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

We are debating the Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015 tonight. It is a complex piece of legislation. I defy anyone in this chamber to actually try to understand the social security system and to understand the full impact of the pensions process. We are debating this particular piece of legislation here tonight. In my experience working with the Community Affairs Committee it is the first time we have had a bill, one that purports to save over $4 billion for the government, without having any chance for public consultation and an inquiry to give people an opportunity to put forward their views and ask questions. It is even worse than that, because, as you would know, this afternoon the Senate Community Affairs Committee brought down its report on this piece of legislation. Yes, we actually had the opportunity this morning to work through the report on this piece of legislation—when we only had documentation put through by the department today in response to letters, and we had information coming through only at the last moment. We were actually asked to sign off on a committee this morning where we had not even fully read the draft committee report, because the process has been so truncated.

This piece of legislation is important, and it needs to have strong consideration. We had limited time given to us to call for submissions. Early in June the inquiry was declared and submissions were called for. People in the community did not know exactly what the process was. There is a standard expectation for people who work with our committee regularly—and many of the submitters who came through on this piece of social services legislation are regular submitters to a process. So they put forward submissions on the understanding that there would be time for this to be considered. There was no concern that a process would be put in place that would not allow a couple of weeks to look at the process, to look at the submissions, to exchange information and to have a public hearing.

What happened in this place is that last Tuesday we actually had a discussion around the Scrutiny of Bills Committee, where we moved an amendment from this side of the chamber to say that we thought this bill required a longer time for consideration. We had a short debate. We do not like to take much time up for that, because we do not need to have a lot of time on these issues. What we need to have is a transparent process. We had that debate and there was an agreement by the chamber that there would be an extension for the Senate Community Affairs Committee to consider this piece of legislation—well, it is not even this piece of legislation, because I understand a range of amendments have come through from the House this morning relating to this bill, which was a bill that was looking at a number of elements of legislation around pensions, one of which had a time frame that had urgency.

But my understanding is that what we are going to be debating in this place tonight is not that bill. It is a new bill that has actually taken everything out of the original legislation and just focused on the asset-saving component of the original legislation. So, particularly given that, there would have been an expectation, as this legislation does not have an implementation date until January 2017, that there would be an opportunity to have public discussion and some debate and exchange around the intricacies of what will impact on thousands of pensioners in our nation. No-one disputes that fact. This will impact on thousands of people who are currently receiving part or full pensions, and the result of this legislation will be to take that away from them. Even allowing for the very short time that the Community Affairs Committee had put this up on their website and called for submissions, there were already 11 organisations that had given quite detailed submissions, including one personal one—and we have all had that augmented, because many of us have already received quite personal emails from people who feel as though they will be affected, talking about how they believe this legislation will impact on them.

At this morning's meeting the Senate Community Affairs Committee put forward their recommendation that this bill be approved—in fact, it was not this bill; it was actually the wider bill, but they put through a recommendation that the bill be approved. The meeting was early this morning. The house finished their debate about lunchtime. We waited for that committee report to be put into the chamber about two hours ago. So now, we end up looking at the process and seeing where we are going. This is not an effective way to operate. The way that the decision was changed to give an extension to allow for public consultation was an open vote in this place. It was given so that we would come back and have the debate in this place in the first sitting of August, after giving time during the July period for a committee hearing. Then, on Thursday, we had a notice of motion here that effectively changed it back to having this debate here today.

I have not seen that before. It is a novel approach. I cannot argue that the chamber voted for it, but it was passing strange that something for which it was agreed to have a consultation process, a public hearing, engagement, and a chance to have a look at the details and the impact in the community was rescinded and we now have a debate this afternoon. We know the result. We have seen that in the media. We know that we are going through the motions in this place. We know that there has been a deal done between the government and the Greens that this will be finalised this afternoon. In fact I found out about this deal last week after we had had the discussion around the community affairs extensions. That is when I found out to my surprise that there had already been an agreement in the media, in the wider community, that this was going to go ahead. Whilst I am never sure how they operate, Mr Acting Deputy President Seselja—you may well know how these deals are discussed—my understanding is that the deal is that this bill will be done very quickly. It will be done this evening or tomorrow, so then there will be an ability for a period of consultation on the tax white paper over several weeks, which will take in issues of pensions and ageing in Australia.

That could be a very useful thing. It does not really help the people who this bill refers to—the pensioners who will lose their part and full pension. Any discussion that will take place in a white paper discussion around tax at some time in the future will actually be tacked onto the end. My understanding is that this white paper has been evolving over a period of time. This expanded time, which will be the salvation of our community, will not have any value for the people who, as a result of this legislation, will no longer have access to pensions and will have significant questions about their future income.

Those significant questions have already been identified in the submissions that we have had before us. A number of organisations and a number of people have put forward questions. Under a standard process, as you would understand, these questions would be put forward. There would be a time for consideration, and we would have discussion back from the department. But that did not happen. We got public submissions, which raised issues, issues from different groups: the industry super organisation—I will give them their formal title; it always sounds more impressive—Industry Super Australia put in two submissions with a number of questions; the Committee for Sustainable Retirement Incomes—a number of questions also; and also a number of organisations had particular views about public sector superannuation and the future.

On that basis, the normal expectation would be that they would put their submissions in. We would have discussions with the department—and I have to admit: the department provided a fulsome original submission, which set out what the bill did and I appreciate that. Then it put forward a second submission in response to an email from you, Mr Acting Deputy President Seselja, as chair of the committee. And then, splendidly, we got one this morning as well, which was particularly useful when we were actually being asked to sign off on a committee report. The final submission from the department came through this morning at about the same time as I saw the draft committee report.

It is difficult to understand why there is such urgency—why this deal that has been done between the government and the Greens to get this piece of legislation off the agenda—to have this passed quickly so that the changes to people's processes will be done and understood. I just do not understand why it is so necessary to have that in the bag today or tomorrow.

I can always understand when you have time urgency that processes are put in place in this place so we cooperate. We might whinge a bit, because we have not got enough time. But when you have a bill which, in effect, is going to take processes away—between 200,000 or 300,000 pensioners will no longer be in the pension system—I would have thought that considering that that is not going to come into play until January 2017 that there would be some more time for consideration.

One of the things that interested me most in the department's submissions to us was that they talked about the fulsome modelling that they had done—I do not know when the modelling was done—in response to some of the issues that were raised about the timeliness of the changes, the impact of the changes on different percentiles of pensioners and a particular issue about the impact on women. These things were raised in submissions, and we got responses from the department that said that the issues were not real: that it was not standard practice for the kinds of things that were in the submissions about people maximising their income and perhaps harming their lifestyle to save money and ensure that they stayed on the pension. We were told that those things were not accurate.

We were also told that the impact into the forward years, which was a particular issue raised, of these changes was not just now but over a 10-, 20-or 30-year period. The departmental submissions said that in fact this was not true and that they had done modelling that indicated that these things were either not accurate or were not to the extent that had been put forward in the submissions provided to us.

There is just one issue there: we did not get any of that modelling. That was the kind of thing that would have been particularly useful, if we had had the opportunity to have a Senate inquiry to see exactly what modelling was done and how it was done. We did have in the submissions from Industry Super Australia and also from the Committee for Sustainable Retirement Incomes access to direct modelling that they had done in conjunction with partners.

I am prepared always to compare evidence and exchange information. I am disappointed—in fact I am more than disappointed; I am frustrated and angry on behalf of the people who will be impacted by this piece of legislation—that we have not had the opportunity to have the fulsome discussion, examine the information and have the standard operation of this place, which is to bring information before the senators and to work with them so that we can see the balance of the arguments and ensure that there would be an opportunity to make realistic assessments of these arguments and that we are doing our job. We have not been able to do this on this piece of legislation, and I am disturbed by the fact that we have not had that opportunity. This has been an underlying principle of the way that the Senate community affairs committee has operated. There has always been a view that that committee actually works effectively together. We do not always agree. And there could well be value in the process that is before us in this legislation. But we will not have the opportunity to do that—we will not have the opportunity to weigh that up—because the deal is done. The situation is now in place that the tapering rates will change; there will be a stronger tapering rate to pull back the access to pensions for people with assets above a certain amount.

The purpose of the legislation, I am led to understand, is to be more fair. Well, it is difficult to see, when we have actually had the experience we have had with discussions around pensions in this place over the last 18 months. We looked at the budget changes that were promoted by this government in the last budget, looking at the pension system. Those were also put before this place and the community affairs committee. It was argued that those changes would be fair and would ensure that our pension system would be safe into the future. We did not accept that particular argument at that time, and, as a result of the Senate committee process, we were able then to have, over a period of time, public hearings and discussions with the community and arguments that built up to say: 'No—the arguments around indexation that were put before this place and before the Senate after the last budget were not fair and they were not the appropriate way to look at making sure that our pension system was sustainable.' And the government agreed with the recommendations that came out of that. The government saw that there was a lack of support for this process in the community and in the Senate. And the reason that that was able to be identified was the process that we had in place to scrutinise the proposals and to scrutinise the legislation. That has been denied to us in this process.

So now we have another batch of legislation. 'No, no, no,' the government says; 'what we did last time was not fair. This time, we are going to make it fair. We are only going to change pensions for people who are wealthy—who are well off and who have significant assets.' That is the proposal that we have in the legislation. And we have evidence from organisations such as ACOSS and welfare rights organisations to say: 'Yes, this is a movement forward; this should be considered.' I acknowledge, from looking at the information we have, that the people who are being impacted by this legislation are not those who are totally reliant on the pension. They never have been. That has not been the client group to which this legislation applies. But the blanket statement that these people are completely wealthy and that their security will be intact by putting this legislation in, is—in my opinion and the opinion of a number of people who have submitted to this particular process—not understood or accepted.

That is why we, on this side, are not supporting this legislation. We think that these pensioners should be supported and that any change to the pension system should not be done in such a piecemeal way. That has been mentioned by a number of the people who submitted to this particular process, truncated as it was, such as National Seniors and COTA. A number of people have put forward that this is not the way to look at our pension system. You should not just identify one group and, in one sweep, just change their processes without interacting and consulting with them and working through what the real impact will be.

There is not understanding of these changes. But the deal that has been put in place between the government and the Greens will mean that it will go—that this is already accepted. Yet there is no understanding of the impact on these people. Their questions have not been answered. Their futures have not been made secure. And they will have to deal with significant changes which will not, in their eyes, be equitable or fair.

A number of the submitters—as you would know, Mr Acting Deputy President Seselja—compared the circumstances of people who have been affected by this legislation with those of other people who are also currently in the pension system, and their circumstances will be seen as not equitable. That is particularly so around the asset treatment of people who are homeowners, for whom their home is not counted in their pension assessment, and for people for are not homeowners, for whom every asset they have is counted in their pension assessment and can actually take away from them in the assessment of the pension.

So this particular process is not supported by the Labor Party. We are not supporting the changes to the pension in this way. We are particularly not supporting the lack of evidence that has come before us to make an informed decision. When we are talking about savings of the extent that we have before us, we believe that there should be the opportunity for consultation, for examination and for a genuine understanding of the direction of the legislation and of the modelling that went behind the arguments that have come forward, not just blanket statements or a list of figures in a draft, which is what we have got in the departmental submissions. We need to see the actual modelling so that that can be looked at independently to show, as to people who are affected by the changes that are being put in place, whether their futures will be secure and whether the impact of the taper will allow them to have the kind of secure future that we expect. I am not saying that the people who are affected by this legislation are the ones who are at the lowest level, but they should be respected and their information should be shared. (Time expired)

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

I rise today to speak on the Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015. A decent retirement is essential in a caring society—I think we all agree with that. That is why the Australian Greens have not ruled out any change to any part of our retirement income system if it makes the system fairer. Unlike other parties, we remain open to changes to both pensions and superannuation if those improvements result in a fairer system that ensures all Australians can enjoy a decent retirement.

