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Tuesday, 16 June 2009
Page: 6141

Mrs MOYLAN (6:28 PM) —Amongst other things, the Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Bill 2009 bill gives effect to the need to increase the level of pension, particularly the single base rate pension. This need for an increase was forcefully argued by the former Leader of the Opposition, the member for Bradfield. With due respect to the member for Canberra, I take the point she made about the wider range of people that this needed to target, but it was patently obvious that many people on a pension in this country were simply struggling to remain financially viable and it was causing a great deal of pain and heartache. Day after day in this place the member for Bradfield eloquently argued the case for an increase in the pension, graphically highlighting the financial struggle that many pensioners faced. The need was certainly evident in my electorate of Pearce. In the course of my regular visits to various parts of the electorate the hardship faced by pensioners, including disability pensioners and in some cases veterans, was abundantly clear. The pressures on pensioners were exacerbated by the rising cost of housing and fuel. The increased cost of fuel sent food costs soaring as farmers battled a sharp increase in the cost of farm inputs, particularly fertiliser and fuel crucial to food production.

During the lead-up to the election, we saw the Prime Minister, the then Leader of the Opposition, promising to ease the cost-of-living pressures for senior Australians by looking at the adequacy of pensions by Fuelwatch schemes and by Grocerywatch schemes. But we saw all of them fall on infertile ground; it was not until this pressure came on from the member for Bradfield that we saw some real action happening here. The Prime Minster, when he came into government, had a $22 billion budget surplus left by the former coalition government, and he still failed to act. I have to say that the coalition, by paying off Labor’s $96 billion debt that we inherited when we came to government in 1996, were able to deliver real benefits to older Australians, including pensioners and self-funded retirees.

I know that one of the issues for pensioners at the time was the fact that the pension was just indexed to the consumer price index; it was not related to the male total average weekly earnings or, as it is commonly known, MTAWE. That was one of the first things that the Howard government did when it came to office. So we were able to make some real changes and provide some real gains for pensioners and self-funded retirees right in that first term of our government.

The new Rudd Labor government, by contrast, was a reluctant starter when it came to increasing pensions, and used stalling tactics to delay action on a decision to increase pensions. As I said, it was patently obvious. We did not really need the Harmer review to tell us about the pain and the hurt that was happening out there in the electorate. Eventually the public pressure, largely due to the then opposition leader’s consistent call for urgent action, forced the government to implement these changes. We all owe a vote of thanks to the member for Bradfield, for his untiring efforts on behalf of pensioners. I certainly welcome this legislation, which will go some way toward improving the living standards of pensioners in the electorate of Pearce. When in government, the coalition did make some important changes. As I said, one of those was to link the pension to MTAWE.

I welcome some positive improvements, though, to this measure which, from September, will ensure that the pension will be adjusted in line with either the consumer price index or the new pensioner and beneficiary living cost index, whichever is the higher. Pensions will continue to be benchmarked, I am pleased to say, to the male total average weekly earnings. From March 2010 a new pension benchmark for the maximum combined couple rate of pension will be introduced. The change will mean that it will be 41.76 per cent of the annualised amount of the male total average weekly earnings. For a person being paid a single rate of pension, the maximum rate payable to that person will be set at 66.33 per cent of the maximum rate payable to a combined couple. The new benchmark for the maximum single rate of pension will be 27.7 per cent of MTAWE, an increase of more than 10 per cent from the current 25 per cent benchmark, which, again, will be welcome.

In addition, the range of supplementary payments and allowances currently paid to pensioners will be simplified and made more flexible through the introduction of the new pension supplement. The supplement pulls together the existing GST supplement, pharmaceutical allowance, utilities allowance and telephone allowance at the higher internet rate. An increase of $2.49 a week for singles and $10.14 a week for couples combined will be paid on top of the value of the existing allowances. The pension supplement for a single pension will be about two-thirds, or 66.33 per cent, of the pension supplement for a couple combined. This is consistent with the new single to couple ratio for pension rates. It was important to address the disparity between single and couple pension rates and supplements. Many single pensioners complained to me that they still had to pay rent or maintain a household and that those costs were fixed whether for a couple or a single person. Many pensioners found it impossible to manage finances when a partner died and their income was reduced to the single rate. These changes go some way to rectifying this disparity, a matter consistently raised by the member for Bradfield and other coalition members.

