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Wednesday, 17 June 2009
Page: 6285


Mr HAYES (11:57 AM) —Thank you, Mr Deputy Speaker Slipper, and thank you for acknowledging those three fine students from Sarah Redfern High School. As you indicated, Mr Deputy Speaker, Sarah Redfern High School is in Minto, which is right in the middle of my electorate, and these three students are showing great leadership in the school and great leadership in the community. I think that where members have the opportunity—and I am very fortunate in Canberra not being that far from my electorate—we should invite our future leaders to visit this place and encourage their participation in community leadership.

Today I take the opportunity to lend my support to the Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Bill 2009. This bill provides crucial changes in the Australian pension system in order to provide financial security as well as a sustainable standard of living for our aged, our carers, our veterans and those on disability support pensions. For far too long these members of our community have been neglected. They have been part of a previous government’s system that was inflexible and certainly very complex. These members of our community have always been and always will be an incredible asset to their communities generally and they make a significant contribution to our society, yet the former government repeatedly ignored their needs. I mean that. A minister under the previous government even put up a recommendation that the pension scheme be adjusted, and that was rejected. I know from members opposite—and it is not just from this bill but from what occurs elsewhere—that fixing the pension scheme was something they were going to get to after the next election. So, in the 13th year—


Mr Baldwin —You’ve had 18 months.


Mr HAYES —Their 13th year would have been a hell of a time for the Howard government if they had survived. They had lots to do in their 13th year—all the things they did not do between the first and the 12th year that they were in government.

Australia does face becoming an ageing population; there is no question about that. Although the opposition have been aware of this problem—as much as we have been aware of it for some time—they maintained the current pension system. They failed to act on it. They absolutely refused to act on it. While various measures were taken to prop up the system, such as one-off bonus payments—the application of bandaids—the thing that they constantly refused to do in the whole time of their administration was to fix the pension system. What the current government is doing is in stark contrast to what occurred under the Howard government. We are in the midst of a financial crisis and many are concerned about their financial future—I readily accept that—and this government is taking decisive action to strengthen the Australian economy. As the very structure of our nation changes, it is imperative that these measures are taken to strengthen the financial security of the recipients of pension payments. The bill before the House today highlights just how serious the government is about pension reform and how committed it is to it. Given the challenges that the country faces with the world financial crisis, we are still committed to doing something for those of our community on aged, veteran’s affairs or disability support pensions.

The proof is in the pudding. I take the interjection from the member for Paterson. I think it is 18 months since the last election. But do not forget that last year the government actually did something that the opposition refused to do: we commissioned a thorough report into the adequacy of the pension system. We did not just put it off for another group to do and then reject their recommendations later. We committed ourselves to the Harmer review, which was to look into the adequacy of the pension system. It is the recommendations of that very review which we are acting on.

The year 2009 is the centenary of the age pension. When you look back to 1909—and it is not all that long ago—and to what was occurring on the world stage then, the age pension was not necessarily unique. However, it was significant that a government had the foresight to do something about looking after the long-term welfare of those who were contributing to the nation. As I said, the age pension is 100 years old. It is a Labor government that is now moving that system forward; it was also a Labor government that, back in 1909, under Andrew Fisher, introduced the age pension. We are continuing the tradition of ensuring that we lay the path for the financial and sustainable future of those who contribute to our community.

The Harmer review analysed the basic structure of Australia’s pension scheme, with particular focus on the necessity for effective reform to alleviate poverty and to improve community living standards. The Harmer review emphasised that, at the current rate, pensions did not fully recognise the cost borne by single age pensioners living alone. It went on to note that, even in these difficult financial circumstances, we are required to act—and that is precisely what we are doing with the bill before the House today.

It is not a matter of just another inconsistent approach to another ad hoc payment or another bandaid being applied to the system. We committed ourselves to a thorough review of the system and to look at its long-term sustainability. The existing system needs to have improved transparency; pensions need to be linked to community living standards, because obviously pensioners are affected by price changes. I think that is what the member for Lyne was indicating in his contribution a little earlier. He said that this was a significant position to take in rectifying the pension system. He is still in dialogue—and appropriately so—with the pensioner groups in his area. I am glad that he is in dialogue with them because he represents my mum and dad, who reside on the North Coast of New South Wales.

