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Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Bill 2009

CHAIR —Welcome, Ms Coad. Do you have an opening statement before we go to questions?

Ms Coad —Yes. I do have an opening statement. The specific area that I wanted to talk about today is the proposed amendment to increase the age pension eligibility age to 67. The LHMU represents low paid workers across a range of industries, including hospitality, cleaning, aged care, childcare and security. For our members extending the age of eligibility for age pension by two years is a meaningful change. Our members are predominantly people who will be reliant on the age pension in retirement. They retire with an average of about $10,000 to $12,000 in superannuation and would have at most a maximum of $20,000 superannuation at retirement. During their working life they have low incomes, are often underemployed or work part time, and can have broken periods of employment for a variety of reasons, including women taking extended time off to raise children.

For our members the age pension is a critical—and overwhelmingly the only—source of income in retirement, making any change to the age of eligibility more significant. Our members work in physically demanding jobs. The hospitality industry has the highest injury rate for women of any industry and the second highest after construction for men. The cleaning industry in New South Wales has the second highest workers compensation insurance premiums after construction, again of any industry, and that represents the high number of workers compensation insurance claims that are made. In some of our other industries, for example, the aged care workers are prone to back injuries and related injuries because of the lifting work that they undertake. In addition to the already physical nature of these jobs work intensification across a lot of these industries has exacerbated what, as I said, are already hard physical jobs.

In summary, our members are minimum wage workers, working in physically demanding jobs. When they retire they will have only very small amounts of superannuation and will rely overwhelmingly on the age pension to provide them with a source of retirement income. Increasing the age at which they will be able to access that pension is a significant change for our members.

CHAIR —Thank you. We will go to questions. Senator Siewert.

Senator SIEWERT —Do you not support the increase at all or do you think it should be done in a different way? How do we deal with the issues that you have raised? Those issues have been raised with us by other people as well? Do you have suggestions about the way forward or do you think it is just not an appropriate policy mechanism?

Ms Coad —At this stage I would say it is not an appropriate mechanism. Given the short timeframe of this inquiry, we have not had a chance to put a lot of thought into alternatives, but certainly we would be happy to think about that. At this stage we would say it is not appropriate to increase the age.

Senator SIEWERT —Is your main area of concern with this bill the increase in the age limit?

Ms Coad —That is right, yes. That is our only area of concern in the bill.

Senator SIEWERT —Most people will have had letters about this change. The concern that a lot of people have raised, which you have just touched on, is the lack of time people have had to consider the consequences and come up with alternative proposals. Other people have said that they can see the rationale, but again they are concerned about the people who are going to be most affected. For example, the workers that you represent have been identified; women in the retail industry on their feet all the time and, in particular, women who do not have adequate superannuation. Have you been able to look at any of those issues and have you had any discussions with government about it?

Ms Coad —No, we have not had any discussions at this stage. We would probably have a similar view to those that you just raised. We can certainly see the rationale, but when you are talking about people who have an average of $10,000 to $12,000 in superannuation when they retire, that is obviously not an income that they are going to be able to live off for any period of time, so the age pension is a critical source of income for them in retirement.

Senator SIEWERT —Thank you.

Senator BOYCE —Do I take it from what you told Senator Siewert that you are happy with every aspect of the pension reform except for the extension of the entitlement age for the pension?

Ms Coad —Yes, I might just clarify that. We are certainly happy with the increase in the base rate of the pension. We probably have not put much thought into some of the other areas, but on a quick glance we do not have any opposition to them.

Senator BOYCE —We had evidence earlier today pointing out that about half the people who go on to the age pension have been on some form of income support previously and the suggestion was made that this would include people who had physically demanding employment and had therefore perhaps stopped working earlier than the pension age.

Ms Coad —Yes. That might be a possibility with some of our members as well, but we also might have some members who continue to work. As I said, they are often part time and on very low incomes. They may still have a small entitlement to some other social security or some other income support before age pension age in addition to some part-time work that they might be continuing to undertake.

