that our pensioners get a fair go and that they continue to see their pensions rise and continue to rise into the future.

Carol Brown (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary for Families and Payments) Share this | Link to this | Hansard source

We all know in this chamber, and indeed around the country, that at the last election the Prime Minister promised there would be no changes to pensions. We have known since then that that commitment by the then opposition and now government was a lie.

Unfortunately, here in question time today, we had Senator Fifield, playing with words and using weasel words to say that the pension changes are not 'cuts'. We all know they are indeed cuts. Senator Seselja has also used those words. It is playing with words, playing with people's lives, with pensioners' lives. You do not make savings in your budget if there are no cuts. The savings are there and there is a cut to the pension.

As Senator Moore said in her contribution, changing the indexation to only a CPI indexation does indeed erode the value of the pension. Analysis after analysis, review after review—and the community sector—has estimated that the change to just CPI indexation will result in an $80 a week cut to the pension over the next decade. That is indeed a massive cut to the pension and one that pensioners cannot afford. Quite frankly, they were tricked by the Abbott opposition when they were told there would be no changes.

I have had many constituent inquiries—many people ringing up concerned, many pensioners ringing up concerned—begging for the Labor Party to do everything they can to ensure that these changes do not get through the parliament.

We know that in 2009 the Labor government introduced an increase to the pension. We also know that Dr Harmer reviewed the adequacy of the indexation. Following the recommendations of the Harmer review, the Labor government introduced a fairer system of pension indexation by adding a new indicator, which was the pensioner and beneficiary living cost index, and increasing the male total average weekly earnings benchmark to 27.5 per cent. So this government are asking the pensioners—we have 3½ million Australians in receipt of a pension and approximately 2.4 million of those are age pensioners—asking those people who can least afford to take this massive hit on their incomes and who are already doing it hard, to take this massive hit of $80 a week on their pay. They are asking them to take this hit because this government do not care about pensioners.

We have had Mr Morrison trying again to trick the Australian people—and it does not work; they have been caught out—by saying that the latest pension increase was in line with CPI. That is complete and utter rubbish. It was not CPI. If it had been, the pension increase would have been less. That is not hard to understand even for coalition senators. If you only use CPI and you take away the other indexation measures, and those are the measures that would have kicked in, then the increase is less. That is a cut. Unfortunately, those people who can least afford those cuts are being hit by this government, and they deserve better. They deserve to have this Prime Minister, a Prime Minister who said that he would keep his promises, honour the commitment not to change the pension and not to cut the pension. Unfortunately, this government has turned very, very quickly into a very mean and tricky government. (Time expired)

Matthew Canavan (Queensland, Liberal National Party) Share this | Link to this | Hansard source

What we have heard from the other side in this debate on pension indexation is a clear reflection of the fact that they are completely unengaged with the real problems we face as a nation. The real problem we face is how we are going to continue to pay for stuff. We all want more stuff in our lives but we have to pay for it somehow. The Intergenerational Report 2015, which came out last week—one of the most important reports for some time—shows that if we continue on the path we are on and do not do anything, in 40 years' time the pension is going to cost us $165 billion a year in today's dollars. If you want to check that, Senator Conroy, go to page 69 of the report. That is exactly what it says.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

Three! It's a hat trick. How many did you score?

Matthew Canavan (Queensland, Liberal National Party) Share this | Link to this | Hansard source

How are you going to fix that, Senator Conroy? Senator Conroy is going to fix that by scoring goals, apparently. He is going to fix it by going and making lots of money for us from the English Premier League and he can pay for all of our pensions.

Gavin Marshall (Victoria, Deputy-President) Share this | Link to this | Hansard source

Senator Canavan, I would ask you to address your remarks through the chair.

Matthew Canavan (Queensland, Liberal National Party) Share this | Link to this | Hansard source

It is $165 billion a year—and that is in today's dollars; there is no inflation there. That is more than a third of our current budget, our current spending. Average Australians pay about 30 per cent of their income in tax—around $20,000 to $25,000 a year. How will taxpayers pay for everything in the future? In the future a third of our tax is going to have to go to pensions before we fund defence, hospitals, the PBS and Medicare. We have to do something about that if we want to continue to provide an overall safety net for our country—and I certainly want to do that. If we want to continue to help people doing it tough we have to make decisions now or we are going to end up with a situation where our kids and grandkids cannot fund that amount and more radical surgery will have to be undertaken. I do not want that to happen. I want to act now because we are in a position right now to act without panicking. We are in a position to do something about this issue before we get forced to do something about it, when we can no longer borrow money from overseas at the same low interest rates we can right now and when we have massive amounts of debt but have to continue to go back to foreign markets, to foreign banks and to foreign governments to ask them to bankroll our bills. If we cannot do that, then we have completely lost control. Instead of us, here in this chamber, being able to sit down and debate these matters reasonably and with some flexibility, we will be pushed into a situation where we will be forced to make change—it will be taken out of our parliament's hands and it will be in the hands of those who we would seek finance from.