From 20 September 2009, the pensioner supplement will be worth up to an estimated $1,462.70 per annum for singles, or $28.13 per week, and $2,199.60 a year for couples, or $42.30 per week. This is an estimated amount, as the impact of indexation is not yet known. The pension supplement will be included in the pension payment rate and subject to income and asset testing. Once the base pension rate is reduced to nil, the pensioner supplement will decrease until it reaches a minimum payment of an estimated $790.40 a year for singles, or $15.20 a week, and $1,190.84 for couples, or $22.90 a week. The payment a person receives will not fall below the minimum amount of the pension supplement until the person’s income or assets reach a level that would otherwise reduce the payment to nil. From July 2010 pensioners will have the choice of receiving around half the pension supplement in quarterly instalments. This flexible part of the pension supplement will be equal to the minimum payment of pension supplement. While the coalition welcome the long-overdue changes to the pension rate, we note that when we tried to secure a similar increase for pensioners last year this was bitterly opposed by the government. Had our bill passed then, many senior Australians would have already been receiving additional income.

One of the significant changes in this legislation is to raise the age for the pension—that is, to raise the retirement age. The Minister for Families, Housing, Community Services and Indigenous Affairs spoke with great pride about the legislation earlier in question time. However, it is quite amazing when one considers her opposition to raising the age pension previously. In the lead-up to the 2007 election an independent think tank recommended the pension age be raised from 65 to 67 by 2015 to deal with the ageing population but the minister, then in opposition, rejected the proposal saying that senior Australians ‘deserve to be able to retire’. That is certainly true. We do not have any problem with that. She went on to say:

If people want to work beyond 65 it should be their choice, no one should be forced to work beyond retirement age.

But less than two years later the minister has introduced the same policy that she had formerly rejected. In this week—a week in which the honourable member for Higgins announced his retirement from parliament—it is very pertinent to acknowledge the incredible work the former Treasurer did in having the vision to recognise the challenges that an ageing population would bring, and having the leadership ability to do something concrete about addressing those particular issues. In a speech the former Treasurer delivered on the paper Australia’s demographic challenges, he said:

… we do not face an insurmountable crisis. But we do face a significant challenge. The longer we leave our response the greater the changes we will need …

So he recognised this very early on. That paper was delivered in 2007 but in fact the member for Higgins recognised the challenge when we first took government back in 1996. He began by preparing an intergenerational report and, indeed, had the Productivity Commission begin to examine some of the productivity issues around an ageing population. As part of the 2002-03 budget he released the Intergenerational report—a report that explored the Commonwealth’s fiscal outlook over the long term and identified emerging issues associated with an ageing population.

In 2004, as I said, he had already asked the Productivity Commission to do a report, but he asked for a further report to undertake complementary studies on the ageing of Australia’s population. In a speech in February 2004, the member for Higgins said:

Our society, the way we live, the opportunities available to us, and indeed our own aspirations, will change dramatically over the next 40 years, just as it has over the past 40 years.

The fact is that one in four Australians will be over the age of 65 in 50 years. This was according to a projected population growth study, and these figures were recently presented at the Financial Review Australia’s Ageing Population summit which was held in Melbourne. So the member for Higgins was certainly onto something there.

