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Tuesday, 16 June 2009
Page: 6138


Ms ANNETTE ELLIS (6:17 PM) —I am really very pleased this evening to speak to the Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Bill 2009. It puts in place the key elements of the government’s secure and sustainable pension reforms announced in the recent federal budget. May I say in relation to the member for Warringah, who has just spoken—I do not in any way want to maliciously rain on his parade—I feel it incumbent upon me to point out that, had the previous government’s legislation gone through, it would have affected in a positive way single age pensioners and maybe some veterans, but it would have disallowed disability support pension recipients, carers and so on. I am really pleased that, as a government, we have had a thorough, proper and professional examination done of the whole pension system, which has led us to where we are now debating this bill.

These reforms will improve the adequacy of the pension system. They will make its operations simpler and more responsive to the needs of our pensioners and they will secure its long-term sustainability—one of the most important elements of the bill. We definitely face challenges into the future, as our population ages, and we must face these challenges directly. A secure and sustainable pension system, therefore, is essential.

Nationally our 3.3 million age pensioners, disability pensioners, carers, wife pensioners and veteran income support recipients will all benefit from increases in their pension payments as a result of this legislation. In my electorate of Canberra, for instance, those who will benefit include 5,559 partnered and 4,605 unpartnered age pensioners, 198 and 170 respectively carer payment recipients, 1,547 and 664 respectively carer allowance recipients, 790 and 2,608 respectively disability support pensioners, as well as around 2,000 veterans. That is just under 16,000 people in my electorate who will be positively affected in the longer term by this legislation. That is why I am so pleased to be here to support it this evening.

The history behind this legislation is worth noting. Last year the government initiated a significant review, the Harmer review into the adequacy of our 100-year-old pension system. The review found that the full-rate single pension was inadequate and that the ratio of full-rate payments between single and couple pensioners needed to be lifted from 60 per cent to between 64 and 67 per cent. Even in these difficult financial circumstances, we as a government were determined to respond to these findings. Every Australian knows that one day they may need to rely on a pension. A strong safety net is needed now and will be needed in future and the global recession highlights the importance of this very point.

I would like to expand a little on one particular provision, also mentioned by the previous speaker, which is the new qualifying pension age. I believe there may be a little confusion in some people’s minds in relation to this element of the legislation. The odd call to my office, where people have been seeking clarification, has led me to want to speak to this element in detail. Beginning in 2017, the age pension eligibility age will increase by six months every two years until it reaches 67 years of age in 2023. For example, on 1 July 2017, the new age pension age will be 65½. That will affect people born between 1 July 1952 and 31 December 1953, whose current ages are between 55½ to 57.

There is more detail—I could go through all of the four categories—but it is very clear that it is going to be a transition over a period of time. People who want more detail should seek it to make sure that they understand that this is not happening tomorrow. I have heard 62-year-olds ring up talkback radio and say, ‘I don’t want to wait any longer for the pension.’ They do not have to if they qualify now. It is very important that people understand that this is a grading proposal that will happen over a number of years and will gradually creep up to that new age qualification. These changes will not affect current age pensioners. Only new entrants to the pension system from 1 July 2017 will be affected. It must be noted that these changes affect the age pension age, the qualifying age for the veterans service pension will remain at 60 years and the official retirement age does not change at all.

The pension age was set at 65 years in 1909, but 100 years later Australia has changed. When the age pension was introduced, a man retiring at 65 would have expected to spend an average of 11 years in retirement. By 2017, it is projected that the average number of years in retirement for a 65-year-old man will have increased to 19½ years. A woman of the same age can expect to spend 23½ years in retirement by 2017. Australia will face some major demographic changes over the coming decades. By 2047 some 7.2 million Australians will be aged over 65, representing 25 per cent of the expected population—almost double the current 13 per cent. Currently, there are around five people of working age supporting every person aged 65 and over. This will more than halve to 2.4 people by 2047. Increasing longevity means that people are receiving the age pension for far longer periods than in the past. Demographic change means that the cost of a given pension increase today will almost double as a share of GDP by 2050.

The critical elements of the pension reform package include increasing the single pension. Single pensioners will receive an increase of $32.49 per week, comprising a $30 a week increase in the maximum basic pension rate and a $2.49 per week increase in the pension supplement. The effective male total average weekly earnings benchmark for the single rate of pension will increase from 25 per cent to 27.7 per cent. The single pension rate will increase as a proportion of the combined couple rate from 60 per cent to 66.3 per cent of MTAWE. A pensioner couple combined will receive an increase of $10.14 per week, with no increase in the maximum basic pension, and a $10.14 per week increase in the pension supplement. Income test rules will change to better target pension increases. A work bonus for older Australians who continue to work past age pension age will also be introduced. With regard to the pension supplement, the government will combine the GST supplement, the pharmaceutical allowance, the utilities allowance and the telephone allowance—at a higher internet rate—and the increased assistance into an a single, easily understood pension supplement which will be paid fortnightly. As the figures show, that is to the financial advantage of all the people who receive the supplement.

I am very proud to be a member of a government that recognises the need for reform in these important areas, a government that undertakes a proper and professional review of the policy requirements that are to be considered, and introduces a bill of this kind. There is no knee-jerk reaction to this, there is no hysteria in the streets and there is no abuse of the vulnerability of our older Australians in running a campaign to scream loudly for more money for these people as obviously they need that income. But it could not have been done unless it was done properly and comprehensively. My criticism of the previous government’s attempts in pushing a bill through in the life of their government was the very nature by which it was done. It removed out of the equation other members of the community who were on Centrelink or support payments who equally deserved careful examination of their financial requirements. The people on a disability support pension, the carers and all of the other people who are now included have been included in a proper and a very measured way. The Harmer review did an enormous amount of work and considered very carefully the best way to establish a pension reform package that is sustainable in the future. It was not to wave around a pension increase for next week but to actually understand the requirements of our community in the future and to structure a reform package accordingly. I congratulate the Minister for Families, Housing, Community Services and Indigenous Affairs and the Harmer review for all the work done on this piece of legislation and the benefits that are going to the flow from it. I am very proud to be part of this government that does this sort of work. I commend the bill to the House.