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Tuesday, 16 June 2009
Page: 6145

Ms COLLINS (6:48 PM) —I rise tonight to show my support for the Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Bill 2009. I do this knowing that the pensioners, carers and people with a disability in my electorate of Franklin have been doing it tough. I want to put on record that I recognise and acknowledge the financial pressures being faced by the many older Australians and that the Rudd government is committed to ensuring they are adequately supported over the long term. That is why I support this legislation, which will facilitate long-awaited pension reform. I commend the Minister for Families, Housing, Community Services and Indigenous Affairs on her efforts to support Australian pensioners and carers in introducing this legislation in the House and the work that she has done to achieve that. This government has taken a tough decision to support pension reform. It is responsible reform to ensure that pensioners are well supported over the longer term. With more than 17,000 pensioners living in my electorate of Franklin, it is a package that I can fully support.

But we need to look a bit at the history and why this pension reform is so necessary. The age pension system has been in use for over 100 years. The age pension was first paid in 1909. It is the largest spending in the Commonwealth’s own purpose program. The Australian government spends around $28 billion per annum on the age pension, so we understand the importance of getting this reform package right. The legislation will introduce a range of measures that are included in the Rudd government’s 2009-10 federal budget. These measures will form a secure and sustainable pension reform package.

But this bill is about much more than simply increasing the pension rate. The amendments included in the bill represent our commitment to pensioners and carers and to ensuring that those who are doing it tough are truly given a fair go. These measures will ensure a sustainable pension system well into the 21st century. This reform process was not something we did overnight. It has not been a knee-jerk reaction. It has been a considered and robust review process. The Harmer review put our 100-year-old pension system under the microscope. It was a significant review that put forward a number of recommendations. There is no doubt that this review has underpinned this pension reform package and there is no doubt that the report done by Dr Harmer and given to this government in February was a critical document that helped shape this government’s secure and sustainable pension reform package. As a starting point, the review found that the full single rate pension was inadequate and that payments to single pensioners needed to be lifted from 60 per cent of the payment to couple pensioners to between 64 and 67 per cent.

All this looking into pension reform was done in the context of a global financial crisis and a global recession, but it was done acknowledging that pensioners and those in our community who are doing it tough need support during this time. We certainly have not used that as an excuse not to act. In these difficult financial circumstances we are responding to the review findings, and we have acted. We have acted to increase the pension rate. We are also acting in terms of the income test rules that will change to better target these pension increases. The rate at which the pension is withdrawn for each dollar of additional private income will be increased. All existing pensioners will have their existing entitlements retained in real terms. And, as the demographic changes across our society, we are changing the qualifying age for the age pension. It will progressively increase, beginning in 2017.

The reforms continue for those pensioners that will benefit from paid work. We are introducing a work bonus for older Australians—those Australians who wish to continue to work past the entitlement age for the age pension. This new work bonus will help age pensioners keep more of the money they earn from continuing to work. It will provide concessional treatment of employment income under the income test once they get over the pension age. Under these new rules, employment income will be assessed fortnightly for a pensioner over the age pension age and then half of all the employment income, up to a maximum of $500 a fortnight, will be disregarded in the income test. This is great news for all those Australians who continue to work and choose to work, contributing and making their skills and knowledge available to society and their local communities.

This government is providing an additional $14.2 billion over five years to underpin this financial security for pensioners and to address these increases. From 20 September 2009, the new pension package will deliver the following increases: $32.49 per week for single pensioners on the full rate of the pension and $10.14 per week for couple pensioners on the full rate of the pension. These increases lift the ratio between single and couple pensioners from 60 per cent to 66.33 per cent. These provisions apply to the recipients of social security benefits including age pensioners, disability support pensioners and those on wife pension, carer payment, widow B pension and bereavement allowance.

The bill introduces a new pension supplement to simplify the number of other payments currently available in order to provide pensioners with more flexibility in managing their own budgets. The pension supplement will make pension payment arrangements simpler and easier for pensioners to understand. The government is combining the GST supplement, the pharmaceutical allowance, the telephone allowance and the increased assistance into a single, easily understood pension supplement, which will be paid fortnightly.

The bill also introduces a new seniors supplement, a payment to replace the existing seniors concessional allowance and the telephone allowance currently available to holders of the Commonwealth seniors health card and veterans eligible for the gold card. The single rate of the seniors supplement will include an extra $129 a year.

The government have undertaken this significant pension reform because we know that pensioners are doing it tough. It was a commitment made by our government and we have acted and delivered quickly on this commitment. As I said, there are more than 17,000 pensioners in my electorate who will benefit from this reform and across Australia there are more than 3.3 million pensioners who will benefit.