We note that there have been some substantial reviews of parts of retirement incomes and that, in the past five years, these reviews—namely, the Henry tax review and the McClure report—have in fact been looking at these very complex systems. Both these reports identified that significant structural change is required and made recommendations to simplify the tax and transfer system and to make it fairer.

However, the Australian Greens recognise that complex change often requires some initial steps to spark the momentum for broader change. We are not the only ones who believe this, either. A number of stakeholders acknowledge that this is in fact heading in the right direction. Uniting Care said today:

… Uniting Care Australia is pleased that the government and the Greens have responded to ours and the calls of COTA and ACOSS to change the pension asset rules.

  …   …   …

This change is a constructive step in the right direction.

ACOSS have been pushing for this outcome for a long time and said on budget night:

This change in terms of moving away from indexation to a tightening of the assets test, we absolutely backed.

The Council on the Ageing clearly recognised that the review that we have secured will go some way to starting the process. They believe this is a step in the right direction, even if the Labor Party do not agree.

This is how we get change: by building momentum. Imagine if we stopped trying every time the government said, 'No, we won't do what you want.' I would not be here if I believed that was the case. But this policy stands on its own merits. This policy effectively reverses the decision of the Howard government to spend the benefits of the boom on tax cuts and bonuses to shore up support in the lead-up to the 2007 election. Senator Brown, who was leader of the Greens, said at the time:

The Howard government is focused on giving the aged pension to more wealthy retirees when it should be focused on raising the income of those currently struggling on the aged pension …

The Australian Greens opposed this measure in 2007 because it gave high-income earners a more generous retirement income while doing nothing to address the needs of the most vulnerable. We now support its reversal, particularly as this measure ensures that more Australians who do not have the advantage of a healthy super balance will be able to access a full pension.

We need to look at the role of superannuation and assets in retirement. The debate about the impacts of this bill has highlighted the role of superannuation as a complementary policy to means tested pensions that is designed to ensure that people save throughout their life for their retirement. I know that Labor has been citing a range of statistics supplied to them by the super industry, in particular, Industry Super Australia. One of these statistics is that half of new retirees will be affected by these changes. Without any further consideration, that sounds pretty scary. But one of the key conclusions that we draw from their submissions is that more people will retire with super assets that exceed the minimum thresholds into the future.

In fact, we know super is increasing. It is reflected by industry reports that superannuation hit a new record high this year, and over the past 12 months there has been a 14.3 per cent increase in total superannuation assets. A disproportionate amount of this is going to the top 20 per cent of people. But clearly everyone is benefitting from the higher compulsory super contributions from their employer and will retire better off than previous generations did.

When we consider this measure, we need to stay clear eyed about how much these pensioners are holding in personal wealth. The superannuation system is doing what it was designed to do. It is not doing enough properly, and I will come to that. Is it really fair for a millionaire to claim a pension? Is someone who owns their own home and has half a million dollars in the bank really comparing themselves to a single person who has no home and no assets and receives a full pension and thinking that the full pensioner has it better? Really?

I note that a number of organisations have said that the seniors that they represent will be worse off. But in making this assessment they are also promoting the assumptions that people should not and will not draw down on their superannuation assets to replace government assistance that they no longer receive. While individuals have autonomy and control over how they structure their retirement incomes and are encouraged to find arrangements that best suit their personal circumstances, the policy settings in Australia have deliberately encouraged the accumulation of financial assets for retirement, not for estate planning. In other words, people who have significantly accumulated wealth are encouraged to spend it. After all, super is, in particular, a forced savings scheme that helps people fund their retirement. So some draw down of assets is clearly required and is, in fact, intended.

The departmental modelling shows that an individual may be required to draw down up to 1.84 per cent of the capital annually if those assets are not earning them any form of return at all. At this rate, a single home owner with half a million dollars in the bank would take at least 25 years to draw down their assets to $290,000, which is the level where they would be eligible for a full pension. However, we also note the evidence that the committee received that many part pensioners are increasing their assets. For these pensioners, the time it would take to draw down their assets would be substantially longer than 25 years.

I acknowledge that some individuals have their investments invested in low-yield accounts and they are not earning very much additional income from them. It is clear that these individuals will need to adjust if they want to avoid drawing on their assets to the extent outlined by the department, and that is why we need to ensure there is significant and thorough financial advice provided to people so they can earn better income from their assets. While there will be some variation from person to person, it is clear that people will be able to supplement their retirement income and still achieve a decent life for the duration of their retirement if they have assets above the proposed minimum thresholds.

I also note that a number of organisations have tried to model the effects of the pension changes. This has led to a range of claims and counterclaims being thrown about. I note that the Labor Party and the ACTU are quite happy to tell us how women will be affected in 2055. But I would argue that some caution citing these projections should be taken when you are projecting that far forward. Let us take a moment to reflect how difficult it is to make such predictions about the future. Who would have predicted in 1975 that our world would look the way it does today? In 1975, we did not have the internet—we did, in fact, have free education—and there were many other things that are totally different. Who really thinks we are going to have the same settings in 2055 that we have now? What things will change in another 40 years? There will be significant change in another 40 years. Who thinks that nothing else will change between now and 2055?

What we do know and what is clear is that superannuation tax concessions are not creating a sustainable system for the future. The Financial System inquiry shows that one-third of all superannuation tax concessions are going to the top 20 per cent of earners. This means that the well-off are able to get richer while those in lower and moderate income jobs are unlikely to have enough to comfortably retire. Submissions to the tax review have also demonstrated that a number of people will be unable to retire comfortably if we do not make structural changes to how people save for the future during their working life. Women in particular are poorly served by our current arrangements, and here I agree that numbers affected are likely to increase over time. But when we drill down into Labor's argument that 80 per cent of women will be worse off, we find it is based on this great little graph in Industry Super Australia's submission. When you look at the graph closely you realise that it shows that, in 2055, 60 per cent of women will not achieve a comfortable standard of living under the current policy settings. In their terms this is an annual income of $42,000—which is $20,000 more than the basic rate of pension for a single person—so there is also an argument to be made there.

Putting aside the argument about what a comfortable or decent retirement actually is—because different people have different opinions—this demonstrates the challenge that we still need to resolve if we aspire to ensure that women's retirement incomes are higher than the basic rate of the pension. With this in mind, increasing the minimum threshold in the assets test will assist those women who retire with very limited savings, by helping to ensure that they are eligible for a full pension. However, in the long run we need to address the reality that women are paid 17 per cent less than men, are regularly lumped with unpaid caring responsibilities and, as the majority of part-time workers are women, they bear the brunt of the regressive 15 per cent tax on super. This is why the Australian Greens support the effort to make the system fairer by giving more to those with modest assets while building momentum for super changes and the other changes that are needed to ensure all Australians have a decent retirement.

A number of organisations have called for a broad review of retirement incomes that builds on the substantial body of work that already exists. In particular, they are calling for an examination of the interaction between pensions, superannuation, taxation and employment. In response to this repeated call, the Australian Greens have taken steps to ensure that retirement incomes are a chapter, not a paragraph, in the tax review. Stakeholders will have not only the extra time to put in submissions but also the opportunity to talk directly with the government before and after the green paper is produced. It will be very hard for the government to continue to ignore the evidence that organisations are preparing for the tax review and the continued campaign to change super. It is clear that Australians will demand a response that makes retirement incomes more, not less, caring and equal. The Australian Greens are calling on the government to engage stakeholders in the tax review in good faith, and hope that all parties demonstrate their support for serious structural reform that does not exclude any aspects of superannuation, taxes, pensions or employment. We need this in order to reverse the growing wealth inequality between older Australians and to ensure that all members of our community can live with dignity in retirement.

I will take this opportunity to remind the chamber that the Greens are the party that has consistently stood up for those who rely on the pension. You will recall many of the attacks on low-income people that have taken place in this very chamber over the years—some before my time in this chamber, and some during the time that I have been here. Let us talk about single parents, shall we? It was Labor, as I recall, who supported pushing those single parents that were grandfathered from the Howard government's Welfare to Work; who pushed thousands and thousands of single parents and their children off the single parent pension and onto Newstart. Data from Senate estimates shows us that 95 per cent of the single parenting payment recipients are women, and that they are struggling to meet essential living costs. Where was the passion for the pension then?

Let us talk about those who are surviving on the disability support pension. It was Labor who brought in the legislation that denied both young and old Australians access to the disability support pension for 18 months while they had to prove whether or not they could find a job. They were condemned to living on Newstart—an allowance, not a pension. As well as that, Labor supported the Liberal government's attack on young people on the disability support pension, with their reassessments. And let us not forget the revised impairment tables, which made it even harder for those with disability to get access to the disability support pension. These are pensioners, these are people whose lives were made harder. How can Labor say that they care about pensions when they have demonstrated their willingness to hit other pensioners over and over again?

It is time to put policy first. The Greens have thought long and hard about this decision. I have agonised when I have been reading the emails, but this is about making the retirement system fairer for everyone. The Greens are sticking to our principles rather than trying to shore up votes for the next election. We have to take a stand to make long-term decisions that ensure our income support system truly provides a decent, adequate standard of living. Both of the major parties have been refusing to talk about real change that is needed, and to take this change seriously, whether it is addressing this particular change or changing superannuation. We know that needs fixing. We know that there is growing inequality in this country. The report from ACOSS today highlighted that. The report released by the Bankwest Curtin Economics Centre at Curtin University last week showed growing wealth inequality. We need to tackle it.

We need to be making change not from election to election, but long-term change. By supporting this measure and continuing to build momentum for change, the Australian Greens are building on the work we have been doing in this place for over a decade—work that Senator Brown did in this place on retirement and on ensuring that all Australians have access to a decent retirement. That is what our eyes are on—making a fairer system that looks at and takes into account superannuation, pensions, taxation, employment and age discrimination. Those are the things that we have on the map, and on the page. That is where we are heading.

Sitting suspended from 18 : 30 to 19 : 30

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

I want to reiterate some of the issues Senator Moore mentioned earlier in her contribution in regard to this bill. This legislation has been unduly rushed. The speed at which this bill is being passed through this place is utterly ridiculous. The changes are not going to be implemented until January 2017, yet we are being expected to pass this bill today. This bill passed the House probably three or four hours ago, so I would have to wonder what the great rush is. One of the big areas of concern I have is that the Senate Community Affairs Legislation Committee has also been extremely rushed in its report. It is extremely unusual that a bill that will affect so many people—hundreds of thousands of single pensioners and couples—is rushed so quickly and so unnecessarily.

As much as I do not want to say it, it would appear that the Greens and the Liberals have done a dirty deal and the bill is being rushed through before that deal falls apart. I find it extremely hypocritical of the Greens to rush this bill. They have come into this place on many occasions in the seven years that I have been here and complained when other bills are rushed due to a genuine need. It is utterly hypocritical. As a member of the Senate Community Affairs References Committee, I know how well these committees work in a bipartisan manner. As Senator Moore said earlier this evening, the committee only received answers from the department this morning, yet the report was tabled earlier this afternoon. I am at a loss to understand why there was just 18 days between when the inquiry was referred to the committee and when the committee reported on such an important issue. This issue affects so many people.

