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Tuesday, 16 June 2009
Page: 6136

Mr ABBOTT (6:01 PM) —The Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Bill 2009, which we are now considering, is legislation which implements the government’s budget pension package. It is an important package. It is perhaps the highlight of the budget and it is good that it receives the attention of the House over the next few hours. The most eye-catching feature of this legislation is the provision which increases the base rate of the single pension by $30 a week. This applies to all pensions except the sole parent pension.

I have to say that the government came late to the cause of increasing the pension. You might remember that in this parliament, in the middle of last year under the leadership of the member for Bradfield, the coalition called very consistently for recognition of the plight of the single pensioner and, in fact, moved legislation in this parliament—legislation that was carried in the Senate—to do just that. That legislation was not proceeded with by the government. So the government has come late to this but, nevertheless, it has come at last.

I would like to place on the Hansard record my conviction that this benefit for pensioners is a lasting tribute to the work of the former Leader of the Opposition, the member for Bradfield. All pensioners who get this large increase from September this year should say a silent prayer of thanks to Dr Brendan Nelson, the member for Bradfield, because I am convinced that without his work it would not have happened. That is the first thing.

The second thing is that this legislation changes the indexation arrangements for pensions. In future, under a new index which the ABS will prepare especially to reflect the circumstances of pensioners, the pension will be increased by CPI or 27.7 per cent of MTAWE—not 25 per cent—whichever is the greater. This is a beneficial change. It builds on the good work of the former government.

Third, this legislation consolidates the various existing supplements and allowances paid to pensioners and then increases them. It increases them by a little over $2 in the case of single pensioners and by over $10 in the case of couple pensioners. This is a sensible enough measure, although I should point out that it does replace, it seems to me, the one-off bonuses for seniors and pensioners that the former government paid in the last few budgets out of the massive surpluses that had been accumulated. Given that the surpluses have disappeared under the current government, presumably, but for this change, those bonuses would have disappeared, so pensioners will probably welcome this change.

Fourth, this legislation changes the withdrawal taper rates. In future the pension will be reduced by 50c for every dollar of additional income earned rather than, as was the case under the Howard government, by 40c. This is obviously not going to benefit some people who would otherwise be on the pension. Nevertheless, I note that the government will be grandfathering existing pensioners. I presume this will necessitate the maintenance of two scales for many years to come—in fact for as long as current pensioners continue to receive the pension. I imagine that it will create a certain amount of administrative complexity for Centrelink, but, nevertheless, if such a change is going to be made, it is a fair way of doing it.

Fifth, this legislation replaces the former government’s pension bonus scheme with a new work bonus scheme. It has been the object of public policy for quite a few years to try to encourage people beyond pension age to stay in the workforce. The former government’s scheme provided a lump sum of up to $30,000 to pension-eligible people who opted to delay their retirement. I regret to say that this scheme was not taken up nearly as widely as the former government had anticipated. It was anticipated when the scheme was introduced in the late 1990s that some 35,000 people a year would benefit from this pension bonus scheme. As things turned out, about 8,000 people a year was the maximum number achieved.

In principle it seems that the new arrangements ought to be more widely advantageous to people working past what might otherwise be a retirement age. It certainly provides an immediate benefit rather than a deferred benefit, and I hope that these new arrangements will in fact mean that many more people will keep working into their senior years, not because I want anyone to work who would rather not work—certainly anyone of senior years who would rather not work—but because I think it is very important that people be given every encouragement to keep working for as long as they can.

Finally, and most controversially, this legislation raises the pension eligibility age to 67, starting in 2017 and concluding in 2023. I have to say that this final measure embodies two characteristics which have come to mark the Rudd government. Firstly, the government did not take the public into its confidence before this decision was made. I think there is a secretiveness about the new government, which is regrettable. I think important policy innovations should be discussed publicly before they are presented to the people as a done deal. Secondly, as with all the allegedly tough decisions of the current government, the pain is deferred. This is a government that is very good at giving people goodies now while deferring any burdens they might have to bear to a time when the current Prime Minister is likely to be applying to become the Secretary-General of the United Nations, when he might be in some incarnation as ‘Kevin Kevin Rudd’.

Nevertheless, having made those observations, and having made the point as strongly as I can that this measure should have been discussed first and should not simply have been sprung on the Australian people on budget night, I do think that a strong case can be made for raising the pension age. The pension age was set at 65 back in 1908, when life expectancy at birth was under 60 years. Today, life expectancy at birth is over 80 years. In 1908, someone who was 65 years old could expect to live for a further 11 years. Today, someone who is 65 years old can expect to live for 19 years more, and it is anticipated that those life expectancies will continue to climb in the immediate future.

What this final measure is doing is tackling the demographic deficit, if you like, that was identified by the former government in its two intergenerational reports. At this time there are approximately five workers for every one person dependent upon social security. By 2040, without policy change, there will be just 2½ workers for every one person dependent upon the taxpayer. This is a very serious problem which has to be addressed, and raising the pension eligibility age is a significant component in doing so. I regret to say that we have in recent years had a situation where many Australians did not expect to start working until they were well into their 20s and yet expected to stop working when they were barely into their 50s and live financially very well indeed well into their 80s and even their 90s. This was simply unsustainable. The idea that there should be but a 30-year working window in people’s lives could not go on, and I think it is good that the government has addressed this.

The other point I want to make is that it really is important for us to break down the stigma against older workers. Discrimination on the basis of age is perhaps the last frontier of discrimination left in our society. I think that it is years since people have been actively discriminated against on the basis of race, religion or gender. But certainly there is active discrimination against people on the basis of age. It is not legal, but it goes on. It is disguised, but it happens. One of the great benefits, I think, of raising the pension age is that we as a society are saying to the public that we do not believe that someone is past it simply because he or she turns 65. I do not much like the idea of statutory senility starting at 67, either; nevertheless, at least it is not going to start at 65. So I think there is this very significant benefit in this proposal to raise the age of pension eligibility.

I suppose the objection that has most commonly been raised since budget night is that there are quite a few people who work in the sorts of occupations where going on might be difficult. The example that has been widely cited is that of the 64-year-old bricklayer. To be honest, I would like to think that, as time goes by, there will be more and more Australians who will be capable of doing tough, vigorous work later and later in life. The truth is that we do not actually have very many 64-year-old bricklayers. Most people in those sorts of occupations have sought other work well before that age or, let us be blunt, have gone on to other forms of benefit.

I do not believe that this measure will result in very many conscripts in the workforce, because I think that people who are really keen to retire, who find it very difficult to work beyond the age of 65, will, in fact, be on a different government benefit. They will most likely be on the disability support pension. If you can work, you should; if you cannot work, there should be a benefit for you and that is the role the disability support pension should rightly play.

These are points on which we should have heard more from the government since the budget. At the forum on the budget changes which I attended with Minister Macklin, she understandably dwelt on the increases in the pension but left me defending the increase in the pension age. I am very happy to do the intellectual hard work, but I would like to see more allies from the government when it comes to talking on this issue.

The opposition will be supporting this legislation in the House. Because the rise in the age pension has not been sufficiently discussed and because the public ought to be more widely familiar with this before it becomes a done deal, we will be moving to ensure that there is a proper committee inquiry into at least this aspect of the government’s changes. People ought to have a chance to say their piece on this, even though, as I have already said, I think it is a good policy. It is good in principle and any practical difficulties ought to be accommodated in the sorts of ways that Australian governments over the years have become quite accustomed to.

I welcome the fact that we are now able to debate these issues and I look forward to contributions from members on both sides.