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Wednesday, 17 June 2009
Page: 6291

Mr ZAPPIA (12:34 PM) —I rise to speak in support of the Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Bill 2009. This bill represents the most significant pension reform that we have seen in this country since pensions were introduced in 1909, 100 years ago. Whilst there is no question at all that over the years there have been some changes made to the way pensions are paid in this country, there would be little doubt that there has never been a single bill that proposes as much reform as this bill does. The reforms are very much long overdue and they are necessary reforms to ensure that Australia’s pension system remains sustainable into the future. I say that because, as most members of this House would know, we face in the future an increase in the number of Australians who will be living beyond pension age. In fact, if I can quote some statistics on coming decades, by the year 2047 some 7.2 million Australians will be aged over 65, representing 25 per cent of the expected population. That will be almost double the current rate of 13 per cent. Currently there are around five people of working age to support every person aged 65 and over. By 2047 this will have halved to 2.4 people of working age supporting pensioners in this country. So we can see that there are going to be significant changes in the demographics of this nation and that is why we need to adopt now a pension reform package that will be sustainable into the future.

When the Rudd government was elected, it committed to a review of pensions throughout this country. That review was announced by the minister in May 2008 and conducted by Dr Jeff Harmer, and the report was handed to the government in February this year. It is interesting that that very thorough review of pensions attracted over 2,000 written submissions. Hearings were conducted throughout the country, and I think it would be fair to say that almost every organisation, institution and pensioner group around the country made representations and submissions in respect of pensions. I suspect they did so not just because there was an opportunity for them to comment about pensions but because this was one issue that for years and years had been raised with governments and for years and years had been neglected. It came to a head when the Harmer review was commissioned by the Rudd government. The Rudd government is now responding to that review and implementing its key recommendations.

It was interesting to hear some of the contributions from members opposite, with a number of them wanting to take credit for the increases proposed in this bill. I say two things to those members opposite who want to take credit when, quite clearly, they do not deserve to take credit. Firstly, with respect to the increase to the single pension payment in this bill, opposition members had 12 years to do something about that. They had 12 years wherein they conducted their own Intergenerational report—and I understand that they conducted two of those. A proposition was put by Mal Brough in 2007 which was rejected at the time by the Howard-Costello government. They presided over a period—and I quote from figures between 2001 and 2006—when one in three elderly people living alone spent their years in poverty. One in three single pensioners living alone lived their lives in poverty. That is a very damning statistic. Again between 2001 and 2006, 20 per cent of the poor were people aged over 65. Not surprisingly, there was a huge response to the parliamentary inquiry because of the magnitude of the problem and the difficulties faced by pensioners around this country. But members opposite did absolutely nothing for 12 years, other than talk about it. And when they did have a proposition from one of their members, Mal Brough, they rejected it.

The second point I make about their claim to credit for this bill is that this bill goes far beyond just simply increasing pensions for single pensioners. It has a raft of measures in it which will totally reform the way pensions will be managed in this country for years into the future. Whilst I will not have the time to speak about each and every one of those reforms, I do want to speak about some of the critical elements of the bill. Importantly, Australia’s 3.3 million age pensioners—disability pensioners, carers, wife pensioners and veterans income support recipients—will benefit from an increase in their pension payment. That is 3.3 million Australians who will benefit from payments as a result of this bill. That is a huge commitment by the government at a time when we are going through the worst economic downturn since the 1930s. In contrast, when you look at what the previous government did not do, they were going through a mining boom when they were in government.

In my electorate of Makin, 20,700 pensioners will benefit from this increase. Roughly one in five of the voting population in Makin will benefit from these measures. That is a huge number. I have no doubt that this measure will be very much welcomed by the people I represent in Makin. The key elements of this bill and of the increases, as other members have quite rightly highlighted, are that there will be an increase of $32.49 per week for the single pension and an increase of $10.14 per week for couples combined. I also point out that $2.49 of the singles payment will be paid as an increase in the pension supplement and that the full $10.14 for the combined pension will also be paid in the form of a pension supplement.

What is important about this increase is that, in line with the Harmer review on pensions, the single pension rate will increase as a proportion of the combined couple rate, from 60 per cent to 66.33 per cent of the male total average weekly earnings—that is, the discrepancy in the ratio between the single pension and the couples pension has been adjusted in accordance with the Harmer review. That is significant because one of the critical bones of contention throughout my electorate over the years has been that single pensioners have found it much more difficult to survive on the single pension. That was reflected in the figures I referred to earlier that, between 2001 and 2006, one in three elderly people lived in poverty. But it has also been reflected certainly in the representations that I have received since being elected as the member for Makin and prior to that, in a different capacity, when I was the Mayor of Salisbury and dealing with pension issues on a regular basis. I hear the argument from some people who say that a couple living together also have increased costs but, again, the ratios have now been appropriately adjusted, and this is indeed a significant reform.

There are a number of other significant improvements to pension payments under this legislation. One of those is that a new pension index measure will be introduced which will better reflect the cost of living increases faced by pensioners. Under this change, a new pensioner and beneficiary living cost index will be calculated by the Australian Bureau of Statistics. We know that pensioners are not affected by CPI increases to the same degree as society generally and that CPI increases do not necessarily reflect the cost of living increases faced by pensioners. The CPI is based on a whole range of expenditures which, in many cases, do not pick up on the majority area of expense that pensioners face.