Labor senators on the committee had very little time to even write a dissenting report, but I thank Senator Moore, Senator Carol Brown and Senator Peris for the important comments they made. The Labor senators highlighted the deal done between the government and the Greens to amend the reporting date and to require this report to be finalised two full months in advance of its prior reporting date, the agreed reporting date. This change presented significant difficulty in ensuring this inquiry could fully investigate the impact of the changes proposed in the bill. We on this side consider the change of reporting date to be contrary to proper process and contrary to the proper functions of the Senate. As I said, I do not know how many times I have heard the Greens come in here and complain about things they think are not due process or are not proper functions of the Senate. The change in the reporting date unnecessarily shut down a proper public debate and discussion about the changes. As I said, this is an issue that will affect thousands of Australians, mainly on low- to middle-incomes. I wish to record Labor's strong opposition to the change.

I note that the conclusions drawn by the government and Greens senators are contrary to the evidence presented. It is really a case of the evidence saying one thing and the committee report saying another. In particular, a significant number of participants in the inquiry have taken issue with the changes proposed by the government to the assets test. I am particularly concerned about the disproportional impact that this will have on women. I would like to quote evidence in the dissenting report from Industry Super Australia:

The proposed changes in the taper rate will amount to a 15 per cent overall cut in the retirement income of some people who are on incomes below a comfortable standard, while people on higher incomes are largely unaffected. Women are especially harmed—under the proposal, eight in 10 single women retiring in 2055 will do so on incomes below that needed for a comfortable living standard …

The Bill's negative effects on single women will hit those on pretty modest incomes: Women aged 55-59 will be affected from earnings above $46,220; women aged 45-49 are affected from earnings above $40,568 and those aged 25-29 from earnings above $23,954.

Their evidence—and this was in the dissenting report also—indicated that:

The proportion of new retirees affected by the proposed change will increase sharply over time. The proportion of new cohorts of retirees affected by the proposed asset test change increase from one in three today to seven in 10 by 2050. This influx will increase the overall proportion of the Age Pension population who are worse off from just over 10 per cent in 2017 to over 40 per cent by 2055.

People might think 2055 is quite a way off. But if you are a young person, or even a not so young person, in the workforce now and you are working towards your retirement, 2055 is not that far off. That is one concern I have. I have other concerns with this bill, and not just in regard to the process and the contents. To begin with, there is the title. The title of this bill includes the words 'fair and sustainable pensions'. Yet this bill cuts the pensions of single pensioners by up to $8,000 a year, and of couples by up to $14,000 a year. I doubt that there are many Australians, particularly among those relying on their pension for income support, who would regard that measure as either fair or sustainable.

The Prime Minister looked down the barrel of a camera and promised no change to pensions, yet it was not very long after that that he launched the most savage attack on pensioners as one of the key elements of his cruel and unfair budget—it was only one of a number of savage attacks, I might say, but it was a savage attack. It was a cut which would have seen the pension drop from 28 per cent of average weekly earnings to just 16 per cent within four decades. Within the next ten years, pensioners would have been worse off by $80 a week, and the measure would have ripped $23 billion out of the pockets of Australian pensioners. This was just the first wave of the Abbott government's attack on Australia's pensioners. My Labor colleagues and I spent a year fighting this savage attack on Australia's pensioners and, fortunately for the 3.5 million pensioners, we won that fight. But now we are faced with the second wave of the government's attack—a cut to the pension which will affect 320,000 pensioners, of whom 90,000 will lose their pension altogether. This is an extraordinary move from a government which promised—listen for it—no cut to pensions.

Labor does not support the government's proposed changes to the pension asset test, and we will oppose this bill. These changes will disproportionately affect pensioners on low and middle incomes. Independent analysis of the proposed changes shows that the impact of these cuts will fall hardest on people with below-average incomes. Assuming a five per cent return, a single pensioner generating an income of only $25,000 a year from their assets will be around $8,000 a year worse off. Based on the same return—that is, five per cent—a couple earning $20,000 a year each would lose $14,000 a year. While about a tenth of Australia's 3.5 million pensioners are currently affected by these changes, the effects will be felt by more and more pensioners over time. Within ten years, around half of all new retirees leaving the workforce will be impacted by these changes. And in the future it will continue to be those on low incomes who experience the greatest impact. To illustrate this point, a couple 20 years from retirement earning only $45,000 each will be worse off by $1,500 a year each. By contrast, a couple earning $145,000 each will lose only $113 a year.

It is estimated that, under the current assets test, about half of all single Australians retiring in 2055 will not achieve a comfortable retirement. I am not sure what the government thinks is fair and sustainable about this. Under the proposed changes, this will increase to 70 per cent of single men and 80 per cent of single women. In fact, as well as attacking the living standards of low and middle-income Australians, the government's change to the asset test provides a perverse incentive for retirees to divest themselves of their assets instead of saving for their retirement. Professor Miranda Stewart, director of the Tax and Transfer Policy Institute at the Australian National University, said that the proposal is poor policy because it penalises savings. Her submission to the committee's inquiry into the bill said:

The proposed asset test tapers effectively doubles the rate of the wealth tax on pensioners while simultaneously narrowing the tax base, contrary to generally accepted good principles of tax and transfer design.

…   …   …

Assuming a return to savings of 5%, a consequence of the asset test is that income from savings is heavily taxed at an effective marginal rate around 160%…

What Professor Stewart means by this statement is that pensioners will be worse off by $1.60 for every dollar they earn from their savings. Similar comments have been made by National Seniors Australia and by the Committee for Sustainable Retirement Incomes. In fact, the message the government is basically sending to new retirees is this: withdraw your retirement savings and go on a spending spree. This may be great for short-term economic stimulus, but in the long term it is going to result in people relying on more, not less, government assistance for their retirement incomes.

It appears that the government will get the support they need for this cruel cut to the pension because of the deal they have done with the Greens. It is interesting that the Abbott government would ally themselves with the Greens, because on the day before the election—in fact, the very same day Mr Abbott that made his no-cut-to-pensions promise—he also promised, in a Fairfax op-ed, that the coalition: 'will not do any deals with the Independents and the Greens'. Well, we all know what has happened. I think it behoves those on this side of the chamber—those of us who stand up for pensioners—to remind the Greens that their charter says that they will introduce measures 'that redress the imbalance of wealth between rich and poor'. I would invite the Greens to reflect on this statement and to consider who this change to the assets test will affect, particularly with reference to the analysis I mentioned earlier. If this measure goes through, as it appears it will, Labor will have no hesitation in reminding the 320,000 pensioners affected—and the millions more who will be affected over time—that it was the Liberal-National coalition, with the support of the Greens, who voted to cut their pension. And, contrary to the claims of the government that it will only affect the well-off, this Liberal-Green pension cut is an attack on low and middle-income Australians.

Labor is not opposed to fair and sensible savings, but we are opposed to cruel, short-sighted and ill-thought-out policies like the government's proposed change to the pension asset test. It is important that we address a couple of deliberate misconceptions that the government is trying to peddle about Labor's position on this matter because if you listen to speakers on that side of the chamber you would think that Labor is not serious about making savings. But their argument is really a straw man. It is patently ridiculous to suggest that, just because we do not accept every savage cut that the Abbott government puts forward, we are not committed to making savings. I also hear the government's catchcry, in this debate and in other debates, that if Labor does not accept the government's savings then we have the responsibility to put forward alternatives. Well, guess what? We have—we have put forward alternatives. In fact, Labor has released policy which will deliver $20 billion worth of savings over the next 10 years. These savings include a crackdown on tax minimisation by multinational companies and better targeting of superannuation tax concessions.

The key argument we always have with the government is not whether savings should be made but who, or what, should be targeted when it comes to making savings. On this side of the chamber, we believe it is those who can most afford it; the government seem to think it is those who can least afford it. Do the government really believe that nothing should be done about superannuation tax concessions when only 10 per cent of Australians receive 38 per cent of concessions? You really have to question the priorities of the government when they think it is fair that a pensioner on less than $30,000 a year should have their pension cut by $8,000 while another retiree can have a superannuation balance of $1½ million and an income of $100,000 a year and pay no tax whatsoever. The Abbott government have their priorities very, very wrong. When seeking to make savings, they immediately turn their attention to the most vulnerable and disadvantaged people in Australia, while looking after the powerful and wealthy. This is why they go after low-income pensioners while opposing proposals for superannuants with multimillion dollar balances to pay a reasonable amount of tax.

I know many of the unpopular measures in their first budget were dumped, including the GP tax, pension indexation and their unfair and unaffordable paid parental leave scheme—I think that was the Prime Minister's signature tune; his signature policy. Well, it has gone and I hope that, in the not too distant future, so will be the Prime Minister. Let us not forget—because this is really important for people to remember—that these things would be law right now had the government been able to secure the support of the Senate. They did not dump these policies because they were unfair or because they were so clearly rejected by the Australian people. They dumped these policies because they could not get them through the parliament.

Of course, whenever the government try to justify their broken promises and their cruellest cuts, what do they do? They try to blame Labor by pointing to the position of the budget. Despite all their finger-pointing, it was the current government who doubled the deficit so soon after coming to power. People need to be reminded of that. They tried to fudge the 2013 Mid-Year Economic and Fiscal Outlook and pretend that the budget had been left in worse shape that they thought. It is a cheap parlour trick and remains a pathetic excuse for Mr Abbott breaking his clear, unequivocal promise on pensions.

I have had hundreds of pensioners contact my office to express their disgust at the government's betrayal, and I know my colleagues on this side also have. Senator Polley, Senator Ketter, Senator Urquhart and Senator Conroy—all of us on this side—have received those emails and had pensioners contact our offices. Let me remind and assure pensioners: Labor will continue to stand up for you and we will continue to hold the government to account for their broken promise. We will not waver on this issue, because on this side we understand that those on low and middle incomes deserve a break, not those who can well afford a break so that they can make even more money.

Richard Di Natale (Victoria, Australian Greens) Share this | Link to this | Hansard source

I rise to speak in support of the changes contained in the Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015. Let me begin by saying that Senator Bilyk is absolutely right: many of the government's budget measures stink—they stink. The attack on the poor through the government's removal of income support in the previous budget continued into this budget. There was its attack on health care by introducing the GP co-payment. There was its attack on our hospital system by starving our state hospitals of funding. It has attacked so many people in society—the poor, the sick and the vulnerable. But—and there is an important 'but' here—there are some areas of this budget that are worthy of support. The changes to pensions are a very modest improvement to the pension system. They are very modest but an improvement nonetheless.

Let's start with a bit of history about how we got to this position on pensions. This was the result of a 2007 cash giveaway by the Howard government. This was largesse in the middle of a mining boom and in the lead-up to an election, where the Howard government decided to increase the asset threshold to make pensions available to millionaires. That is what it was. It was a cash giveaway—and the Greens opposed it at the time. At the time we said, 'It's not acceptable that we give money to people who, over and above the family home, have more than $1 million of assets. That's not what the pension system was designed to do.' This measure reverses that position taken by the Howard government back in 2007 and opposed by the Greens then. It reverses it.

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

You're trousering pensioners. You've got your hand in pensioners' pockets.