While the coalition support the increase in the age eligibility to qualify for the age pension, we believe it must be coupled with a strong safety net for those who may be unable to continue, for some reason, to remain in the workforce. Any changes to the pension must be supportable, sustainable and carefully implemented. In releasing the government’s paper Australia’s demographic challenges in 2007, the member for Higgins established three policy areas that could lift labour force participation. These included improvements in the capacity for work through better health and education, better incentives for work and improved flexibility in the workplace. I would commend the speech to anyone in this House to read because I do not think I have time to detail some of the very wise counsel he gave in that paper in relation to those policy matters. But there is no doubt that the former Treasurer was already planning for Australia’s future many years ago when we first came into government back in the late 1990s.

This is in contrast to what we are seeing from this government and its lack of capacity, it seems, to provide this House with any concrete details pertaining to this particular aspect of the bill—that is, the aspect of the bill that will require Australians to work longer before they can retire. As the member for Warringah, the shadow minister, said here earlier tonight, the Rudd government must release details of these plans, because they had the Harmer pension review report well before the budget and that should have been released so that we could have proper public discussion about this particular issue. While we do support this, as the shadow minister indicated, we think that there is more work to be done. I am pleased that this legislation is likely to go to a committee hearing to flesh out some of these issues that may give rise to concern to some Australians about the possibility of having to continue in the workplace to the age of 67.

There are issues for people working in the trades sector. One of the issues that the member for Higgins addressed in his paper Australia’s demographic challenges was the importance of training and retraining. This is the kind of issue that needs to be fleshed out. It is important that the Australian public, and older Australians in particular, have an opportunity to comment on this. It would have been preferable if that had been done before this bill came to this place. Notwithstanding that, none of us in this place would want to see this bill delayed and the benefits of increased pension payments delayed for those in the community who have been facing considerable hardship.

The other issue in relation to that is that the government has not released any details of the savings this measure will create, as we have not seen any clear economic modelling. If individuals are being shifted from the age pension onto other income support benefits such as Newstart or the disability support pension, it is clear that the benefit to the budget bottom line is minimal if not zero. Any lift in the age pension age must take into consideration employment opportunities for mature workers. Again, that is an issue raised by the member for Higgins in Australia’s demographic challenges.

Again, in the community, the reality is that many employers do not want to employ older people. There are barriers there. These are issues that we need to seriously get to the heart of and address. We need to make sure that people nearing retirement age have other options, for part-time work as well as for full-time work. There are many issues there to be further discussed in the community as we move toward a policy of increasing the retirement age.

The government should be consulting very closely with industry and with small business. When we were in government we removed some of the age discrimination in the workforce within the government, and that was a very important step forward. But there are questions that remain to be asked. What impact will this bill have on those working in the trade sector in the heavier industries? As I said, for many people this will be problematic. What further toll will this have on their health and on Australia’s health sector? Again, health issues were raised in the member for Higgins’s speech. What retraining facilities are available for older workers, what are we doing about making sure that older workers have access to retraining facilities and does the infrastructure exist for retraining these people and future generations? What about making sure that more flexible work options exist? These are the kinds of questions, as I said, that have been posed by the member for Higgins. I would like to quote again from the member for Higgins’s speech on that paper, where he said:

The Government has already legislated to remove any age discrimination that exists for employment by the Australian Government, and provides leadership in promoting community understanding of the economic and social imperatives of greater participation by mature age people.

He went on to say:

Mature-age workers are vital to our workforce—they are important in our workplaces and we need to support their ongoing participation and the choices they will want to make about work and leisure. This will be more important as Australians grow older and live longer.

These are questions which are yet to be answered. It is vital that they are answered. I am pleased that there will be an opportunity for this bill to go forward to a committee process that will perhaps answer some of the unanswered questions that arise from this particular part of the bill.

The coalition will always fight for a fair deal for senior Australians; we always have. As I said, we did significant things when we were in government, from early on. These are the people that we can all acknowledge have been nation builders and have contributed to the prosperity of this country. They deserve our respect and our thanks. We should not see them battling the way that they have been in the past couple of years. I am pleased to support, along with my colleagues, the main thrust of this bill and look forward to seeing the results of any further committee inquiries into the raising of the pension age.