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Wednesday, 17 June 2009
Page: 6288


Ms HALL (12:14 PM) —It gives me great pleasure to rise to speak in support of the Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Bill 2009. This legislation will support pensioners and benefit an enormous number of people throughout Australia. The bill introduces a range of measures from the 2009 budget, including measures for the government’s secure and sustainable pension reforms package. The measures in the bill include an increase to the age pension rate; the closure of the Pension Bonus Scheme to new applicants; changes to advance payments; structural reforms and simplification such as providing a new pension supplement and a new seniors supplement to replace a variety of current entitlements; revised pension indexation and benchmarking arrangements, using in part a new pension and beneficiary living cost index to complement the consumer price index—and I will be talking a little bit about that later; revised pension income test arrangements and transitional arrangements to ensure pensioners affected by the income test changes will not be any worse off, which I think is very important; revised indexation and benchmarking arrangements for certain family tax benefit rates and maternity immunisation allowance; exclusion from social security and veterans’ entitlements income tests of amounts received under the Western Australian cost of living rebate scheme and the value of benefits received under the Western Australia country age pension fuel card scheme; changes in regard to aged-care fees; the introduction of new supplement for aged-care providers; and the addition of a new operational area to give individuals allotted for service ‘qualifying service’, entitling them to full benefits under the Veterans’ Entitlements Act.

This reform package improves the adequacy of the pension system, making it operate in a simpler way that is more responsive to pensioners’ needs, and it ensures the long-term sustainability of the pension in this country. It prepares Australia to meet future challenges, including the ageing population. I have to acknowledge the work that was done by former Treasurer Peter Costello in bringing down the Intergenerational report, because that was the first serious consideration of the impact that the ageing of our population will have in Australia. This is the next step in that process. Also outlined by the government are further steps to constantly review and adapt to the changing demographic within this country. Australia has 3.3 million age pensioners, disability pensioners, carers, wife pensioners and veteran income support recipients, and they will all benefit from these increases in the pension payment.

On many occasions I have stood in this parliament and highlighted the fact that the Shortland electorate is one of the oldest in the country. It has the eighth highest number of pensioners in Australia. I believe that, for the first time in a very long time, we have a government that is seriously looking at the needs of those pensioners. In the Shortland electorate we have 26,592 pensioners. That includes 11,176 pensioners that live in a partnership, 786 single pensioners, 814 carer payment recipients living in a partnership, 441 single carer payment recipients, 3,659 partnered carer allowance recipients, 938 single carer allowance recipients, over 3,000 disability support pensioners living in a partnership and nearly 3,000 disability support pensioners that are living alone. That is a significant number of people that I represent in this parliament. For a very long time I have been being approached by pensioners telling me just how hard it is for them. They were particularly impacted by the GST, and every little cost of living change following that has also impacted on them—to a greater extent than they have impacted on working Australians. Their level of disposable income is lower and they are more vulnerable when there are changes.

For the first time, we have a government that has reviewed the system. It has been 100 years since the age pension was introduced in Australia. The Harmer review, which this legislation stems from, was very much overdue. The pension reform measures in this bill implement the reforms of that review in social security and aged care. The bill really does reflect the recommendations made by Dr Harmer. The government has acted to introduce long-overdue reforms to make the pension system simpler and fairer. As I mentioned, the age pension was introduced in 1909. I think it is also important to mention that the age pension is the largest-spending Commonwealth own-purpose program. The Australian government is currently spending $28 billion per annum on the age pension. That is why, when you make changes, you must make sure they are the right changes.

I know at the time of the Howard government there was a lot of talk about the need for change, but there was no action. What we have in this legislation is action. We do not have ministers going to cabinet and being rejected when they suggest that pensioners be given an increase. We have a very transparent review process, and culminating from that review process we have the recommendations.

I should go over the Harmer review a little, for the benefit of the House. It commenced on 15 May 2008. If we look back to last year’s budget, we had the then Leader of the Opposition, Dr Nelson, clamouring for a $30 increase for single pensioners—no thought whatsoever for married pensioners or partnered pensioners. There was just this flat $30 for pensioners. In February this year Dr Harmer handed down his report. As I have already mentioned, it was really critical in the development of this legislation. During the review process there were public hearings in every capital city and in regional centres. There was a hearing held in my own area, in the Hunter and on the Central Coast, and it received over 2,000 written submissions. In fact, I had pensioners come to my office and we forwarded their submissions on to the review. Dr Harmer was supported by a reference group comprising representatives from seniors groups, disability groups and carer groups; experts in the area of pensioners; academics; and the ACTU. So you can see that it was a very holistic approach to reviewing the pension. I think that, for the first time, we have before us legislation that is looking at the issues that have been facing pensioners.