Richard Di Natale (Victoria, Australian Greens) Share this | Link to this | Hansard source

Let's get a few more facts on the table. Eighty per cent of people will not be affected by this change. Eighty per cent of pensioners will not be affected. Who will be affected? One hundred and seventy thousand pensioners at the lower end of the scale will receive an increase in the pension of, on average, $30 a fortnight. If you have more modest means and are at the lower end of the asset scale, you will get an increase under this arrangement.

Who loses out from this deal? According to Senator Bilyk, the most disadvantaged are those people who own $1.1 million over and above the family home—let's remember the family home is exempt from this decision. Those people who have assets of over $1 million as well as the family home, which might be worth several million dollars, are the new battlers for the Labor Party. They are the disadvantaged community that Labor stands to represent. No. This is a good decision. It is a sensible measure.

Helen Polley (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary for Aged Care) Share this | Link to this | Hansard source

You can't justify it.

Richard Di Natale (Victoria, Australian Greens) Share this | Link to this | Hansard source

While there is a lot of hyperventilating from Senator Polley and Senator Conroy, I suggest that what they need to do is have a chat with some of their colleagues in the shadow cabinet. For example, there is the shadow Treasurer, Chris Bowen, who supports the Greens policy on this measure. Tony Burke supports the Greens policy on this measure. Anthony Albanese supports the Greens on this measure. Mr 'Let's reduce income inequality across Australia' Andrew Leigh is in favour of the Greens on this measure. Half the shadow cabinet supports this decision and we have a Prime Minister who goes into bat for people with assets of over $1 million. They are the new battlers for the Labor Party.

To be frank, I am just staggered that we are here. I thought this would be a non-controversial debate. I thought we would be here with this legislation supported by all members of parliament and we would go some way to fixing a pension system that was broken. The last time the government was in control of pensions we had single parents camped out at Jenny Macklin's office complaining about removal of income support for those people. Here, we are expected to believe that this is an opposition that supports the battlers—those millionaires and single parents, of course.

Who else supports the policy? Let us have a look. The Australian Council of Social Service, a group of people who go into bat for the most vulnerable in our community, are staunchly in support of these changes, and there is the Council on the Ageing and UnitingCare. They all strongly back the changes—along with half the shadow cabinet. It is no surprise that we have industry super funds that do not support it. They are a vested interest in this with a clear mandate to ensure that governments look after people's retirement incomes rather than their own members'. It does not surprise me that the ACTU supports the position of Australian industry super, given the nexus between industry super funds and the ACTU.

My message to the Labor Party is, if this policy position is so reprehensible, rule it out. Let us see Mr Shorten, if he becomes Prime Minister, make an unequivocal commitment to repeal this piece of legislation. It is simple. You can demonstrate that your words are more than hollow words by making a clear commitment to ruling out these changes should you become the next government of Australia. So far, there is deafening silence. We have an opposition leader who criticised this position but will not commit to reversing it. That is hypocrisy, in the extreme.

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

You can still change your mind!

Helen Polley (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary for Aged Care) Share this | Link to this | Hansard source

You can change your mind!

Richard Di Natale (Victoria, Australian Greens) Share this | Link to this | Hansard source

You will not commit to reversing it if you are in government. You will criticise it and yet you will take the savings. You will bank them if you become the next government. If that is not true, come out and make the commitment, right now. They will not.

Let us look at what else this legislation delivers. This legislation delivers a review into retirement income, something that Senator Siewert has been battling hard, with the sector, to ensure that we can deliver on it. And we will deliver on that. We will get a review into retirement incomes, because it is true that addressing the issues of pensions is only one small part of what it means to live a decent retirement. We need to look much more broadly at issues like superannuation, retirement age, age discrimination and many other issues that feed into what it means to have a good, fair and decent retirement.

We do have, now, a review into superannuation taxation concessions. That is a start. We are having a national conversation about what it means to live a decent retirement, and superannuation tax concessions are a critical part of that. I look forward to both sides of politics supporting the costed Parliamentary Budget Office proposal for reform of superannuation that the Greens have now put on the national agenda. That is a good thing.

So what do we have? On balance, we have a reform to the pension system that addresses the issue—

Senator Conroy interjecting—

Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Mr Acting Deputy President, on a point of order: I am sitting behind Senator Di Natale and I can barely hear him. He has obviously touched a raw nerve with the Labor Party, here, tonight. Could you remind them that interjections are disorderly, please.

Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

Senator Whish-Wilson, you make a very good point, and I am sure Senator Conroy has picked it up and will act in a very orderly fashion. Senator Di Natale, please resume.

Richard Di Natale (Victoria, Australian Greens) Share this | Link to this | Hansard source

Thank you, Mr Acting Deputy President. At the risk of causing a myocardial infarction in some of my colleagues, I will keep my comments a little more brief and come straight to the point. This is a government that has attacked the social contract on so many issues but, on this one—just like a broken clock—they have it right. A broken clock gets it right sometimes. We need to get a fairer pension system and this is a small step towards doing that. It ensures that people of more modest means get an increase in their pensions and it means that people with assets of $1.1 million over and above the family home get less. I do not think that is a bad thing. I think that is fair and reasonable. It is consistent with our position in 2007. It is consistent with where a number of groups—like the Australian Council of Social Services, Uniting Care and the Council on the Ageing—believe we need to get to. It is consistent with where half of the Labor Party's shadow cabinet are at. It is why the Greens have supported it.

We have supported it because the policy measure stands on its own two feet. In addition to it, we have delivered on a review into what it means to live a decent retirement, something we think is critically important. Should a future government decide to tackle some of those bigger issues around what it means to live a decent retirement—superannuation, tax concessions and age discrimination—we will have a blueprint for them ready to go. I just hope that those people standing in opposition to this bill, should they get the opportunity to reverse these changes, reverse it. But guess what? They won't—because their words are hollow.

Helen Polley (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary for Aged Care) Share this | Link to this | Hansard source

I rise to speak on the Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015. Australia is a generous and compassionate nation and our society has been built upon a commitment to help those less fortunate, but the measures in the bill before tonight stand to jeopardise this. The measures in this bill stand to dissolve the strong social safety net put in place by Labor. Labor will continue to fight for a strong social safety net for those who have worked hard and saved for their retirement. We will protect a safety net that says that when you grow older, when you have worked your whole life, when you have paid your taxes and when you have worked to build this country, then the government will ensure you have a sensible and reasonable retirement. The Prime Minister has tried to cut the pension ever since he was elected. Academics and policy experts have condemned these nasty pension cuts in their submissions to the Senate inquiry into the legislation. The Senate inquiry would have allowed proper scrutiny of these cuts, but the Abbott government and the Greens have teamed up to shut it down. By ramming and rushing these cuts, the Abbott government and the Greens are not allowing us to have a wholesome and mature discussion and are denying us the ability to do our jobs properly.

Those on the other side of the House like to talk a lot about how much they respect older Australians and how they want to protect them in their retirement, but we are yet to see them walk the walk. It is very easy to talk the talk, but when are they going to start demonstrating it? As said before, we have before us a bill of legislation that is unfair and represents repeated broken promises. The first broken promise is reflected in those famous words spoken by the Prime Minister when he said he would make no changes to the pension. He promised this nine times before the last election—not once, not twice but nine times. Tony Abbott's first budget disgracefully targeted pensioners as an easy source of revenue and now we are witnessing a second lot of changes the government wants to make to the pension.

The first time the Abbott government targeted pensioners in 2014. Labor joined forces with the community and won. We stood side by side with pensioners in every corner of Australia and fought the Prime Minister's unfair changes from last year's budget and we won. Because of Labor, 3.5 million pensioners can rest easy, but we will continue to stand for Australian pensions. The next phase of the government's push to unfairly target pensioners has begun and the Australian Greens have signed a grubby deal with the Abbott government to rip $2.4 billion from pensioners' pockets. It does not matter how many times Senator Di Natale, the new leader of the Greens, comes into this chamber and tries to justify the agreement that was made, he cannot, because, quite frankly, the Greens have sold out. Quite clearly, they have sold out and they have joined the coalition. So, when it suits them, they come into this chamber and make claims about them being holier than thou, that they are the people who speak for the undertrodden and those people who have been left behind, but, quite clearly, when it suits them they will get into bed with the government, and that is what they have done on this occasion. This is quite clearly a grubby, dirty deal to put their hands in the pockets of every Australian pensioner in this country.

This deal sends an unmistakable message to every pensioner in Australia to never, ever trust the Abbott government and to never, ever again trust the Greens. As I said, it does not matter how many times the Greens say it—whether it is the Greens leader or any other member of the Greens team—they will never be able to justify this unfair attack on the retirement of Australian pensioners who have saved, worked and paid their taxes for all these years and planned for their retirement. We have examined the proposed changes in detail and we have looked at how it will impact on retirees in the future. We have also worked through the policy detail and consulted with the ageing and superannuation sectors to understand the true impact of these changes. This is the way we go about business, because, unlike the government, Labor values fairness. Every which way we turn, all we see is a sustained attack on pensioners who have worked hard all their life and saved hard to retire with some comfort.

We will continue to stand by the Australian pensioners. There are 330,000 people who have worked their entire life and have planned for their retirement who stand to be up to $8,000 worse off every year because of the inequitable and short-sighted move by the government and the Greens. Through this bill, we are seeing 330,000 pensioners worse off in the first year. There will be 90,000 pensioners kicked off the pension altogether and more than half of the new retirees will be left worse off over the next 10 years. Some single pensioners will lose $8,000 and some couples will lose $14,000. The Abbott government is so out of touch with Australian pensioners.

I would like to reflect again on the shameful role of the Greens in this process. Their decision reflects incredibly poorly on the Greens who have sent a million retirees up the river for short-term political gain, and what have they gained out of this grubby deal? What has this grubby deal delivered? A review of superannuation when already Mr Abbott has ruled out any change for the wealthy superannuants of this country. We know that it does not matter, in most cases, what Mr Abbott says or what he puts in writing. He does not keep to his commitments. I will tell you one thing: I would put my house on it that he will keep this commitment, because he will never, ever review superannuation benefits for the wealthy in this country. That you can put your money on every single time. We know on this side that Tony Abbott will never, ever deliver anything more than just a review of superannuation. How can sensible, mature members of this Senate be so gullible as to believe that this government would deliver anything more than a review? We can all review papers, just like they will review them—'We've reviewed superannuation, but we're not changing our position—not at all.'

The Abbott government's dirty deal with the Greens proves that there is only one political party in this country that Australian pensioners can depend on—and that is the Australian Labor Party. We on this side are proud to stand up for Australian pensioners. We will stand up and fight for the pensioners to the next election and beyond. We are the ones who understand that those people entering into retirement—and Australian pensioners—need to have some certainty. They need to have some security. These changes that the Greens are going to support will not allow people to have any certainty or security going forward in their retirement. Australians deserve much better. They certainly do not deserve to be undermined and belittled by Scott Morrison and Mr Abbott. Labor will remind Mr Abbott every day between now and the next election of his broken promises to Australian pensioners. As I said, I am proud to be part of a traditional political party that has always put fairness and equity above political pointscoring and short-term opportunities—unlike the Greens.

Can I say yet again that, too often, we have to sit in this chamber and hear from those opposite—from government senators like Senator Macdonald and like so many others—who come in and lecture us almost daily about the Labor-Greens deals; it is always Labor and the Greens.

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

The Liberal-Green alliance, protected from the chair.

