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Transcript of doorstop interview: Sydney: 14 March 2015: Pension Adequacy Review; Labor’s approach on welfare sustainability



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Doorstop Interview, Sydney

14 March 2015

Sydney

E&OE

MINISTER MORRISON:

Well it is great to be here with David Coleman at Grandviews, one of the great spots in the Banks electorate down here in Peakhurst and it is great to be chatting to some of the blokes here today.

The Government is absolutely committed to having a sustainable and adequate pension, not just for today’s beneficiaries but beneficiaries into the future and to do that we need to make sure that we have the right settings in place and that we get the balance right. What we are discussing with the crossbench is a new option which would see a safety net for the pension, which means every three years there would be an independent review of the adequacy of the pension to make sure that it keeps up with community living standards and in between times those three years, then the pension would increase in line with inflation with the cost of living.

This is a very serious issue for the future of the country. The pension is currently being received by around 2.5 million Australians and it is costing taxpayers obviously significantly in the order of over $40 billion and that is scheduled to rise over the next 10 years to almost $70 billion. So we need to get the rate of growth under control so we can make sure that the pension is sustainable and there for future generations but we also need to make sure that pensioners have a quality of life and a pension payment that keeps pace with community living standards.

I'm disappointed that the opposition once again isn't prepared to be part of this important conversation. If you make no changes here, you simply drive the pension off the edge of a cliff and you would have to make very serious changes to the pension down the track. Now we can avoid that if we do something sensible and moderate and incremental now that enables the pension to keep rising every year but at the same time makes sure it is going to be there for future generations. That is what we are trying to do. That is what we are working with the crossbench to deliver. I think that's what the Australian people expect of a Government, to work with people to find solutions, to be part of the conversation, not to absent ourselves. It's disappointing the Labor Party once again in their festival of no ideas this year is not prepared to come to the table and be part of a serious conversation about how we make the pension adequate and how we make it sustainable. I look forward to those continuing discussions with the crossbenchers in the Senate. Obviously there have been a few changes of late and we will follow that through with Senators in their new capacities and look forward to those conversations.

At the end of the day it's about making the pension sustainable. The pension will go up next Friday. The pension has gone up by around 6% since we were elected as a Government and it will go up again next Friday as it goes up every March and every September. The suggestion that the pension is being cut is false. It's not a policy to scare pensioners. Scaring pensioners is not a policy, that's what the Labor Party is doing, they are scaring pensioners and that is not a constructive thing to do. What we are doing is working to get a better solution which makes the pension sustainable but importantly makes it adequate.

JOURNALIST:

How is this proposal different to the current situation where the pension is reviewed periodically?

MINISTER MORRISON:

The pension isn’t reviewed periodically currently. What is done is it's indexed to either male total average weekly earnings or the CPI and is matched to the higher of those two indices. At present, the last two increases have been on the basis of CPI. The Government has a measure before the Senate which would see the pension indexed to CPI in the future and after a period of about 10 years, it would then potentially shift to being matched to average weekly earnings. Now that offer is still on the table. That approach is still on the table. It means you can make an incremental adjustment to the pension's growth path over time or we can move to this option, which we are now discussing, which is a three-yearly review, an independent process. It would report to the Government. The report would have to be tabled before the Parliament and the Government would have to respond to that through the normal Budget process. That would give the opportunity for people to make submissions, for the pension to be set on the merits of the case of keeping pace with community living standards and it wouldn't be driven by sentiment but what would be important to maintain a quality of life and a standard of living for people who have to rely on the pension.

JOURNALIST:

What has the reaction been from the crossbenchers so far?

MINISTER MORRISON:

We are talking and I will allow them to convey their views in their own words. It has been the product of conversations I've had with both the crossbench and stakeholders since coming into the portfolio and I think it's a worthy option to continue to discuss. Where we end up, well that's a matter for the crossbench. This demonstrates the Government is seeking to be very reasonable about this, we are seeking to find solutions and make accommodations and come to a compromise which enables us to have a sustainable and adequate pension. We are keen to be part of that conversation. I believe there are quite a number of crossbenchers who are also keen to be part of that conversation but the Labor Party wants to stay at home and be a conversation stopper when it comes to a sustainable pension, well that's a matter for them.

JOURNALIST:

Have they been positive towards your discussions so far?

MINISTER MORRISON:

They have been open to the discussion.

JOURNALIST:

What is the relationship with Glenn Lazarus and do you think it will improve now that he is not part of the Palmer United Party?

