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Urgent Relief for Single Age Pensioners Bill 2008

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2008

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

SENATE

 

 

 

 

 

 

Urgent Relief for Single Age Pensioners Bill 2008

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

(Circulated by authority of

Senator the Hon Helen Coonan)



Preface

 

This Bill is the first step by the Coalition to deliver a comprehensive policy in relation to pensions, income support, Veterans’ support and carers over time.  Assistance for single age pension is an immediate priority due to the urgent circumstances facing many recipients struggling to cope with escalating costs of living 

 

The Coalition will continue to address the further concerns being raised by pensioners and pension groups.

 

The Coalition recognises that the single service pension is not a welfare payment however for the purposes of this Bill the term ‘single pensioners’ and ‘single age pensioners’ refers to single recipients of the Age pension, Widow B pension and the Age Service pension

 

This Bill amends the Social Security Act 1991 and the Veterans' Entitlements Act 1986 to increase payments to single age pensioners by $30 per week.

 

The Bill aims to increase the single age pension, single age service pension and Widow B pension by $30 per week with effect from 20 September 2008.

 

The increase in payments is to be met from the Standard Appropriations in section 242 the Social Security (Administration) Act 1991 and section 199 of the Veterans' Entitlements Act 1986 .

 

The Bill inserts new sections into the Social Security Act 1991 and Veterans Entitlements Act 1986 to provide that an amount equivalent to $30 per week is added to the Single Age, Widow B and Age Service pension rates.

 

General Outline

 

Older Australians are a growing and diverse demographic within the population who are active contributors to the Australian Community. 

 

As a nation we enjoy one of the longest life expectancies in the world, currently 13 per cent of Australians are over 65 years of age and this is expected to grow to 25 per cent by 2047 [1]

 

Currently, government funded pensions and allowances are the main source of income for most people aged 65 years and over. [2]

 

The current single rate of pension is 60 per cent of the combined couple rate, which is lower than the average for major OECD countries which stands at 63 per cent.  The proposed increase of $30 per week would bring the single age pension in line with the OECD average.

 

The important role that older Australians play in our society should not be understated.  Almost half of older Australians aged 65-74 years (48%) provide unpaid assistance to someone outside their household, one-third (33%) provided volunteer services through an organisation, 29% are actively involved in community organisations and support groups of various kinds. [3]  

 

However many older Australians are finding it harder to afford these social activities because they are even struggling to afford the basic necessities to live and live with dignity.

 

The current focus has been on the plight of working families, with seniors barely rating a mention.  Social Inclusion is the government’s mantra, but seniors, who are dealing with spiralling costs, are being socially excluded.

 

Single pensioners expected relief this year from the increasing cost of living pressures.  That is what the Labor party promised them in 2007.

 

The Senate Inquiry into the Cost of Living reported in March this year and outlined the critical circumstances of many pensioners due to the increased cost of living.  However there was no extra relief provided in the Budget.

 

Grocery items are costing more and single pensioners are struggling to meet these costs.  There are many reported stories of pensioners doing it tough.  They are doing without fresh fruit and vegetables and surviving on jam sandwiches to see them through.  Along with the reports of substandard food purchases there are some pensioners taking strangers into their home as boarders.

 

Affordability of health care is also a concern for many older people and single aged pensioners are putting their health at risk. 

 

Older Australians have also experienced significant increases in the cost of petrol for their cars.  For many single pensioners, their car is a lifeline into the community, providing them with the ability and mobility to participate.  However this is a freedom that is fast becoming unaffordable. 

 

The Coalition in Government had a strong record.

 

It was the Coalition in Government that introduced the Utilities Allowance in 2005 to assist older Australians with meeting everyday household bills such as electricity and water.

 

During almost 12 years of Coalition Government the pension increased by 57 per cent in normal terms or 24 percentage points above inflation.  This was through good economic management and adjustments to the pension when needed, not just commissioning reviews upon reviews.  The Coalition Government legislated to set the maximum single rate of the pension to at least 25 per cent of Male Total Average Weekly Earnings (MTAWE).  This meant that whenever pensions were adjusted for increase in the CPI, and the pension rate fell short of the 25 per cent MTAWE there would be a top up equivalent to 25 per cent of MTAWE.

 

Due to the strong economic management of the Coalition in Government pensioners enjoyed three, one off bonuses.  These were criticised by Labor when in opposition and in Government were reported to scrap bonus payments this year. Pressure from the Coalition, pensioners and pension organisations saw the bonus paid for this year only.  They survived because of the outcry from pensioners and pension groups.  These are the bonuses the Government is touting as relief for older Australians in the face of rising costs. 

 

It was because of the Coalition’s strong economic management that the Labor Government inherited fiscal surpluses of $110 billion over five years.  Labor’s tax and spend measures increased the surpluses to around $112 billion - an increase of 1.5 per cent.  The $22 billion dollar surplus in 2008-09 - the result of the Coalition’s strong economic management - is being hoarded by Labor.  It is a surplus which Labor is not willing to share in these tough, financially uncertain times with Australia’s most vulnerable individuals.

 

The Rudd Government received an 83 page cabinet submission on the 25 th of March from the Department of Families, Housing, Community Services and Indigenous Affairs, followed by an 11 page briefing from Treasury regarding the inadequacy of the pension on the 16 th of April this year.  Yet to date there have been no new policy initiatives to address the issues raised by pensioners and pension groups.

 

The intent of this Bill is to provide urgent relief to single pensioners in recognition of the increased pressures placed on their budgets through soaring costs that the Rudd Government has not brought under control.



Financial Impact

 

This Bill will affect 928,834 pension recipients in total.

 

857,229 Single Age Pensioners

 

700 Widow B Pensioners

 

70,905 Single Age Service Pensioners

 

Total expected cost of $1.45 billion.

 




[1] 2008 Pension Review Paper page 33

[2] “Older Australia at a glance” Australian Institute of Health and Welfare Report, November 2007, page 43

[3] “Older Australia at a glance” Australian Institute of Health and Welfare Report, November 2007, page vii.