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Monday, 16 March 2009
Page: 2704


Mr SIMPKINS (7:02 PM) —I rise to speak on the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009. It is a funny thing that when a lot of people see the word ‘entitlement’ in the name of a bill they think that it will actually increase entitlements, but this is not the case. It is exactly like previous bills brought into this House that mention jobs but do not achieve more jobs and, in fact, do not even stop jobs being lost.

In this bill there is an entitlement involved, the Commonwealth seniors health card, and some 22,000 seniors or veterans will have that entitlement—the health card—taken away. I will address the detail of the bill soon, but first it is important to note the issue of a mandate. Although the Labor Party never acknowledged the mandate of the coalition when we were in government, they are very keen to claim it now they are in government. Indeed, we have honoured that mandate when they have complied in detail with their pre-election policies. With this bill, however, there is not even that—there is no mandate. This attack on self-funded retirees and some veterans has no mandate accompanying it; therefore it is opposed by us on this side, by the Association of Independent Retirees and by the National Seniors Association.

The Commonwealth seniors health card helps senior Australians with the cost of certain health and other services. It helps with the cost of prescription medicines and other services if you are of age pension age but do not qualify for the age pension. At the federal level, these cardholders are entitled to cer-tain cash payments. The seniors concession allowance, which was increased in March 2008 as part of the government’s elec-tion commitments, is now $514 per year, paid quarterly. The telephone allowance is paid if there is a subscription to a telephone service and payable at a higher rate, $138.50, should the person also subscribe to a home internet connection. And there are other concessions such as medical bulk-billing, house-hold, transport, education and entertainment.

When the member for Warringah, Mr Abbott, asked the Minister for Families, Housing, Community Services and Indigenous Affairs, in writing, on 5 June 2008, ‘How many people will lose eligibility for the card as a result of the budget’s changes to the eligibility criteria?’ the answer was: ‘Around 22,000 customers will lose eligibility in 2009-10.’ It is highly concerning that the concerns this policy elicited over recent months remain unanswered. As recently as Monday, 9 March 2009 the Canberra Times reiterated the enduring concern of self-funded retirees that 22,000 of them fear for their continued access to the seniors health card. That is a hard thing to support, considering that some of those people are members of the community in our electorates and they are losing benefits they have had in the past and have now come to rely on, especially considering the current economic climate.

What this really sounds like is a Rudd Labor government plan to take the seniors health card away from many seniors and veterans by pushing their incomes over the threshold, which is currently $50,000 for singles and $80,000 for couples—in other words, change the rules and strip them of their right to a CSHC. As with other hidden proposed changes, like the means testing of the baby bonus, the family tax benefit part B means test or the introduction of a new test that would exclude families earning over $110,000 from receiving childcare benefit, I do not recall hearing about these proposed changes before the last election.

The Brisbane Times website, in late February, made mention of the case of retired schoolteachers David and Jeanette Flynn, who became eligible for the seniors health card in 2007. On 1 July this year they are likely to lose it. David, who turns 70 this year, estimates that he will be worse off by several hundred dollars a year as a result of the additional pharmaceutical costs alone. He says:

“I have mature-age diabetes and high blood pressure and I’m on half-a-dozen different tablets … I can afford to pay but it’s not an insignificant cost and we’re all getting older.

“When the Rudd Government was elected there was no mention in their campaign of a rule change but now your super and gifts to the kids will come into the equation and many retirees will lose the Seniors Health Card.”

So, no matter how much you look at it, it is taking benefits away from Australians, and now is not the time to be affecting anyone financially, particularly with the current economic climate. It is like hitting the core of the Australian family with all these changes. Or is this just the tip of the iceberg? On the one hand, you give a so-called economic stimulus and then, with the other hand, you take it away in another form, only costlier.

A very important point in this whole sorry matter is the recent effect on superannuation of the current economic challenges. Superannuation changes have been mostly on the negative side. Ask any of the self-funded retirees how their superannuation is going and you will get a graphic description of where that superannuation has gone. The only thing that would stop the loss of the Commonwealth seniors health card would be the collapse of retirement incomes. That being said, we should keep in mind what has happened to those retirement incomes—in particular, the circumstances of those on defined benefit pensions, members of self-managed super funds, who actually received a full or partial assets test exemption.

