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Wednesday, 17 June 2009
Page: 6297


Mrs D’ATH (1:02 PM) —I rise to speak in support of the Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Bill 2009. This bill will introduce a number of key measures from the 2009 budget. With over 21,250 pensioners and carers and another over 4,100 veteran income support recipients in my electorate of Petrie, the increase to the pension rate is a long-awaited and welcome initiative. I note that the changes to veterans payments will be dealt with in a different bill, but I believe that it is important in this debate to acknowledge the benefit that comes not just to age pensioners and carers but also to veterans from the budget initiatives.

Well before the election of the Rudd Labor government in 2007, pensioners were calling out for reform. They were calling out for a significant change in the base rate of the pension. Those members on the other side of the chamber have questioned why it has taken so long to increase the base rate of the pension. There is a clear distinction between the previous, Howard government and the Rudd Labor government on this issue. In 12 years the Howard government failed to do anything to support pensioners. It is true that, come election time each term, pensioners would find themselves the recipients of one-off bonus payments. However, those pensioners were never told that the one-off payments were not budgeted for in future estimates. They only came along in election time. Despite any reviews or inquiries the previous government may have undertaken during its long 12 years in office, no long-term reform or any beneficial reform to pension rates was ever introduced.

The Rudd Labor government heard that call from pensioners loud and clear. This government did not sit back and pay lip service to pensioners the way the previous government did. Within its first six months in office, the Rudd Labor government took action. On 15 May 2008, the Minister for Families, Housing, Community Services and Indigenous Affairs, the Hon. Jenny Macklin MP, announced that the secretary of her department, Dr Jeff Harmer, would lead a review into measures to strengthen the financial security of seniors, carers and people with disability. This investigation was to include a review of the age pension, the carer payment and the disability support pension. The minister asked Dr Harmer to report to the government on the outcomes of the pension review by 28 February 2009. The terms of reference directed the review to consider the appropriate levels of income support and allowances, including the base rate of the pension, with reference to the stated purpose of the payment; the frequency of payments, including the efficacy of lump sums versus ongoing support; and the structure and payment of concessions or other entitlements that would improve the financial circumstances and security of carers and older Australians.

The pension review has been undertaken in the context of the wider inquiry into Australia’s future tax system, which is considering the tax structure needed to position Australia to deal with the social, economic and environmental challenges of the 21st century. The terms of reference for the inquiry into Australia’s future tax system require it to consider improvements to the tax and transfer payment system for individuals, including retirees, and for working families. While the panel overseeing the tax system review is due to report by the end of 2009, the government asked the chair of the review, Dr Ken Henry AC, to bring forward his report on the retirement income system to March 2009 to allow that report to be considered in conjunction with the pension review report.

The pension review report was completed by Dr Jeff Harmer in February 2009. The government’s secure and sustainable pension package, which was developed with the assistance of Dr Harmer’s report, was announced in the 2009 budget, which was handed down by the Treasurer on 12 May this year. This means that, within the first five weeks of this new government’s parliamentary sittings, the review was announced and, within one year from that announcement, the government introduced the changes through the 2009 budget. This is a far cry from the inaction of the previous Howard government. The Labor government recognised and acknowledged that pensioners were finding it very difficult through 2008 while awaiting the Harmer review’s report.

With the global economic crisis really starting to show its effects and to have a flow-on effect in Australia’s communities—into our households; into our businesses—in late 2008, this government acted decisively to stimulate the economy in the way they best believed it could be done. At the same time, the government provided interim financial assistance to pensioners by providing pensioners with a one-off payment delivered to them in December through the stimulus package. This payment not only provided an immediate financial benefit to those pensioners but also was equivalent to a $35 a week increase in their pension between the delivery of that payment and June this year. So it basically was able to fill a gap until such time as the Harmer report came down.

The government’s 2009-10 budget delivers for pensioners a permanent shift to the base rate of the pension. The single pension base rate will increase by $30 per week. In addition, a further supplementary payment of $2.49 per week for single pensioners will be paid and there will be an additional $10.14 per week supplementary payment for couple pensioners. We should not underestimate that supplementary payment. Previously, under the Howard government, we saw many payments being provided on an annual basis. Very shortly after coming to government, the Rudd Labor government provided that many payments, such as the utilities allowance and the telephone allowance, would be paid quarterly—recognising that, as with all of our costs of living, those bills do not sit there and wait until the end of the financial year before they have to be paid, that these are ongoing expenses, and it is best to provide that financial assistance as those bills are coming in.

This budget takes that initiative one step further and, in my submission, makes a significant change to the way in which we ensure that pensioners in our community are getting the financial assistance they need when they need it. This initiative ensures that, from 20 September 2009, these payments will be paid as a single supplementary payment on a fortnightly basis. It rolls together a range of payments that are already being provided to pensioners, which will see them not have to wait annually or quarterly but in fact get those supplementary payments when they need them most. Those supplementary payments in addition to the $2.49 per week for single pensioners and the $10.14 per week for couple pensioners will see their GST supplement, their pharmaceutical allowance, their utilities allowance and their telephone allowance being received at the same time as they are getting their normal base rate pension payments. This will see a significant benefit flowing to these pensioners.