MINISTER MORRISON:

I've met with Glenn on a number of occasions in my previous portfolio and have always found Glenn to be one who tries to look at the facts of a situation and make up his own mind and I'm sure that will continue. I look forward to engaging with Glenn about these issues. I'm sure Glenn is as concerned as the rest of us that we want to make sure that the pension is here for today and tomorrow because that's what's at stake here. We have a safety net in Australia today which is the envy of the world. Now we owe it to our kids and the next generation that safety net is there for them too. If you just keep doing it with the pedal to the metal then you are going to race it off the edge of a cliff. The fact that the Labor Party doesn't get that shows how reckless and irresponsible they are being about this issue. You need to have a serious conversation about it and that obviously has to go more broadly to retirement incomes more generally and how people use their own resources and all of these things and how long they work. That is the conversation we are having with the Australian people. This is a part of it. I'm looking forward to the crossbenchers continuing to be part of this conversation.

JOURNALIST:

In terms of the CPI, it is currently 1.7% would you put a floor on the rate of that increase, would there be a minimum amount?

MINISTER MORRISON:

This is the whole point of an independent review every three years which would look at all the relevant indices and all the measures that relate to community living standards and we could have an expert panel make recommendations about where the base rate should be or what range it should be or factors that need to be considered by the government as they put forward a response to their report. So that is the whole point, the point is to have an independent review which provides a safety net beyond the CPI increase that would happen in the ordinary course of events.

JOURNALIST:

Would the government be compelled to change the pension if the panel recommended?

MINISTER MORRISON:

This would always be a matter for the Government of the day because the Government of the day has to be able to consider the broader fiscal issues that are at play here. It would be a transparent and independent process. The report of the independent panel would be a public document and the Government would obviously have to make any response and address what was raised in that document. It's a very transparent process which I think provides a way to getting a circuit breaker on the discussions we are having in the Senate on this very, very important issue. Millions of

Australians are going to depend on the pension in the future, not just current pensioners, but those who will rely on it 10 to 20 years from now. I want to make sure it's there for them, we want to make sure it is there for them. You can't run this thing off the road by doing nothing.

JOURNALIST:

How can the panel be a safety net if their recommendations aren't binding?

MINISTER MORRISON:

It's for the Government ultimately and the Parliament to make the decisions about where the pension is set. That's why we have elections. The advice is there to inform that debate and to help the Government make good decisions about the adequacy of the pension. I should stress that this applies to more than just the Age Pension. The Disability Support Pension is also referenced in this frame of measures as are things like carer payments and other things. So we need to look at the sustainability across the board. The pension has been going up. It will continue to go up. The issue is how do we continue to increase the pension over time in a way that the Budget can afford and to make sure the pension will be there for future generations.

JOURNALIST:

Are you using this proposal is a bargaining chip to get other savings measures through the Senate?

MINISTER MORRISON:

This measure relates directly to the measure of the CPI indexation that is on the table. It is about working that issue through. Since coming into the portfolio I've set out three key areas where we are looking to work. We are trying to get young people out of welfare and into a job and sticking at a job. Through the childcare package we are looking to support families, stay on two incomes wherever they can, stay on a single income if they are a single parent family so they can give their families the best opportunities in life and particularly help them not falling into a welfare trap simply because they have had kids. We are obviously trying to encourage Australians as they age to continue to be able to do what they have done all their lives in the vast majority of cases and that is being able to provide for themselves and support themselves to work longer where they are healthy and they can and they wish to but also use the other resources they have available to them to ensure they have a better quality of life in retirement. That also helps the Budget but it also helps the economy.

JOURNALIST:

Have you had a chance to talk to anyone here today about your proposal?

MINISTER MORRISON:

I had a little chat today, I have talked to people all around the country about these issues. This conversation is not a new one for me it’s one I've been having with stakeholder sector and the crossbenchers, obviously. The only people who don't want to talk about this are the opposition. They simply want to put their head in the sand when it comes to sustainability of the pension and

just see the thing run into the ground. I just don’t think that is a sensible way and a responsible way to address what is a very, very serious issue.

JOURNALIST:

How much would an independent panel cost?

MINISTER MORRISON:

This would be supported by the Department of Social Services. There would not be a significant cost associated with this. The sort of support you would expect to be provided to an independent panel would be in place. The department would be able to absorb that within their own portfolio estimates. I think it would be an important part of the reason we have a Department of Social Services. We have seen similar-type things before in different guises around the minimum wage and things of this nature. We are not recommending exactly the same process here but this concept of having an adequacy review, I think, is a worthy idea, it's certainly something worth discussing. We are prepared to talk about it. I would encourage others in the Parliament to engage on it because future generations of people who will depend on the pension's safety net have an interest in making sure that we make sure that the pension is there for them in the future as well.

Thanks for being here today.