I have received correspondence from my constituents about these matters. I, like other members, have received correspondence from fund managers on behalf of their participants. The issue is about an anomaly in the Social Security Act. What has happened is that these pension funds will not meet the solvency required for them to continue. What needs to be allowed for is a rollover from the self-managed super system to a life annuity pension system. If this is not done then the assets test exemption would be backdated for five years, because that is the limit of time for recovery available to Centrelink. Thousands of dollars are involved in these cases of individuals, and this is a significant problem that the government now has the opportunity to address. It would seem that the government would prefer to take away the Commonwealth seniors health card from around 22,000 seniors and veterans as a priority rather than acting quickly to support those on self-managed super arrangements.

The legislation is in need of review to consider whether the assets test exemption is lost at the time of rollover. This would be as opposed to the backdating to the inception of the defined pension benefit. A review could consider how to allow pensioners to continue to receive the exemption if their pension is rolled into a life office annuity. There are challenges to this. Firstly, because many of the assets supporting the pension in these self-managed funds are frozen, it is not possible to transfer into life office annuity. Given that annuity rates are closely linked to prevailing interest rates, which are low, these provide a permanent, low, defined benefit return. These matters have been raised with me in letters by Ord Minnett and Tranzact Total Super. I thank them for providing me with this information. Their letters are pretty much the same letter, but they clearly represent an industry concern on behalf of their members.

We in this place are used to receiving correspondence on single issues, and perhaps it would not have had any greater meaning for me had this exact problem not been raised with me beforehand by my constituent Mrs Valerie Lowe. Tragically, her husband James recently passed away, and I offer my condolences for her loss. I remember that James and I had a good chat on the day of the state election at the Hawker Park Primary School voting booth last year. James was a good man in all respects. Towards the end of his life, James and, of course, Valerie had to deal with this exact problem. Mrs Lowe had come to my office to discuss the matter further. The position was that Mr and Mrs Lowe’s self-managed super fund was no longer making enough to meet the commitment in terms of income stream, due to the effects of the global financial situation on super funds and the share market. Although Mr and Mrs Lowe were quite happy to reduce the amount of income they received from the fund, that was not an option under the rules by which these funds were set up. Therefore they had to commute their self-managed super fund to an accounts based pension and, in the course of this, lost the asset test exemption on the assets underlying the income.

Mrs Lowe accepted the situation, with significant regret. But she is seriously concerned that, under the current social security legislation, once the asset test exemption is lost, it will be backdated for five years—which means that there have effectively been overpayments for the past five years, for which Centrelink will raise a debt. I understand that the figure would be around $14,000. It is little wonder that the situation has been a great cause of concern for the Lowes, and now for Valerie Lowe alone. A serious reduction in income due to lower returns from her superannuation, and now a significant debt raised by Centrelink—let alone her recent loss of her husband—is a lot for this lady to endure, and I think that this is worthy of immediate action. To that end, I have written to the Minister for Finance and Deregulation asking for a review.

I will now return to the inherent fault with this legislation. The availability of the Commonwealth seniors health card represents a little bit of welcome assistance to those who are fundamentally paying their own way. They have worked hard and have saved for their futures. They are not taking the age pension and they have payed taxes throughout their lives. It is not unreasonable for them to be given this small helping hand to take the edge off some of their medical expenses, particularly given how little they cost the taxpayers in overall terms. It should also be considered that, with the cost of private health insurance rising—certainly not helped by the government’s ideological stance against private health insurance—the assistance with the provision of the health card is right and appropriate.

This legislation really does represent discrimination against those who have saved for their retirement, as if, by such prudent action, they have somehow taken an unfair advantage over others. It is a telling sign that the Association of Independent Retirees and the National Seniors Association are aware of this legislation and both oppose it. The self-funded retirees do not stand alone on this matter, because we stand with them. We stand with them and oppose this bill.

I wonder where this will all end. Will the family house be included in the assets test in the future? Will that force seniors to sell their homes? Will the assets test taper rates be increased? That would reduce the incentives to save for retirement. Or, perhaps, will the income test taper rates be made harsher, creating a disincentive for people to earn additional money? It is hard to reconcile the action taken with this legislation—and the media reports that have suggested that the changes just mentioned are on the table for the government—with Kevin Rudd’s pre-election talk of ‘easing the cost of living pressures for senior Australians’. In contrast to that, I see only roll-backs from the financial security advances that were made by the Howard government.

The government can be sure that we will continually ask whether any senior will be worse off as a result of their pension review. We will never retreat from our strong support for age pensioners. We were the side that advanced the issue of an increase of $30 per week for age pensioners in September last year, and we remember that the government voted against it. I call upon the government to drop this legislation and to do it now.