Helen Polley (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary for Aged Care) Share this | Link to this | Hansard source

We now have, very clearly, a Liberal-Green alliance—an alliance that is going to deliver nothing for the dirty deal they have done. They are going to be delivering nothing. The Leader of the Greens tried to justify, in his speech, why they have sold out Australian pensioners—why they have sold out those people who have worked very hard to accumulate some superannuation. He tried to justify this by saying that there is going to be a review of superannuation, and that some future government or some future leader might want to pick up on this. Heavens above! If you are going to do a deal ,the first rule of politics—

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

Read the fine print!

Helen Polley (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary for Aged Care) Share this | Link to this | Hansard source

Absolutely, Senator Conroy—read the fine print. But make sure you get something in return for what you are giving away. And there is no justification for what the Greens have given away. They have given away certainty for Australian pensioners and for those part-retirees who are self-funded. It would be very interesting to see Senator Whish-Wilson go along to the next meeting of the self-funded retirees meeting in Launceston, his home city, and talk to them—

Senator s Conroy and Whish-Wilson interjecting—

Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

Order! Senator Whish-Wilson. Senator Polley will be heard in silence.

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

You're protecting your coalition partners!

Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

Senator Conroy. Senator Polley, please resume. Do not be distracted.

Helen Polley (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary for Aged Care) Share this | Link to this | Hansard source

Thank you very much, Mr Acting Deputy President. Senator Whish-Wilson can be flippant about the self-funded retirees in his home city of Launceston, where we both have our electorate offices, but he will not be so flippant when he is reminded at that the next federal election—because they will not forget this. A lot of those self-funded retirees would, in the main, vote for the government—but they will now label the Greens as being bed partners with the coalition government. At the next federal election, the Greens will reap the rewards of the seeds that they have sown.

But quite sincerely, it is very disappointing. I have worked alongside Senator Siewert on so many inquiries through the work that we do within the community affairs committee. I think she is a very hardworking senator, and I give her credit for that. But to have her now be part of the Greens who sell out Australian pensioners and self-funded retirees—it is just terrible. It is absolutely terrible. I just do not understand it. This is so regrettable, and I am not sure really how to put into words how disappointed I am. I am really and sincerely disappointed. I myself have had to live on a very limited income that was provided by the government in a time of very great stress to myself and my family. And so I know what it is like to try and make ends meet from one fortnight to the next, and to be unable to replace the big items in your household—where you quite clearly just do not have the money to replace your washing machine or your refrigerator. That is the sort of difficulty that the Greens have now put in place for too many Australians who have either retired, are pensioners or are self-funded retirees. They are the strugglers. This should not be happening. Neither should it be the case that those who come in here and lecture us about fairness and equity are selling out to this most conservative, arrogant, out-of-touch government that I have witnessed in all my time of being here in the Senate.

Jacqui Lambie (Tasmania, Independent) Share this | Link to this | Hansard source

I rise to speak to the Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015, a piece of legislation which is being rushed through this parliament without a proper public hearing. I would like to commend the Labor Party's Senator Moore on her contribution to this debate. Senator Moore's speech rang the alarm bell on this piece of government legislation which will take more than $4 billion from our pensioners and older Australians over the forward estimates. I understand that the government may have the numbers to win the vote on this piece of legislation, with Greens support, and I am very disappointed with that. I feel sorry for the hundreds of thousands of elderly, sick and disabled Australians who will be adversely affected by the passage of this bill.

I will shortly outline my concerns and the concerns of some Australians who have contacted my office with regard to the Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015. But firstly, I will give a brief description of the six basic measures this bill attempts to deliver:

1. Defined benefit income streams – from 1 January 2016, ensure that a fairer proportion of a superannuant's actual defined benefit income is taken into account when applying the social security income test by introducing a 10 per cent cap on the income that can be excluded from the test. The measure will not apply to military superannuation schemes.

And I am grateful for that.

2. Proportional payment of pensions outside Australia – from 1 January 2017, reduce, from 26 weeks to six weeks, the length of time for which recipients of age pension and a small number of other payments with unlimited portability will generally be paid their basic means-tested rate while outside Australia. After six weeks, payment will be adjusted according to the length of the pensioner's Australian working life residence.3. Assets test and concession cards – from 1 January 2017, rebalance the assets test parameters by increasing the assets test free areas and the taper rate by which a pension is reduced once the free areas are exceeded. Those whose pension is cancelled will automatically be issued with a Commonwealth Seniors Health Card, or a Health Care Card for those under pension age, without the need to meet the usual income requirements. Veterans whose service pension is cancelled under this measure will retain their Veterans' Affairs Gold Card.4. Energy supplement replacing seniors supplement – reintroduce the measure provided by the Social Services and Other Legislation Amendment (Seniors Supplement Cessation) Bill 2014 – cease payment of the seniors supplement for holders of the Commonwealth Seniors Health Card or the Veterans' Affairs Gold Card – with a new start date of 20 June 2015 (meaning the last quarterly payment of seniors supplement would generally be made on 20 June 2015).

5. Pensioner education supplement – reintroduce the measure provided by Schedule 4 to the Social Services and Other Legislation Amendment (2014 Budget Measures No. 4) Bill 2014 (the No. 4 Bill) – cease pensioner education supplement – with a new start date of 1 January 2016.

6. Education entry payment – reintroduce the measure provided by Schedule 5 to the No. 4 Bill – cease the education entry payment – with a new start date of 1 January 2016.

Serious doubt has been cast over the figures that the government has put forward relating to this bill, and more time needs to be taken to properly consider these claims. A submission from Industry Super Australia argues that:

There is a lot of detailed and technical information in the Industry Super submission to the Senate Standing Committee on Community Affairs; however, an informal description of the problem with this legislation, which I received from an executive officer, clearly summed up the situation for me. It reads:

To be clear these changes are not about cracking down on wealthy retirees (only 5% of those affected have total assets greater than $1 million) and the Government has ruled out changes to high end super tax breaks.

Some of these people not only pay zero tax on their super but obtain a tax cheque from the ATO for imputation credits worth more than the full age pension each year.

It's middle income earners who will lose out.

That is who will lose out—the middle-income earners:

The main targets are people on average wages or less who have moderate amounts of super.

A single person with $250,000 in super after saving their whole life is not rich—

not by any means—

and it is a pretty small amount if you consider it has to last them up to 30 years.

I am wondering if you actually took that into consideration when you worked it all out:

But include other assessable assets like their car and furniture any they will be losing $2,000 a year.

It seems the Government has fooled the Greens by claiming pensioners with low levels of assets will be better off — but they won't because the Government produced dodgy cameo tables, and has assumed currently historically low interest rates will stay in place forever.

The government has conceded that a group of 326,000 elderly Australians will be worse off, while 170,000 pensioners will be better off. There are better ways that this government can save a $1 billion a year or increase their revenue by $1 billion without stealing from the back pockets of older Australians and pensioners. There are at least two new policy changes which would save the government $1 billion or increase revenue by $1 billion. Firstly, decrease foreign aid by a $1 billion a year. It will still mean that Australia will send $3 billion a year overseas, or $12 billion over the forward estimates—perhaps our ASIS officers will only be able to give $2,500 to each people smuggler instead of $5,000! Secondly, introduce a financial transactions tax. Independent research from the Australia Institute shows that a financial transactions tax can raise at least $1.4 billion a year, or close to $6 billion over the forward estimates—and that is at an absolute minimum!

A financial transactions tax will be levied by most European countries by the end of January next year. It is not new. It is recommended by Nobel prize winners. It can be refined and structured so that it hits the big end of town. So I have to ask: what is stopping you, over there, from doing that? What is stopping you from going after the big end of town instead of these people that have worked hard all their lives and done the right thing with their super? The big end of town are very clever at profit shifting and are able to easily avoid paying their fair share of tax. Indeed, my policy only targets about six high-frequency share-trading companies who use super computers and software to sneak an unfair advantage over mum and dad investors. They skim about $3 billion of profits from mum and dad investors.

I know that the Greens, under their new political leadership, feel that their political strength lies with younger Australians and that they are prepared to burn older Australians for that—bad move! But my message is this: we can and should protect young and old Australians at the same time. Why allow the Liberals to continue with their clever political strategy of divide and conquer?

As I indicated earlier, I received feedback from a couple of elderly Australians whose voices need to be heard in this debate. The first case is that of David and his wife. David and his wife worked as nurses before retiring. They worked long shifts without being paid overtime, and unsocial hours at an average pay rate. They had never received government payments, and most of their salary went towards paying the mortgage, which at times had an interest rate of 17 per cent. They saved and lived responsibly. They never travelled overseas and never dined out, because they thought they would enjoy such things when they retired. David and his wife currently receive a part-pension, with an average priced house and assets well under $1 million. Yet under the proposed changes David and his wife would be no better off than had they lived their life on welfare. The changes come at a time where interest rates are low. Many pensioners will be required to give up private health insurance, creating a greater health burden.

The second case involves Jane. Jane and her husband have assets of $840,000 in superannuation, from which they draw their income and receive a small part pension of $420.80 per fortnight. Their assets include a modest car and some furniture. They had hoped to use the superannuation to fund Jane's husband's entry to aged care, as he has dementia. This requires between $250,000 and $300,000 for the refundable accommodation deposit and then weekly payments to cover a basic daily fee, which works out to be 85 per cent of a single pension. Jane says:

We have lived modestly and preserved as much of the superannuation capital, but now the assets threshold will be reduced and taper rate adjusted, our $840,000 and the taper rate adjusted, our superannuation will mean we lose the part-pension and the pension card.

Jane continues:

Facing a drop in income and loss of part-pension, to avoid dipping into the superannuation needed for my husband's aged care, we will need to cut back on living costs such as heating and Alzheimer's Australia care, drop private health insurance, save fuel by not volunteering in the community anymore.

Jane and her husband have extra living costs as Jane's husband's dementia means he forgets to turn off lights, heaters, taps et cetera. And there is the burden of him living with this terrible disease. Jane and her husband feel they have saved and made financial plans for the future, but the goal posts were adjusted, leaving them wondering why they even bothered.

There are some common points made in feedback: people the government are counting as wealthy are worse off than someone receiving the full pension; the changes will encourage double dipping, where people will dispose of their assets above the threshold to receive a full pension; assets, for the purpose of the test, are not all income producing and include boats, caravans, household contents and personal effects; people will not accumulate more than $375,000 for a home-owner couple, so as to receive a full pension; and, current age pension recipients have made decisions on investments and lifestyle based on the current rules and are being unfairly penalised for following the official rules and working hard.

In closing, once again I remind the Senate of the broken promises—just more broken promises—of the Liberal government and this Prime Minister: The Hansard of 16 May 2013 shows that, as opposition leader, Mr Abbott told parliament:

A coalition government will keep the current income tax thresholds and the current pension and benefit fortnightly rates while scrapping the carbon tax. The carbon tax will go but no-one's personal tax will go up and no-one's fortnightly pension or benefit will go down.

On 18 June 2013 Mr Abbott told parliament:

We will relieve the pressure on families. We will relieve the pressure that we know the families and households of Australia are under. Under us they will keep the tax cuts and pension and benefit rises …

On 27 June 2013 Mr Abbott again told parliament:

We understand that the families and households of Australia are doing it tough.

And, by the way, they are still doing it tough; they are actually doing it tougher. Mr Abbott continued:

That is why under the coalition they will get to keep their tax cuts and their pension and benefit increases without a carbon tax. That means that every Australian household's budgetary position at the end of the week, the fortnight or the month should be so much stronger. It is not just about building a richer society; it is about building a better society as well.