We heard earlier from the previous speaker about the demographic changes, about the pension increases and about the cost of the pension increases as the demographic changes occur. I was astounded to hear a speaker on the other side say that this was really all their idea—that even though there are issues with it they are going to support it but that it was really all the idea of the member for Higgins. I find that astounding because, if it were his idea and they are committed to it, why did they not do it in the 12 years during which they were in government? Why in the boom times was it never a priority to increase the age pension and to look at long-term pension reform? They talk about the Intergenerational report, but they did nothing about that report; they did not implement it and they did not look at the issues. This government has. We had a review—the Harmer review—and we have acted in 18 months and in the midst of a global financial recession.

To ensure that the pension continues to provide that strong safety net and that it remains sustainable, this government is introducing these reforms now. This is because we know that in this global financial recession pensioners are doing it tough. In order to make sure that the pension age is sustainable, we are gradually lifting the qualifying age for the entitlement to the age pension from the current 65 years to 67 years and starting this gradual process in 2017. We are also increasing the income test, as part of this pension reform, from 40c to 50c—this is part of the findings of the Harmer report.

I have been talking about the demographic changes and the long-term sustainability of this pension reform and there are some statistics that have been the basis of this decision, which I would like to put on the record. By 2047, some 4.7 million Australians will be aged over 65 years. This represents around 25 per cent of the expected population at that time. Currently, there are around five people of working age to support every person aged 65 years and older. This will more than halve to 2.4 people by the year 2047. Australians in the future will receive the age pension for far longer periods than in the past, as our life expectancy continues to grow. Demographic change means that the cost of the pension increases today will double as a share of gross domestic product by 2050.

There are a couple of things we can do when faced with these types of demographic changes. We can do what those on the other side chose to do—which, as I talked about, was not to do anything for 12 years—or we can make a decision and act, as the government have done with this legislation. Building a sustainable pension system requires that the demographic changes be taken into account. It requires leadership. It requires that pensioners be provided with a standard of living. It requires that the future cost of these reforms be taken into account over the longer term. That is what the government have done—we have looked at all these issues, we have made decisions, we have acted and we are doing what is in the best interests of Australia’s long-term future.

This is not a cheap exercise, but we know that pensioners out there have been doing it tough and we know that they deserve this and that is why we are doing it. There has been much debate in the media and in communities around this reform measure—we know that. But it is an approach that will work hand in hand with the work bonus scheme, the change of the age pension, the increase in the age pension and the increase in the age of the age pension over time. This is a range of measures that form a complete package of reform.

I also want to talk about carers. I have put on the record several times in this place my support for carers, and carers have not been forgotten. In fact, we have made a commitment to supporting them, as I have put on the record. I want to note that the Treasurer in his budget speech described Australian carers as ‘the unsung heroes of our community’. I certainly could not agree more.

The budget also provided more assistance to carers. It is an investment that I think is worth making—that is, helping those people who are caring for the most vulnerable people in our society. It introduces a number of important measures, such as the $600 a year carer supplement for all carer payment recipients. This is obviously on top of the increase in their pensions. Recipients of carers allowance will also receive an additional $600 per year for each eligible person in their care. This will mean that some people will be eligible for the increase in the pension plus both bonus payments. They certainly deserve that and I think that everybody in the Australian community believes that carers deserve that support at this time as the costs of caring for people have increased over time.

As a member of the House of Representatives Standing Committee on Family, Community, Housing and Youth, whose recent report Who cares …? looked at better support for carers, I am really pleased that we have support from the government and the minister in relation to support for carers. I know that many people on this side support carers in their plight. I look forward to further reforms for carers on some of the issues that they are facing in our community.

Many of the carers I have spoken to talked about the previous budget bonuses and how they provided no certainty and no security. This budget also locks this in as an annual payment that will be made, and I think that that is worth putting on the record. It replaces the ad hoc style that existed previously. There are more than 3,500 carers in my electorate of Franklin, so it will certainly be well received by the recipients and also by the other members of the community in my electorate.

In conclusion, the strong safety net that we talk about in terms of pension reform is obviously needed. It is required now and for the future. This is the reality as this is what the future holds for Australia and we need to deal with it. With this in mind we are laying down a strong foundation of pension reform. We are delivering a long-awaited increase to Australian pensioners as part of that reform. We are increasing the pension, we are increasing the long-term sustainability of the pension system, we are ensuring that pensioners benefit from continuity and we are also simplifying the payments. This government has acted to ensure that the pension system remains adequate and sustainable into the future and that it tackles the reality of the ageing population in Australia and the challenges that this presents.

We have listened to pensioners and other people in the community and we have acted with care and responsibility. We have also listened to carers, as I mentioned. With so many Australians relying on income support and pensions to survive in their day-to-day activities, I commend this bill to the House.