Senator BOYCE —I am trying to get a sense of the work path of the sorts of people you are talking about. I am getting the sense that perhaps people might work to 50 or 55 and then, because of injury or the like, go on to some sort of income support, perhaps with some part-time work, and hanging out to get to 65. Of the people we are talking about, who will be most affected by this change?

Ms Coad —In terms of our members, I do not have any figures in front of me in terms of what proportion of or at what age people might move on to some sort of payment before retirement age, but anecdotally I know that in our industries there are definitely people working into their late 50s/early 60s. We would have a number of people who would continue to work through to the current age pension age or retirement age, but I am sorry, I do not have the figures.

Senator BOYCE —Can you provide us with any figures on notice?

Ms Coad —I can certainly look into that and let you know.

Senator BOYCE —Has there been any discussion within the membership of other ways that this might be addressed other than not changing the pension age? Are there some sorts of transitioning payments, schemes or programs available for people whose jobs just simply mean they cannot do it for their whole working career?

Ms Coad —As I said, we have not had an opportunity to have any consultation with our members or discuss in any more detail some alternatives.

Senator BOYCE —Again, I am just trying to get a sense of how big an issue this is. I used the term before ‘people who hang out to get to 65’. Can you talk anecdotally in any detail about some of the people that this would apply to?

Ms Coad —I can anecdotally. In the cleaning industry I have met a number of members who continue to work in that industry until age pension age, but at that point, because it is a physically demanding job, look very much forward to the opportunity to retire and discontinue that sort of work.

Senator FURNER —I have a series of questions. Firstly, you indicated that most of your membership is employed part time; is that correct?

Ms Coad —I would not know whether most are, but certainly a lot are. We also have industries where people have what you might term underemployment. Again, in the cleaning industry people might have limited hours that they work per week. For example, they might do two 3-hour shifts a day.

Senator FURNER —So, it could be part time or it could be casual?

Ms Coad —Yes. Certainly in the restaurant industry and hospitality there would be a lot of casual and part-time employment.

Senator FURNER —What would you suggest would be the average amount of hours per week, whether it be part time or casual?

Ms Coad —I would not want to suggest an average. I can certainly try to get back to you with some detailed figures.

Senator FURNER —Thank you. You indicated that the hospitality industry is the second highest with respect to injuries, only second behind construction.

Ms Coad —Yes. That is for women. Those figures come from the ABS from 2007. From ABS 2007 figures accommodation, cafes and restaurants was the top industry that had the highest work related injuries for women, and that was 98 per 1,000 employed women.

Senator FURNER —Do we know what the range of injuries was?

Ms Coad —I do not have that information in this data, no.

Senator FURNER —Looking at superannuation, many unions have been successful in some areas—not in all areas—in negotiating superior levels of contributions. In these particular industries that you are referring to has your union been successful in negotiating higher contributions at all?

Ms Coad —Across some of them it has. I guess the issue is that even with a higher rate of contribution when you are starting from a really low income that does not significantly increase the amount of money that you retire with in a superannuation fund.

Senator FURNER —Do you have a standard superannuation fund that you have your members covered by at all or is there a degree of choice across-the-board?

Ms Coad —Yes, there would be choice and it would vary across industry.

Senator FURNER —How have those funds been performing?

Ms Coad —I am not sure. Like most, I would imagine not too well in the past little while.

Senator FURNER —Part of the initiative—and I guess it goes contrary to what you are advocating—is the work bonus in the proposal where someone when they retire can do part-time work. Given the evidence that you have provided today in terms of difficulties with illness and injuries, are you familiar with that and would it be of benefit to your members when they reach retirement age, that is, still being able to perform some degree of part-time or casual work without incurring any disadvantage to their pension?

Ms Coad —I have not looked at that amendment in detail, so I am not sure that I completely understand what it is proposed to do. There would be a number of our members who would continue to do some part-time work after retirement, but predominantly we would say there probably is not given the physical nature of those jobs.

Senator FURNER —Thank you.

CHAIR —Thank you. If there is anything that you do want to send us, please do so, because this is going to be an ongoing discussion, but we are due to bring down this report on Wednesday.

Ms Coad —Yes. I will try to gather some of those figures and pass them through on Monday.

CHAIR —Thank you for your time.

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