Mr MURPHY (10:46 PM) —I would like to support the member for Barker and his family. Adriana and I would like to extend our deepest sympathy for this tragic loss to him and to his family. Patrick has been very, very brave. I get along well with him. We are on different sides of the political spectrum, but he is a great member of this House. I know, Patrick, that I speak for everyone in this chamber tonight when I say you have our total support. I can assure you that my wife and I have been saying our prayers for you and your family and for your daughter.

The adverse financial impact of asset testing on retirees seeking pensions has been brought to my attention through a growing number of constituent inquiries. In particular, I note from a new Organisation for Economic Cooperation and Development survey of pension systems that Australian retirees are among the poorest of the industrialised world. It is, of course, hazardous to make comparisons between the Australian and European retirement regimes because Australia maintains a system of publicly funded retirement social security whilst the common practice in Europe is that pensions are a function of working contribution.

That being said, I note from the OECD survey that in countries such as Britain, Germany and France pensioners enjoy incomes between 83 per cent and 103 per cent of average non-retiree incomes. The equivalent figure for Australian retirees is just 68 per cent, the lowest of the 10 countries surveyed. Supporters of means testing of pensions argue that this system is more economically sustainable than that used elsewhere in the world. This is based on non-sustainable intergenerational inequity arguments. The argument, so it goes, is that very generous pensions paid in Europe to today's retirees will have to be paid for by tomorrow's taxpayers. Australia, by comparison, has a means test which makes the publicly funded age pension viable through those paying who can afford to pay.

This argument is deceptive for a number of reasons. First, the compulsory superannuation system in Australia is highly complex. It is questionable whether our regime needs to be this complex and whether a simpler system could not achieve the same ends. Second, Australian retirees have the option, in most cases, of withdrawing preserved superannuation on reaching 55 years of age. This gives individuals approximately 10 years to spend, distribute or hide their lump sums. This makes government superannuation planning very difficult. Finally, the compulsory superannuation scheme is unfair to the lowly paid Australians, especially as their super savings will act to reduce the amount they would have otherwise been able to draw from the government pension. I note the conclusion in the report titled Older Getting Wiser, a joint report of Australian, Canadian and British chartered accountants, states:

Compelling people on half average earnings to put a substantial portion of their income into a private pension scheme when they might themselves, quite rationally, decide to spend the money on current consumption is, in economic terms, the equivalent of a tax on them.

This asset testing regime is driven by cost cutting expediency. Australia has amongst the poorest retirees in the world; 48 per cent of Australian retirees fall into the bottom third of Australia's income population, compared with 28 per cent in France and 38 per cent in Britain. The key question is: whilst the government boasts our system is economically sustainable, is it sending our retirees broke? I think of two impacts as I say this. First, the loss of pension, either by income test or asset test, results in the loss of all benefits to the pensioner and, hence, a substantial increase in living expenses. Second, the impact of the goods and services tax will indiscriminately apply to all Australians, including pensioners.

I further note the way in which Australians are able to draw upon their superannuation entitlements as a lump sum payment. This makes policy planning very difficult and places a higher burden on those retirees who do not take the lump sum, through a lower asset test threshold. A modest second home in my electorate of Lowe will place practically any person above the asset test line, thus denying them a publicly funded pension. The provision of a decent income in retirement and removing the weight of provision from the government are two aims not served by lump sum provision in the private sector. I urge the government to be consistent in the message it is sending the Australian public in the provision of their own superannuation. That is, either have a compulsory superannuation scheme that is actually going to fulfil that role—that is, a nest egg for retirement—or do not have such a scheme.

The number of low income retirees with modest assets being caught by asset thresholds is causing asset stripping in the economy, especially in my electorate of Lowe. Retirees are being forced to flog assets just to maintain any level of lifestyle dignity. Had it not been for the strong protestations of the community, even the residential home would have been subject to asset testing. I therefore urge the government to look into making amendments to those superannuation laws that have seen this trend of asset stripping rise and are reducing the asset base of our retirees, who are already one of the poorest classes of pensioners in the world.