I think the PM forgot the last bit that he said. It is about building a better society as well. It is sad when the words of a nation's Prime Minister are worthless, because that is all they are—worthless. This legislation will not build a better society. This legislation deliberately seeks to tear our society apart. It deliberately creates winners and losers in a generation that knows the meaning of hard work and sacrifice.

I will oppose this bill and will know that I have done the right thing by the generations who guaranteed Australia's greatness. I will not be one of the ones who lets them down. In closing, I would ask that Labor members give a guarantee that, when in government, they will introduce measures which will undo the damage this legislation will surely create. I let the Labor Party know that you will have my support and gratitude on this at all times.

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

I rise to speak on the Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015. This bill seeks to implement changes to the assets test and assets taper arrangements for the age pension—changes which will provide billions of dollars in savings to the government and leave some single pensioners $8,000 worse off and some couples as much as $14,000 worse off.

Before the last election, as we have heard in the debate here this evening, Mr Abbott had a clear position on pensions, and we all know what it was. The government members in the chamber know what it was. It was no cuts and no changes. And yet, in last year's budget we saw the Abbott government launch one of the most savage attacks on Australian pensioners in living memory. The government's plan to cut indexation would have seen every single pensioner in this country left worse off. Within 10 years, this cut would have amounted to $80 per week. But Labor stood by side with pensioners, their families and the community and defeated these unfair changes. But apparently those opposite did not get the message. They did not get the message that Australians will not stand by and let the government attack pensions while they give the big end of town a free ride.

So again, here today, we see the government attack pension incomes in their second budget. Make no mistake, this measure might spare some pensioners the pain of last year, but it will still have very serious negative impacts for pensioners. This bill will cut pensions for some 330,000 part pensions. They are not millionaires, as those opposite might have you believe, but people who have worked hard and made modest savings for their retirement. They are people who have made modest savings, maybe because they have downsized their family home or because they have worked hard and made voluntary contributions to their superannuation. This bill is a clear attack on middle Australia. According to the government's own figures, 236,000 pensioners will be on average $130 a fortnight worse off—that is $3,380 per year—and a further 91,000 pensioners will lose their pension altogether. This will leave them on average $190 a fortnight—$4,940 a year—worse off.

Before I speak about the specific measures in this bill, I would like to take a moment to put on record my concerns about the Community Affairs Legislation Committee inquiry into the Social Service Legislation (Fair and Sustainable Pensions) Bill 2015. As a member of the Community Affairs Legislation Committee, I wish to take the opportunity to express my deep concern about the circumstances under which the inquiry was conducted.

Pursuant to a Senate resolution on 13 May, the provisions of this bill were referred to the Community Affairs Legislation Committee for inquiry and report by 15 June 2015 after it was introduced into the House of Representatives on 4 June 2015. The reporting date was extended to 22 June 2015 and then, in recognition of the significant implications and complexity of the bill, the reporting date was extended to 10 August 2015.

However—as we know and as other senators have said in their contributions—the very next day the Greens joined forces with the government to shut down scrutiny of the bill and further examination of the impact. Because of that, many people who would have put submissions forward to this inquiry and had an opportunity to give evidence in public hearings have been denied that right, because of this dirty deal that the government and the Greens have done to cut the pension. The government and Greens agreed to change the reporting date back to 22 June, shutting down the Senate inquiry nearly two months before it was due to report and removing the opportunity, as I have said, for the committee to hold public hearings on this bill.

The Senate resolution which originally saw this bill referred to the Senate committee for inquiry is intended to allow time for critical bills to be referred for inquiry and report by 15 June 2015. For the purpose of this resolution time, critical bills are those introduced into the House of Representatives between 14 May and 4 June 2015, which contain substantive provisions commencing on or before 1 July 2015.

Of the six measures in the bill, only one has a commencement date prior to 1 July of this year, with the other measures starting as far out as 1 July 2017. On the same day that the reporting date for the inquiry into this bill was cut short, the government also gagged debate in the other place and moved amendments to remove five of the six measures in the bill, including the measure that commenced before 1 July 2015. The only measure remaining in this bill, the proposed changes to the assets test for the pension, has a proposed implementation date of 1 July 2017.

But for the seriousness of this measure, I would say that this had to be a joke—a complete farce. The way the Abbott government and the Greens have worked to block scrutiny of this bill is an insult to the 330,000 pensioners who will lose up to $8,200 each every year, because of these cuts to pensions.

But, when you look at the evidence that the committee received during the course of this very short inquiry, you can see why the government did not want to allow the Senate committee the necessary time to do a fulsome inquiry into the bill. The majority of submissions to the inquiry raised concerns about the proposed changes, in particular the changes to the pension assets test and taper rates outlined in the bill.

In their submission to the Community Affairs Legislation Committee inquiry into this bill, Industry Super Australia provided detailed analysis which shows that the impact of these pension cuts will fall hardest on people with below average incomes. This analysis also showed that, in the long run, there are more people affected on below average incomes than above. For example, a pensioner with $500,000 in assets achieving a five per cent return is on an annual income from superannuation of only $25,000. This pensioner will lose $8,210 in pension payments every year because of these cuts.

These people are not rich, as the government would have you believe. They are Australians who have worked hard and saved hard for their retirement. As the Industry Super Australia submission states:

[The changes to the asset threshold and the "asset taper rate"] would reduce the retirement incomes of Australians who currently are on modest incomes, and whose retirement incomes are projected to be below that sufficient for a comfortable standard of living in retirement.

The submission goes on:

Consequently, the proposed change is poorly targeted and inconsistent with the public policy objectives of the retirement security system.

In their submission, Industry Super Australia also highlighted that:

The proposed changes in the taper rate will amount to a 15 per cent overall cut in the retirement income of some people who are on incomes below a comfortable standard …

In contrast, people on higher incomes are largely untouched. This analysis of the impacts of this bill is supported by the analysis undertaken by NATSEM which found that nearly 80 per cent of the cut will be shouldered by Australians in the lowest income quintile.

We also had a submission from National Seniors, who had this to say as part of their submission to this truncated inquiry:

The changes reduce benefits to households with relatively modest assets while leaving benefits to high-wealth Australians, such as super concessions, untouched. National Seniors cannot support reforms that tighten eligibility to the Age Pension while generous tax concessions to high net wealth individuals remain in place.

And, for the benefit of the chamber, National Seniors Australia is the largest organisation representing people aged 50 and over, with around 200,000 individual fee-paying members nationally. So it is a broad based organisation, which enables them to act as a truly independent and representative voice for older Australians. And that is what they had to say.

It is not just those at or approaching retirement age who will bear the brunt of these changes. The negative impact of the proposed taper rate changes will extend over the coming decades, with the proportion of new retirees impacted by these changes increasing sharply over time. The analysis provided by Industry Super Australia shows that, within ten years, half of all new retirees leaving the workforce will be impacted by this measure. This analysis shows that:

The proportion of new cohorts of retirees affected by the proposed asset test change increase from one in three today to seven in 10 by 2050.

So it is one in three today, increasing to seven in 10 by 2050. The submission goes on:

This influx will increase the overall proportion of the Age Pension population who are worse off from just over 10 per cent in 2017 to over 40 per cent by 2055.

Women will be hit particularly hard by these changes over time. Industry Super Australia's modelling showed that, under the proposal in this bill, eight in 10 single women retiring in 2055 will do so on incomes below that needed for a comfortable living standard. This amounts to a 30 per cent increase in the number of women retiring on incomes below what is needed for a comfortable standard of living. In contrast to the millionaires that the government would have you believe will be impacted by this measure, the independent analysis shows that single women on very modest incomes will feel the negative impacts of this bill. Women aged between 55 and 59 will be affected from earnings above $46,220, while women aged between 45 and 49 are affected from earnings above $40,568, and those aged 25 to 29 from earnings above $23,954. These women are not well off by anyone's definition. And, as I said earlier, this bill will not affect millionaires—as those opposite would like the community to believe—but it will affect people who have worked hard and made modest savings for their retirement.

Furthermore, this bill will not benefit as many people as those opposite would have you believe. Those opposite claim that about 170,000 current pensioners will benefit by, on average, $30 a fortnight, due to increases in the assets free area. However, we know that this positive impact may be significantly inflated.

In their supplementary submission to the Senate Community Affairs Legislation Committee's inquiry into this bill, Industry Super Australia again provided analysis that refuted the government's assertions about how many pensioners will be left better off by the changes in this bill. The analysis by Industry Super Australia suggests that:

… the gains presented are overstated, with a significant proportion obtaining no increase or lower increases than suggested.

This is largely due to the operation of the dual means test. So the limited benefits of this bill are completely overblown.

Evidence presented to the Senate Community Affairs Legislation Committee inquiry also showed that these changes will act as a significant disincentive for people to save. In their submission, National Seniors Australia said:

The changes will also result in unfair treatment of some partially self-funded retirees, and create perverse incentives for middle income households to spend rather than save for their own retirement.

So the evidence also showed that the changes will also act as a strong incentive for people to spend their assets down more quickly. That was the evidence that we received. So in the end what these changes will do is to have a negative impact on the adequacy of retirement incomes.

While the government would like to portray this measure as only affecting millionaires, as I and others have said in their contributions the reality is that this pension cut is an attack on middle Australia. In her submission to the Senate Community Affairs Legislation Committee inquiry into this bill, Professor Miranda Stewart, the Director of the ANU's Tax and Transfer Policy Institute, labelled the proposal poor policy because it penalises savers. Professor Stewart wrote:

The proposed asset test tapers effectively doubles the rate of the wealth tax on pensioners while simultaneously narrowing the tax base, contrary to generally accepted good principles of tax and transfer design.

Put simply, the changes in this bill are an attack on pensioner households and a tax on middle income Australians who are planning to retire in the next 10 to 15 years. Professor Stewart goes on to say:

Assuming a return to savings of 5%, a consequence of the asset test is that income from savings is heavily taxed at an effective marginal rate around 160% …

The Committee for Sustainable Retirement Incomes clearly summarised the impact of these changes when they said that there was a 'serious danger of the proposed test encouraging unwise investment behaviour.' This bill, which Minister Morrison has incorrectly called a bill for fair and sustainable pensions, will impact on those with only modest savings, while leaving those on higher incomes largely untouched. It will cause adverse impacts by providing a significant disincentive for people to save and providing a strong incentive for people to draw down on their assets more quickly. This has to be the definition of a poorly thought out policy, a policy which is neither fair nor sustainable for Australian pensioners.

What makes these cuts even worse, even more unfair and even more poorly thought out is that while the government is happy to take thousands of dollars a year off part pensioners with one hand, they are more than happy to hand over tax concessions to millionaire superannuants with the other hand. Labor has put forward a sensible and fair proposal to limit the tax concessions that superannuants with millions of dollars in assets receive. But the government has rejected this proposal. What should we expect from a government with no understanding of fairness and equality?

While those opposite protect the rich and raid the pensions of middle Australia, it is Labor who is left to stand up for what is right. It is Labor who will stand up for people who have worked hard and tried to save for a liveable retirement income. It is Labor who will stand up for pensions, and we will stand up for them every day until the election, when the government will be held to account for the promises they have broken. We will stand with pensioners once again.