There are some challenges in relation to the pension. Going back to the review, it was found that for a very long time pension rates have not fully recognised the costs facing single pensioners, that the indexation rates for pensions need to be more transparent, that there is a complexity of needs that needs to be reviewed and reduced as it undermines the financial security of pensioners and that services that are essential to complement the pension system need to be diverse and respond to pensioners’ needs. Looking at workforce participation, as I have mentioned already, we have an ageing population, so there needs to be incentives to encourage people to work a little bit longer and make it worth pensioners’ while to decide that they will remain in the workforce. So there are very complex issues.

The review found that it was desirable to increase the age pension qualifying age to 67 from 2017. This will be done incrementally, and it will increase by six months over a period of four years. So from 2017 the eligibility age will be increased by six months every two years until it reaches 67 years of age in 2023. So there is quite a long lead-in time; it will not affect anyone who is actually receiving the pension at this time.

I would like to go to the core of this legislation. The bill will be increasing the maximum single rate of pension by $30 a week, or $1,560 a year, from 20 September this year. I must say that, from the phone calls I have received in my office, pensioners are very appreciative of the change. These increases are on top of indexation and any increase in the male average weekly earnings, which would have already been taken into account on 20 September this year. The increase brings the single pension rate up to two-thirds, or 66.3 per cent, of the combined couple rate. Looking at overseas examples and models, that really seems to be the level it needs to be at.

But there is another aspect to the changes that I think is fairly important, and that is the pension supplement. The bill introduces a new pension supplement to simplify the number of supplementary pension payments that are currently available and to provide pensioners with a more flexible way of managing their budgets. Currently, there is the GST supplement, the pharmaceutical allowance, the utilities allowance and the telephone allowance. They will all be incorporated into a pension supplement. The consolidation of these payments will really help pensioners, because they will be paid initially on a fortnightly basis. The pension supplement for a single pensioner will be $2.49, on top of the combination of all those supplements I have already mentioned. For married pensioners the supplement will be $10.14.

I come to the issue of married and partnered pensioners. There has been considerable misinformation put out into the community about the benefits of pension changes to married and partnered pensioners. A local newspaper on the Central Coast has been running articles that actually claim that partnered pensioners will be worse off, and this has developed a life of its own. Partnered and married pensioners will not be worse off; they will be better off. Whilst they do not receive the same level of increase as single pensioners, they will be receiving a $10.14 a week increase and will not have any reduction in their pension supplement. So the very strong message that I would like to get out, not only to pensioners in the Shortland electorate but to pensioners everywhere, is that married and partnered pensioners will not be worse off but will be better off.

In addition to the increases and the change in the way the supplements are paid, there will be other benefits to pensioners, such as the seniors supplement, a payment that replaces the seniors concession allowance and telephone allowance currently available to holders of the Commonwealth seniors health card. It will deliver benefits to that group of seniors in our community. There will be some changes to the pension income test. The test changes from 20 September this year. This is looking at ensuring that the pension system remains sustainable in the long term. This is also looking to make sure that increases go to those who most need them. Existing pensioners will be protected. As the member for Werriwa pointed out, no pensioner will be worse off. The income test taper rate will increase from 40c to 50c per dollar of income over the income-test-free area. I reiterate that no current pensioner will be worse off.

A new work bonus will be introduced for age and service pensioners. This will provide concessional income test treatment of employment income for pensioners over the pension age. This will replace the previous pension bonus scheme. I think it will really benefit people greatly as 50 per cent of a pensioner’s employment income, up to a maximum of $500 a fortnight, will be disregarded from the income test. That will have a long-term benefit for pensioners. The previous pension bonus scheme was quite rigid and there were a number of problems associated with it. I have had people come to see me because they were excluded from that scheme when they should have actually been receiving its benefits.

The final thing that I would like to touch on is indexation. The Australian Bureau of Statistics will develop a new index that will specifically reflect cost of living changes for pensioners and other income support recipients. It will be known as the pensioner and beneficiary living cost index. This will ensure that future increases in the pension will really reflect the needs of pensioners. If the CPI is greater than that index, pensioners and beneficiaries will be given an increase. The legislative benchmark will be set at 41.76 per cent of male total average weekly earnings for couples and at 27.7 per cent of MTAWE for singles. I wholly support this legislation. I think it is good legislation that really benefits Australia’s seniors and pensioners. It is looking to the future to ensure the long-term sustainability of our pension scheme.