As I have said before in this chamber, over 30 per cent of pensioners on the north side of Brisbane are renting. It is important when you are in the private rental market that you can pay your rent on time. If you cannot, there can be very serious consequences. Pensioners do not necessarily have the means to supplement their income when times are tough, and they, more than anyone, need to make sure that they can meet those payments when they are due. This initiative not only improves the base rate of the pension payment—an improvement long over due—but also rolls up those supplementary payments in a much more simplified way by having a single supplementary payment that incorporates all those allowances paid fortnightly to benefit those people. For a single pensioner, in addition to their $30 increase, it will mean a $25.39 increase to their weekly entitlement, and of course that will be adjusted with indexation on 20 September as well. So it is at least $25.39 on top of their $30 base rate increase. For couple pensioners, there will be an increase of over $30 per week in their entitlements.

What is even better is that next year these pensioners will have the flexibility to decide how that supplementary payment will be paid and whether they want to go back to quarterly payments. Everyone has their own way of budgeting. Some would rather receive that payment quarterly when those bills are coming in. This government is providing flexibility to pensioners in relation to their payments—flexibility which they have never had before. They have not had the luxury of choosing when to get that payment. It was either ‘That’s when you get it or you don’t.’ This measure empowers pensioners to decide how they want to budget and how they want to manage their expenses. That is another very important initiative as a consequence of this budget measure and the commitment this government made not only to undertake a review but also, more importantly, to act on the recommendations that came out of that review. Too often we have reviews that do not necessarily get acted on. We have seen action by this government to deliver for pensioners and to take on board the recommendations that have come out of the Harmer report.

Another very important initiative which has been spoken about in this House, in the media and out in the community is the increase to the pension age. I support the increase to the pension age. I believe it is what a responsible government would do. It is a necessary measure that will ensure the long-term sustainability of the pension system in this country and that is what we have to address. It is our responsibility to ensure that people have financial support well into the future. We all know that we are living longer and that the initiatives, the research and the changes in the health sector are fantastic. We are able to move forward to ensure that illnesses, chronic diseases and a range of medical conditions which previously would see someone’s life cut short are much more manageable and will continue to be more manageable in future because of innovation in the medical field. People are going to live longer. If we are going to live longer we have to stand up and say: how are we going to make the pension system sustainable for the long term? This is one of those initiatives.

Prior to the budget coming down, many retirees out in the community, certainly in my electorate, were taking notice of the Harmer review. They were looking at submissions by various organisations and bodies and were interested in having some input in the inquiry. Many retirees came to me saying, ‘We understand that the pension age may need to be increased. What we ask, for those of us who are due to retire in the next five or six years, is that we have a reasonable, sensible and fair lead-in time for that change.’ That is what this government is doing with this initiative. That increase will not begin until 2017 and it will be gradual, increasing by six months every two years until it reaches 67 years of age in 2023.

When this announcement was made in the budget, there were those on the other side of this House who scoffed at the idea. There were jokes about why we should wait so long; 2023 is years away; why have that long a lead-in? That is what a sensible, responsible government does. The pension age cannot be increased overnight. Yes, those on the other side may say—as the Leader of the Opposition has said—’I recognise that there must be an increase in the pension age to make the pension system sustainable for the long term.’ But he has not said when he would introduce it. They were certainly keen to scoff at the concept and at the proposed time line when this budget initiative was introduced. This is a proper time line. It is reasonable. It ensures that those who are in the work force right now, who have already planned to retire over the next five or six years, can continue with that plan and will not be disadvantaged as a consequence of this initiative. People who will not retire before 2017, and particularly by 2023, will have more than adequate time to prepare for the change to the pension age.

Of course, as we have said, this does not stop people retiring at an earlier age. This is not retirement age; it is the age at which people will access the pension. It is important to make that distinction and to clarify that point. We have control of our own destiny as to when we retire. If we want to retire early we can, but we have the responsibility to ensure that we have the financial security to do that. If we are going to rely on the pension system, we have to accept that the pension system must be sustainable. That is why 67 years of age is reasonable, sensible and fair.

I will deal briefly with the argument we have heard about people who do hard labouring work. I looked after construction for many years in my previous job. I know the strain it has on people’s bodies. I accept that, as people get older, physically they struggle to do labouring work. The federal government needs to work with state governments to ensure that we have initiatives in place to retrain people. It is not only when people hit 65 that their bodies are telling them that they cannot continue hard labouring work; in their 40s and early 50s their bodies tell them, ‘You cannot continue doing very physical labouring work.’ We need to help those people to retrain and reskill. I know that the state government has a range of initiatives about retraining and reskilling mature age workers. We also need to encourage businesses to say to workers, ‘You have the skills, you have the knowledge. Instead of doing hard labouring work, you can be a role model and help apprentices and those who are learning by imparting your knowledge, working with them as a transition to your retirement, so that others can gain from your experience and knowledge.’ That would be much better than workers pushing their bodies until they can no longer cope. I am keen to work on initiatives with this government and with state governments to help mature age workers reskill so that at 65 years of age they are not wondering how they are going to do two more years of hard labouring work.

These are extremely important budget initiatives. I have spoken in this House about the important infrastructure initiatives that are so significant in supporting jobs now and growing our nation into the future. Equally, we must look after those most in need in our community and that is what this bill does. I support it and commend it to the House.