As others have so eloquently articulated in their contributions, we are standing here because of the deal between the Greens and the government. What have we really got with the deal with the Greens? We have got a six-week extension period on the tax white paper, and the government is already on record in Mr Hockey's press release saying that the government has given a clear commitment that there will be no unexpected adverse changes to superannuation in this term of government, nor do they have any plans for such changes beyond the next election. Specifically, the government will not increase taxes on superannuation and will not remove any current flexibility in assessing superannuation in retirement. So the deal has been a complete sell-out by the Greens to the government, and it will achieve nothing but to hurt pensioners. I urge the Senate to stand with the Labor Party in opposing this bill.

Glenn Lazarus (Queensland, Independent) Share this | Link to this | Hansard source

I rise today to stand up for all retirees and pensioners across this country. It is clear that older Australians are under attack. The Abbott government wants to reduce pensions and pension eligibility by tightening up the pension assets test. The government's proposed changes will negatively impact thousands of retirees and pensioners. My understanding is that these changes will reduce pension payments for some 236,000 seniors and cut 91,378 people from the part pension. Some retirees will be about $15 a week better off. Further, the changes will come into effect from 1 July 2017, in approximately 24 months.

Retirement is one of the biggest life changes a person can make. It takes years to save and plan for retirement. Every year, Australians put money aside through investment or super to prepare themselves. Often, hard-working Australians only have a small amount of money to put away each week. Often they have none. So it takes a lot of years and hard work for Australians to achieve some type of nest egg for their retirement. Often people forgo essentials and give up little luxuries to put money aside. Once in retirement or on the pension, many Australians live day to day on very tight budgets. Any slight change in income can mean the difference between being able to afford to put petrol in the car or not going anywhere.

At a time when costs are increasing in Australia, we should not be trying to reduce the income of those most in need or take income from those who have worked all their life to save for a modest retirement. We should be increasing our support for older Australians and pensioners. Once on the pension or retired, Australians do not have the capacity to change their living arrangements or to draw income from other areas. Adjusting the retirement goal posts for so many Australians at such short notice is both unjust and cruel and will cause much distress across the community. Community groups and not-for-profit organisations are already struggling to cope with the increasing number of people unable to pay their bills or put food on their table.

In addition, the proposed pension changes will impact women. Women are still significantly disadvantaged in our community because they have less superannuation and assets than their male counterparts. Women are the backbone of our nation, and many women have taken time off to bring up children and, as a result, have not been able to accumulate the funds needed for retirement. While I understand the need for the federal government to be fiscally responsible, I am at a loss to understand why the Abbott government keeps trying to target vulnerable Australians. I honestly believe pensioners are under attack because they are seen as low-hanging fruit and a quick fix for revenue raising.

I cannot support these changes. If the Abbott government wants to change the way in which pensions are calculated, this should be done in consultation with the community and alongside reviews of other important mechanisms, including superannuation. Any changes should not be introduced until all those affected and potentially affected have the lead time, resources and capability to plan for the changes and adjust their retirement plans accordingly.

My home state of Queensland is considered the retirement capital of Australia. Not only are we incredibly welcoming and friendly people—and I am sure Senator Moore would agree—we also put on nice weather and offer great beachside locations. Many retirees and pensioners across Queensland will be affected by these pension changes. Queensland is already on its knees. We are still facing high levels of unemployment and a range of other financial and social issues associated with the drought. These pension changes could not have come at a worse time.

I do not support these pension changes, and I am disappointed that, once again, dirty deals have been done to push through legislation that attacks pensioners and retired Australians. I should note that, while a few senators in this chamber seem to think this bill is a good idea because it targets wealthy retirees, the reality is that it targets middle income retirees and those who are unable to change their financial circumstances. My view is one of principle—stop attacking those who are unable to protect themselves. Do not change the pension and retirement goalposts without fair warning. And this is one of the key reasons why I do not support this bill—there is no fair warning, and hard-working Australians are being treated with contempt by the Abbott government.

I strongly urge my Senate colleagues to vote this bill down. The people of Australia do not want and cannot afford these pension changes. I do not support these pension changes.

Chris Ketter (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

I rise tonight to oppose the so-called Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015—a title which George Orwell would be quite proud of. Tonight's bill is brought to the chamber courtesy of broken promises and a grubby deal with another political party. The broken promises are legion with this government. We know that in the lead-up to the last election the current Prime Minister promised on nine separate occasions that there would be no changes to the pension. One would have thought that the people of Australia could have taken him at his word, given that he repeated that promise on nine separate occasions. But, no, the Prime Minister cannot be trusted on this particular issue.

The Greens political party is complicit in this exercise. It is quite an appalling breach of trust on the part of the Greens in this area. I understand that the coalition and the Greens have joined forces to shut down a Senate inquiry nearly two months before it was due to report, and that this report would have allowed proper scrutiny of the Abbott government's cuts to the pension. The Greens and the government have teamed up to sell out pensioners. As these changes are not due to come into effect until 2017, it is interesting that the government and the Greens are so afraid to have their pension cuts properly scrutinised.

It appears that the Greens are implicitly agreeing that the pension system is unsustainable, and we know that that is not the case. We know that Australia is considered to have one of the most sustainable pensions in the world. The Allianz Pension Sustainability Index last year found that Australia's pension system is the most sustainable in the world. According to the OECD Australia spends just 3½ per cent of GDP on the age pension, compared with the OECD average of 7.8 per cent. Ensuring the continued sustainability of retirement income is important, but it has to be done in a fair and equitable way, and it would appear to me that the Greens have been sold a pup, with all due respect to the member for Fairfax. We know that while the increase in the assets test free area ameliorates the impact of the doubling in the taper rate, it will not universally deliver increased pension payments for those with modest levels of assets, due to the dual means test. I know senators have spoken about this particular issue before I have. Here I paraphrase a supplementary submission given by Industry Super Australia to the Senate Community Affairs Committee, where they say that pensioners with assessable assets exceeding $1 million are not the target of this measure, as they constitute only five per cent of the losers. So in fact 95 per cent of those affected have assets of less than this, including those with assets of as little as $300,000. The Industry Super Australia analysis goes on to reveal that by 2055 the measure will reduce the retirement incomes of 50 per cent of single females—none of whom will attain a comfortable retirement, thanks to the Greens. It will also reduce the retirement incomes of 50 per cent of single males—none of whom will attain a comfortable retirement, once again thanks to the Greens. And it will reduce the retirement incomes of 10 per cent of couples—none of whom will attain a comfortable retirement, once again thanks to the Greens.

The increase in the assets test free area has been proposed, as I say, to ameliorate the impact of the harsher assets test taper, and this is supposed to argue that there is an increase in the overall fairness of the measure, because it will lead to some modest increases for those modest levels of assets. The Industry Super Australia modelling shows that this will be the case for some pensioners, but the outcomes will vary significantly. Some pensioners with low levels of assets will not obtain any increase. There have been claims made that all part pensioners with assets below the new threshold will be better off, and Industry Super Australia's modelling suggests that that is incorrect. They say that looking at the dual means test leads to the conclusion that the claims have been overstated, with the cameo tables being presented potentially providing a misleading picture as to the effects of it.

Returning to the government's proposition, when Mr Abbott told pensioners there would be no change to pensions they took him at his word, as I said earlier. But it would appear that pensioners are public enemy No. 1 for this government, which is ably aided and abetted by the Greens. We know that last year the government sought to hit 3½ million pensioners in one of the most savage attacks on Australian pensioners in living memory. The plan to cut indexation would have seen every single pensioner in the country left worse off. Within 10 years this cut would have amounted to $80 a week. We would have seen a massive $23 billion ripped out of the pockets of Australian pensioners. That was a broken promise and it would have pushed pensioners into poverty and hardship.

The Prime Minister has resiled from that position, but that is only thanks to Labor's staunch opposition to those changes from last year. This time, he still wants to rip $2.4 billion from the pockets of pensioners. This is reprehensible. We know that, regrettably, under the current tax and transfer policy settings that we have in this country many Australians will retire on incomes below a comfortable standard. According to the modelling by Industry Super Australia and Rice Warner that I referred to earlier, we know that Australia has a world-class superannuation system but it is not matured to the level that we would all like. That means, according to this modelling, that about half of all Australians retiring from now through until 2055 will not achieve a comfortable retirement taking into account the age pension, superannuation income and income from wealth outside super.

And the current system is failing single women especially, as referred to earlier. Over two-thirds of single women aged 55 to 69 will retire on incomes below a couple standard. And we know that even younger women face a difficult future. More than half of women currently aged 25 to 29 will retire on incomes below a comfortable standard. That is the current situation and it is less than ideal. But the measures that are before us tonight will make the system even less fair than it currently is. The modelling I have referred to shows that the changes will initially have a relatively small impact on existing pensioners but the proportion of new retirees affected by the proposed changes will increase significantly over time and over 40 per cent of retired Australians will be adversely affected by the proposed age pension cuts by 2055, according to the Rice Warner modelling.

The report goes on to say that the proposed changes in the taper rate will amount to a 15 per cent overall cut in the retirement of some people who are on incomes below a comfortable standard, while people on higher incomes are largely unaffected. Women are especially harmed by the proposed changes. Under the proposal, eight in 10 single women retiring in 2055 will do so on incomes below that needed for a comfortable living standard, an increase of 30 per cent. The bill's negative effects on single women, according to the Rice Warner modelling, will hit those on fairly modest incomes. Women aged 55 to 59 will be affected from earnings above $46,220, women aged 45 to 49 will be affected from earnings above $40,568 and those aged 25 to 29 will be affected from earnings above $23,954. These are dramatic impact on those who can least afford the changes. This is what the bill does.

As Labor senators speaking before me tonight have commented, this bill is a cut to the pension for 330,000 pensioners. One wonders why this government seeks to target pensioners so repeatedly. Some single pensioners will be $8,000 worse off because of this. A single person who owns their own home and earns less than $25,000 in income will lose $8,200. A couple who own their own home and together draw down $45,000 from super and other earnings will lose around $11,400. That is this government putting its hand in the pockets of this particular group and taking $1 of every $5 from them. How is this fair, and how is it that the Greens could be so naive to agree to changes which are going to be so detrimental to Australians? Pensioners know that, if this bill is passed, not only will the Prime Minister's hand be in their pockets to take away their income; they will find in their pockets also the hands of the leadership of the Greens, who are so complicit in allowing this all to occur.

According to the government, 236,000 pensioners will on average be $130 a fortnight worse off. As my colleague Senator Carol Brown indicated earlier, that is $3,380 a year. And we know that 91,000 pensioners will lose their pension altogether. This will on average leave them $190 a fortnight, or $4,940 a year, worse off. We know that this measure might spare some pensioners the pain of last year, but it will still have very serious negative impacts for pensioners. According to independent analysis, within 10 years half of all new retirees leaving the workforce will be impacted by this measure.

As I said earlier, the government would have us believe—and it would appear that the Greens have tumbled into the mythology—that all of the pensioners who are affected are millionaires. We know that this is absolute rubbish—and I have been through those figures. Let us make no mistake about this, it is an attack on middle Australia. The independent modelling indicates that, over the long run, the largest impacts will be felt by people currently earning below-average incomes. This government is happy to put its hand in the pockets of pensioners and take thousands of dollars a year from them. At the same time, they refuse to have a sensible look at the issue of millionaire superannuants. We know that Labor has put forward a sensible and fair proposal, and we know that that has been costed at around $14 billion, so it is not fair to say that Labor opposes all measures to address the budget deficit. This is a government that wants to leave the millionaire superannuants unscathed and to take thousands of dollars off pensioners who can least afford it. In the process, they would rather double the deficit to $35 billion.