I have frequently been approached by pensioners in the past who have said: ‘Yes, our pension has increased by the CPI. However, the CPI has no bearing on the real costs of living increases that we are faced with.’ I accept that argument, and so did the Harmer inquiry and so did the government. That is why we have introduced this new cost index to increase pensions. Under the new provisions, the higher of the CPI or the new pensioner living cost index will be used to determine pension increase. If by some chance the CPI comes out higher than the new index, it will be the measure that will be used.

A third significant change to pensions is that from 20 March 2010 the maximum combined couple rate of the pension will be 41.76 per cent of the annualised male total average weekly earnings. That is important because it changes what the pension should be in comparison to average male weekly earnings.

Under this bill, there will also be important reforms relating to pension payments and aged-care providers caring for pension recipients. This is another matter that over the years I have heard representations about from both pensioners and aged-care providers on a regular basis. It has been an area which has been a real bone of contention for both sides. Pensioners quite rightly argue against all of their pension payment going to the aged-care providers once they are in an aged-care facility. The aged-care providers, quite rightly—I believe—have argued that the aged-care pension, because it has not been increased sufficiently over the years, is today not adequate to meet the daily expenses incurred by them in caring for the pensioners under their care. Both sides, as a result of the pensions not having been increased sufficiently, have been struggling and both sides have, I believe, legitimate cases to make.

Many pensioners in age care facilities have their entire pension go to the aged-care provider. What the government was very conscious of was that if there was going to be an increase in the aged-pension—as there was—that it should not all go to the aged-care provider but that some of it should also go to pensioners. So in the case of single pensioners, of the $32.49 that will be given to them as an increase, $10.09 will be paid directly to the pensioner and $22.40 will go to the aged-care provider if the pensioner is in an aged-care facility. That is a fair sharing of the increase to the pension.

It is acknowledged that others may be affected by the measure that increases the daily bed allowance for single pensioners. People like self-funded retirees or part-rate single pensioners who do not benefit from the pension increase may also be faced with that additional increase of $22.40 that is paid to aged-care providers. The government, in recognition of that, has made a provision of some $713 million over the next four years to ensure that those self-funded retirees or part-rate single pensioners are protected from the increase in the daily fees that they would otherwise be charged. For any person who is in an aged-care facility as at 19 September this year, that shortfall will be met by the government.

That money paid by the government will ensure that the aged-care providers throughout this country will receive an additional $713 million over four years. I stress that point because I am sure that other members of this House have also been approached by the aged-care sector seeking to have their daily fees increased and the daily subsidies provided by the government increased. As I said earlier on, many of the aged-care providers are struggling under the current payment arrangements to provide the level of service that they would like to. That $713 million will be welcomed, I am sure, by the aged-care sector. I am sure that it will go a long way to ensuring that they will be able to continue to provide the high level of care that many of them pride themselves on.

Without that kind of money, one of these outcomes is inevitable: firstly, either the aged-care providers would have to provide a lower standard of care; secondly, they would have to try and cut costs in some other way; or, thirdly, they would have to increase the fees that they charge the people in their care. I welcome this measure because it will go a long way in assisting the two sides of what I call the pensioner argument that I have been presented with since being elected to this place.

The last measure that I want to talk about specifically in respect to this bill is that relating to carers. The bill provides for an annual carer supplement payment of $600 for around half-a-million carers across Australia. When I look at the figures, about 850 of these people are in my electorate of Makin. This is not just a single one-off payment but an ongoing annual $600 payment. Unlike the previous government, who would make single one-off payments in response to pressures coming from the community, we are making an ongoing commitment and one that I am sure will be welcomed by carers throughout the country.

A new supplement will also provide recipients of the carer allowance with a $600 annual payment for each person who they care for. In my electorate of Makin, that will affect about 3,000 people. Quite a substantial number of people will get a very real benefit from these reforms. In fact, more than 95 per cent of carer payment recipients also receive the carer allowance.

The last point I make about these reforms is that these reforms, amongst other things, cover the pension supplement that is proposed as a mechanism to pay for increased householder costs as a result of the introduction of the Carbon Pollution Reduction Scheme, which—as we all know—the opposition is opposing.

Under that scheme, the government is proposing to set aside some $6 billion in the form of a household assistance package. That package is aimed predominantly at assisting low-income households with any increases in the costs of living that they incur as a result of the Carbon Pollution Reduction Scheme being introduced.

Interestingly, those low-income households will include pensioners because most pensioners are the ones that will be put into the low-income category. For them, the assistance that is provided under the proposal in schedule 5 of the Carbon Pollution Reduction Scheme would mean that all of their cost of living increases occurring as a result of that scheme will be met by the government. In fact, 120 per cent of their cost of living increases are expected to be covered by this proposal.

That is an important aspect of the scheme, even though that bill is still to pass through parliament. One of the concerns that I have is that part of the scare campaign being run by the opposition about the Carbon Pollution Reduction Scheme legislation is that householders will be faced with an increased cost of living. If you are a lower-income householder, that scare campaign will resonate even more because, if you already struggling, an increase in the cost of living is something that you do not want. I want to make it absolutely clear that those people, particularly those at the lower-income end, will be protected under that scheme by the $6 billion household package. This legislation already makes provision for that.

I conclude by saying, as I said at the outset, that the Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Bill 2009 makes the most significant reform to pension payments in Australia since 1909. I have not covered all of the changes that are proposed in it, but it is certainly an attempt—and, I think, a very constructive and well-thought-through attempt—to ensure that pensions are sustainable into the future and to respond to all the dominant issues that are raised on a regular basis with members of this parliament about the support required for pensioners. I commend the bill to the House.