By 2047—I know that that is a little way down the track—we will have 7.2 million Australians over the age of 65. That represents 25 per cent of the expected population. That is quite a contrast to the current position, which is that those who are over the age of 65 represent 13 per cent of the population. So, in light of that demographic change alone, these reforms are necessary to make the pension scheme simpler, fairer and also to ensure that the pension changes are targeted at those who need them most. I want to focus in particular on the bill’s inclusion of the increase in the pension rate. Throughout the Australian government’s current spend, which is about $28 billion per annum on age pensions, we recognise the need for improved pension payments while also ensuring that those reforms are affordable. The Harmer review found that, as it stands, the full rate of the single pension is inadequate. The ratio of a full-rate payment between single and couple pensioners needs to be lifted from its existing rate, which is calculated at 60 per cent to somewhere between 64 and 67 per cent. That was the recommendation by Jeff Harmer in his review. This bill picks up that recommendation and ensures that the corrections are made.

Through this legislation the government has ensured a substantial increase of $32.49 per week to the full-rate single pension, which lifts the ratio between single and couple pensioners from an existing 60 per cent to 66.3 per cent. The couple pensioners will also benefit from additional assistance of $10.14 per week. These increased provisions will take place along with the regular indexation. The regular indexation will ensure that the value is maintained. It is important to note that these changes to increase pension rates are a direct result of the recommendations made by Dr Jeff Harmer. As I said, the member for Paterson wanted to downplay that aspect but quite frankly that is something that we were committed to. We not only received the Harmer report but are acting on it.

The bill will also further assist those selfless individuals in our community who every day make that significant sacrifice in caring for others. Many of them are under significant financial pressure. As a consequence of previous legislation passed in the parliament a supplement payment of $600 will commence today. After the discussions I have had I know that this will be seen as very significant to carers across our nation. I am sure the member for Shortland has had similar discussions with carers in her community as well. I know about that because one of the regular things that we do as members of parliament—and not just on this side of parliament, as the member for Lyne indicated—is to maintain contact with those people who undertake the selfless work of caring for others. In the outer metropolitan area of Sydney we have a heck of a lot of carers—certainly a lot of people involved in caring for the disabled. That is being recognised. It is something that needs to be recognised because these people do an absolutely fantastic job. Without their contribution, their love and support of the people they care for, society would be much worse off.

I would like to take the opportunity during this debate to acknowledge the magnitude of the impact these pension support changes will have on individuals. There are approximately 3.3 million age pensioners, disability pensioners, carers, wife pensioners and veteran income support recipients who will directly benefit from these changes across the country. In my electorate of Werriwa alone—Sarah Redfern High School is in the middle of that electorate—I can, with the assistance of the member for Shortland, tell you that there is a total of 17,357 people who will benefit from these reforms. Of those, 10,260 are single age pensioners. I am not sure how that demographic translates across the nation but that is quite a significant part of the population of Werriwa.

To better target these pension increases new income tests will have to be applied. I know—I have read the commentary in the newspapers—that there is some disquiet about that. The member for Lyne talked about some aspects of that as well. To give greater flexibility and ensure that we have a sustainable application of the pensioner scheme into the future we have had to look at targeting those who need it. So from September this year the tapering rate for income above the free area will be increased from 40c to 50c in the dollar. Before people jump up and down and point the finger about that, one of the things we did through this legislation was to look at the transitional arrangements that will protect existing pensioners who would otherwise be adversely affected by the change. Under the provisions that are to apply, people who would be adversely affected by that change will be protected under their existing entitlements, including any increase, until they would be better off under the new entitlement. So people cannot be worse off under those changes. However, this measure is setting the platform for the sustainable application of this scheme into the future.

As I said at the outset, this legislative package provides extensive changes to the Social Security Act which are long overdue and, more importantly, it is about protecting many of the most vulnerable members of our community. We owe those members a great deal. This government has rectified the failings of the former government in that respect. We have not applied another bandaid; we have set out to achieve a proper structural reform of the system.

Following 12 years of covering up the fact that the single pension was severely inadequate, by using ad hoc bonuses or other means, the proposed amendments in this legislation move to rectify the structure of the pension scheme so that it will benefit all Australians. Everyone, including the students here from Sarah Redfern High School, is aware that one day they may need to rely on our pension scheme. Therefore, this bill sets the safety net to ensure there is confidence in that scheme and that the structure of the scheme will be sound for now and into the future. I support the bill.