This shows that the government do not get fairness, and they do not get fiscal rectitude. They still do not get that, when you make a promise, you are supposed to keep it. Labor will be holding this government to their promises. That is what good oppositions do. Labor will fight this measure. We will stand with pensioners once again, and we will take this fight to the election. Tony Abbott lied to the Australian people: he said there would be no changes to pensions. He cannot be trusted—we know that. The reality is that Tony Abbott wants to cut the pension. He wants to take money from pensioners while protecting wealthy Australians. It is wrong. Only Labor will fight for the pension.

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

Can I indicate that I will be supporting this legislation, with some reluctance. But I believe that, in the circumstances, it is the right thing to do for a number of reasons. Firstly, there is an issue about the long-term sustainability of the pension scheme—to ensure that Australians get a pension that is as good as possible but that increases according to male average weekly earnings, which is a higher rate than the CPI rate that was proposed by the government in last year's budget. That was a disastrous suggestion, because the effect of those changes would have been to erode the value of the pension over several years, by up to $80 or $100 a week. It would actually have made a very big difference. I acknowledge Senator Ketter's very thoughtful contribution to this debate. I do not pretend that this is an easy issue.

I have constituents who have contacted me to express their concerns. Yesterday at Adelaide Airport, on the way to Canberra, I was approached by a constituent who expressed their heartfelt concerns about this. They are about to retire, and this would make a difference in terms of their retirement income—a real difference, in terms of the assets they have—that they would have to dip into their assets.

I think it is important, in the context of this debate, not to consider only what was proposed by the government last year. That should not be the benchmark of whether we should go down this path or not, because what the government was proposing last year was an unmitigated disaster. It was not something that was put to the people at the 2013 election. In a sense, there is a safeguard here that I think Senator Ketter has referred to: these measures are not due to come into force until 1 January 2017, and there will be an election prior to that time. Who knows, Mr Acting Deputy President, sometimes I think that we could well be heading for an election later this year. Let the Hansard note the gesticulation of the Acting Deputy President—as in, 'who knows?' In any event, even if the election is held on the third anniversary of the election of the Abbott government—or even after that—there will be an opportunity for this to be a key election issue, which I think is quite appropriate. It is one of the factors that have led me to support this legislation: that there is that safeguard of the electorate having a direct say on this piece of legislation. The Australian Labor Party will be fighting on this issue, as they are entitled to, and I think that it will be a key election issue. But I think that, on balance, this ought to be supported.

If we can just go back into the history of the pension—and I am grateful to the researchers of the Parliamentary Library—we are all grateful for the researchers of the Parliamentary Library—for their dispassionate, considered and objective approach to their research—in the 1940s and 1950s we saw substantial increases in the levels of permissible income and property limits to the pension. In 1954, the Menzies government exempted income from property from the means test. The Gorton government introduced a tapered withdrawal rate in 1969. The annual rate of pension was reduced by only half of the amount for income above the exempt amount, including income derived from property, rather than the full amount as had been the case previously. In 1972, the McMahon government—remember them, Mr Acting Deputy President; you would have been in primary school then—introduced a large increase in the level of exempt income and intended to abolish the means test by 1975 for age pensioners aged 65 and older. The Whitlam government abolished the means test for age pensioners aged 75 years and over in 1973, and for those aged 70 years and over in 1975, having matched the McMahon government's commitment before the 1972 election. In 1976, the Fraser government removed any consideration of assets from the means test, making it an income test only, except for actual income derived from those assets.

The Fraser government commenced a reversal of this trend towards the universal age pension free from any means testing. This trend was replaced with a renewed emphasis on targeting assistance to those most in need—which I think is not an unreasonable proposition. As set out in the Bills Digest for this bill, the main changes to means testing in the Keating and Howard government years were in regard to how certain types of income and assets were assessed, particularly in relation to superannuation and other financial investments. In 1993, the Keating government reduced the withdrawal rate—the taper rate—from $4 to $3 per fortnight for every thousand dollars in assets over the applicable free area. As part of its Simpler Super reforms, the Howard government halved this withdrawal rate from 2007 to $1.50 per fortnight for every thousand dollars over the applicable free area. To put this in context, what occurred was that for a period of about 13 years—almost 14 years—there was a period of bipartisanship, in that both the Keating and Howard governments, for most of the period of the Howard government, thought that the taper rate of $3 per fortnight for every thousand dollars in assets over the applicable free area was the appropriate taper. That was changed by the Howard government in 2007 to $1 50 per fortnight, and many commentators, I believe, are of the view that this was as a result of the Howard government in the lead-up to the 2007 election panicking and wanting to shore up votes but that it did not work because its time was up.

We now have a situation where this government is looking at going back to a taper rate, which was something that had bipartisan support during the Keating era and most of the Howard era. Under this proposal, the asset test limits for allowances and thresholds for the full pension would rise for single homeowners from $202,000 to $250,000 and for single non-homeowners from $348,500 to $450,000. For homeowner couples they would go from $286,500 to $375,000 and for non-homeowner couples from $433,000 to $575,000 from January 2017 as proposed in this legislation. These changes will make a difference. They mean that people can still have assets. It does not mean that they are wealthy—Senator Ketter is right in his analysis—but it is a question of sustainability and equity, in my view, as to those who are most vulnerable, who I think need the support. I note that the constituents who have written to me have indicated that they are very careful with their money and that they are by no means wealthy, and I understand that, but it is a question of how you deal with this vexed issue so that as many people as possible are covered by it.

I was influenced in my views on this issue by the views of Dr Cassandra Goldie of the Australian Council of Social Service and also by Ian Yates from COTA, the Council of the Ageing, who I think genuinely want to have a long-term, sustainable and fair pension system and are concerned about the impact if we do not deal with this issue. COTA in its submission to the inquiry said that over 2,232,000 age pensioners will not be affected by this proposal, which is about 83 per cent of all age pension recipients and 88 per cent of all recipients. COTA makes the point that the increase in the taper rate proposed in the bill will have a negative impact on single homeowner age pension recipients with more than $289,000 in assets or couple homeowners with more than $451,000 in assets. As referred to in the COTA submission, according to the government's estimates 215,000 people will receive a reduced level of age pension, which is eight per cent, and almost 236,000 people, which is six per cent, in all categories will receive a reduction. They mention that there will be a significant number of Australians affected by this, but the vast majority will not be.

I am disappointed with the government's approach to the suggestions by the Australian Labor Party around superannuation. I think that what the shadow Treasurer, Chris Bowen, suggested was very sensible. I do not want to commit myself to the precise figures that Mr Bowen put up regarding the income thresholds, but it seems to me that, if you are earning $75,000 a year from your super and not paying any tax on that, that is not in itself too onerous a threshold before some tax kicks in. I think it was partisan politics at its worst for the government to simply dismiss what the Australian Labor Party has been suggesting about the issue of superannuation. If we want to have a truly sustainable retirement incomes policy, we need to tackle the question of superannuation. It is not about class warfare; it is not about taxing the rich; it is about having a sustainable system of superannuation and aged retirement incomes—because we are talking about situations where people might have $4 million, $5 million, $6 million or more in super who do not have to pay any tax. For a small minority of people, it has become a tax haven rather than a form of retirement income planning.

It is worth referring to the work of the Australian Institute in this regard, where Richard Denniss has been outspoken about the impact of this, suggesting that the cost to the budget of the current superannuation concessions will be very significant. They will go up into the many billions of dollars each year and they will cascade unless we do something about it. I think that Mr Bowen's proposed reforms do have a lot of merit and they ought to be debated and that the government has had a blinkered approach in not dealing with that issue. I think that most Australians will understand that, when it comes to fairness, having some level of tax—let's say 15 per cent—on super kick in on income from your superannuation fund of over $75,000 or $100,000 would not be unreasonable. That is one of the real challenges. My understanding, though I do not have the precise figures in front of me, is that it will cost many billions of dollars in years to come. The point that Richard Denniss made in an opinion piece in The Australian Financial Review is that the superannuation tax concessions are growing at 12 per cent per year. If you compound that, you are looking at a real problem with the cost to the budget.

As to some of the contrary opinions, Michael O'Neill from National Seniors Australia, a person I have enormous respect for, is critical of these changes. He has said that he believes it will not be millionaires who will be affected by the tightening of the pensions asset test, as claimed by the government, but middle Australia. He says that they will be deeply disappointed with those who support this proposal. I do not like disappointing Mr O'Neill because he is someone who does a lot of incredibly good work and I work with him on issues and have enormous respect for him. He also makes the point that these changes will reduce pensions while not addressing superannuation tax concessions. I think a lot of Australians will think it does not quite pass the pub test when it comes to fairness to tackle the age pension issue but not tackle superannuation. I think that that is a live issue.

The ACOSS chief executive, Cassandra Goldie, in a The Australian report on 17 June, backed the government's changes modelled, in part, on her organisation's work. The David Crowe article quotes her as saying, 'Both major parties should strike a compromise on retirement-income policy, including super concessions.' Dr Goldie said: 'In an ideal world we would have a joint approach from the government and the opposition in this area.' Well, we don't, and that's politics.

These changes are unwelcome but necessary. The Labor Party has every right to run with this as an election issue, but I believe most Australians will say it is a compromise—perhaps an unfortunate compromise—to ensure the long-term sustainability of the pension. If we are serious about the long-term sustainability of the budget, if we are serious about the long-term sustainability of retirement-income policies in this country, then we must tackle the issue of superannuation. We must tackle the issue along the lines—and I say this broadly—that Mr Bowen, our shadow Treasurer, has indicated. The government has been bloody minded not to go down that path.

I look forward to the committee stages of this bill. I think there will be a number of questions in respect of it. I will be asking: if there are any unintended consequences arising out of this, and if they are still in government post 1 January 2017, will the government be open to reviewing or recalibrating this particular issue, in terms of any unintended consequences. On balance, this needs to be supported. The alternative of not supporting it is to have a pension scheme that in the long term will not be sustainable.

Mitch Fifield (Victoria, Liberal Party, Assistant Minister for Social Services) Share this | Link to this | Hansard source

If there are no other contributions from colleagues then I will close the debate. As amended by the House of Representatives, this bill includes the important budget measure of improving the fairness and sustainability of the pension system.

From 1 January 2017 the bill will rebalance the assets test to make it fairer and better targeted and to help ensure the pension system is sustainable into the future. The changes will increase the assets-test-free area to provide additional assistance to part-rate pensioners with moderate asset holdings, provide an additional increase in the free areas for non-home owners and increase the assets-test taper or withdrawal rate, the assets above the new free areas, from $1.50 to $3 per fortnight, for each extra $1,000 in assessable assets.

Importantly, pensioners who lose pension entitlements on 1 January 2017, as a result of the changes, will be automatically issued with a Commonwealth seniors health card, or the health-care card for those under pension age, without having to meet the usual income-test requirements. Additionally, any veterans who would otherwise lose their veterans' gold card, as a result of changes, will retain their card. The 2015 budget measure removed from the bill in the House of Representatives will be reintroduced, in a separate bill, in due course.

I table a copy of a letter from Minister Morrison to Senator Di Natale and a copy of a press release, of 16 June, headed 'Tax white paper consultation process to be extended'. I understand the whips across parties have been shown copies of these documents. With those words, I commend the bill to the Senate.

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

The question is that the Social Service Legislation Amendment (Fair and Sustainable Pensions) Bill 2015 be read a second time.