I noted in Minister Fifield's answer in question time today—I do not know if the other side did—that he did say that we are all ears. We are happy to have a discussion as a government about what alternatives might be in place here to deal with this issue, because this is seriously an issue. But there are no alternatives right now from the other side of this chamber who purport to be an alternative government. If you purport to be an alternative government, you should put up alternative proposals to deal with the major issues that face our nation. I note that the minister was asked by the Labor Party: are we still committed to the changes announced in last year's budget? The minister said that, yes, they are still on the table; we are still committed to making sure that we put a bunch of Australian government spending programs on a sustainable path and we are still committed to hearing other proposals to put those programs in place. I just wonder what the Labor Party are still committed to, because their option to deal with this issue is to put up taxes instead. They are still committed to a carbon tax. We have not heard what they are going to do about a mining tax, but presumably they are still committed to that. They are still committed to policies like shutting down the live cattle trade—which we also heard in question time. They are still committed to making sure that Australians in this country pay more taxes and not to funding our future through making reasonable savings and tough decisions on our budget.

Senator Whish-Wilson interjecting—

Yes, and the Greens want to put up taxes too. I should not leave you out of this, Senator Whish-Wilson. I do not believe that more taxes are the solution for this country. I do not believe that our future should be based on paying more taxes. I believe taking off taxes is the right way to go about things. I believe that getting rid of the carbon tax was a multihundred dollar boon for pensioners in this nation. We did not take the increased pensions away from them by doing that, but we did take away the increased costs. Those costs are around $500 a year for the average household, and as a result of our decision pensioners no longer have to bear those costs. The extra pensions have been maintained and pensioners are much better off now than they were at the election 18 months ago.

Alex Gallacher (SA, Australian Labor Party) Share this | Link to this | Hansard source

I too rise to take note of the answer given by Senator Fifield. I know lots of pensioners, and I interact with quite a number in my suburb, because there is a petition circulating at the moment in respect of some cuts in funding initiated by this federal government. I heard Senator Cormann say today that, if you do not learn from history, you are doomed to repeat the mistakes. Had Tony Abbott's new indexation system been in place for the last four years, a single pensioner on the maximum rate would be around $1,500 a year worse off than today. So here we go. Changing this indexation after making a very deliberate, up-front promise not to do anything in the pension area has been rightly picked up by the pensioner community.

We are accused of scaremongering. We do not have to scaremonger. Pensioners are very, very worried about this indexation proposal. We see the two economic dries, Senator Seselja and Senator Canavan, say: 'It has to be done. It has to be done.' The economic rationalists, in Senator Canavan and Senator Seselja, are sent out here to defend the indefensible. There are all manner of members of this place. Out of the 226 of us, there would be no-one who has not had representation on this issue. This issue is widely held and deeply felt, and it is not a scaremongering campaign. People are very, very worried. There are people who do not make a success of this great economy of ours, who by no fault of their own, by dint of their hard work and effort, have failure in the body, just get through to retirement and then have a respectable living on the pension. It is being denied by these people. They send out their foot soldiers, Senator Seselja and Senator Canavan: 'Well, we can't roll the bills over in 2030. Who will look after us?'

We had a proposition where we could incrementally increase people's chances of having a greater respectable retirement by increasing superannuation. That is the way to do it: allow people to have a good, useful, well-paid job and to have a contribution to superannuation that allows them to build a successful fund to then take control of their retirement. But I have to tell you that superannuation has only been around since 1986. There are a lot of people in the economy who are going to retire with minimum savings in super, just a little bit to keep them from actually being on the poor list, and you are taking away the pension that would sustain them, at least in terms of a minimal subsistence level.

And I do know lots of pensioners. I will touch on one issue: the National Partnership Agreement on Certain Concessions for Pensioner Concession Card and Seniors Card Holders. That means that there is another $190 that is going to go on the rates of pensioners because this government has taken $27 million, I think it is, out of the contribution to that national partnership agreement in South Australia alone. That will affect 160,000 pensioners. So, for all the government's claims of doing great things for pensioners in abolishing the carbon tax, it does that on one hand and then it takes it all back on the other. This really is an issue which will come back to haunt this government. And I do not believe that it will even have the intestinal fortitude to carry it out. Its own backbench is in revolt about it. As I say, it sends out the dry economic foot soldiers, Canavan and Seselja, to give us the spiel—no heart in it, no passion in it, no feeling in it.

The pensioners of Australia and the pensioner organisations of Australia will mount a very successful campaign. We on this side know who we stand with. We stand with the pensioners. We stand with those people who need that payment to survive in a decent way. And we are not about changing an indexation, which allows them to get less. We would prefer that they continue on the highest possible index to sustain their modest retirement with a bit of dignity as recognition of the hard work they have put into our great Australian economy.

Question agreed to.