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Wednesday, 24 June 2009
Page: 4115


Senator SCULLION (11:44 AM) —The Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Bill 2009 is legislation which implements the government’s budget pension measures. The keynote feature of this legislation is the increase in the base rate of the single pension of $30 a week. The opposition of course welcomes this increase, because it was the coalition who called for the increase by the same amount a year ago. Legislation was even carried by senators at the time to increase the pension. Although it took the Rudd Labor government a year to come on board, it is great to see that this pension increase will now be provided to pensioners. Had Labor increased this pension back when it was proposed by the coalition, eligible pensioners would have been over $1,000 better off.

The coalition also supports the changes proposed to the indexation arrangements for pensioners. Delivered through this legislation will be a new indexation arrangement under which pensions will be increased by whichever is the greater of the CPI or 27.7 per cent of MTAWE—not 25 per cent as in the past. This change builds upon the structural changes and regular improvements delivered to pensioners by the previous government. The third change to pensions that I would like to comment on is a consolidation of current pension supplements and allowances into a single payment. This simplifies the pension supplement scheme and provides an increased single payment. Two single pensions combined will increase by a little over $2 a week, and single pensioners will be $10 a week better off. I know that many pensioners welcomed the one-off lump sum bonus payments provided to pensioners by the previous government and no doubt will miss that money. As Labor has spent the budget surplus left by the previous coalition government many times over, I would suggest that pensioners will take some solace from the new increases placed in legislation so that they can budget with some certainty.

A further change proposed in this legislation is the abolition of the previous government’s Pension Bonus Scheme, replacing it with a new work bonus scheme. The coalition believes that it is beneficial to encourage people, where they are able, to remain in the workforce beyond notional retirement age. It provides both economic and personal benefit if people can continue to contribute their experience and expertise in the workplace. I concede that the take-up rate of the previous government’s lump sum of up to $30,000 to pension-eligible people who remained in the workforce was less than expected. We believe that it is good public policy to support people to work beyond retirement age and hope that measures proposed in this legislation will in fact achieve that goal. The coalition will certainly be monitoring the impact of the legislation in this area, and we certainly, in principle, support this measure.

While the measures outlined so far are the highlights of this legislation and certainly received a mention from the Treasurer on budget night, as with most legislation proposed by Labor, there are some items that were not widely publicised on budget night. Firstly, I refer to the changes to the pension taper rate. Under this legislation, pensions will be reduced by 50c for every dollar earned above the threshold. Under the previous coalition government the rate was 40c in the dollar. This change will certainly impact negatively on some pensioners, although I recognise that the government is proposing to grandfather it for existing pensioners. Apart from creating what I would expect to be an additional workload for Centrelink to manage this, I believe that the government is making such a change in what is perhaps the fairest way to implement the change without seeing existing pensioners experiencing a sudden decrease in their income.

The final issue I would like to make a comment on in relation to this legislation is the raising of the pension age to 67. This increase in the age of pension eligibility will begin in 2017 and conclude in 2023. It has been suggested that the reason the start of the implementation has been put back by some eight years is so that the current Prime Minister will be so long away from office that someone else will actually need to deliver the pain. Of course, this government is well known for giving out goodies today and being popular while delaying some sort of painful payback until some other time. I think we would all acknowledge that this is a fairly cynical ploy by a populist government which delivers political outcomes instead of sound policy outcomes. We hear all about the hard decisions that need to be made, yet again we see a so-called decision delayed for so long that Labor are hoping that when it has to be delivered no-one will remember who put it in place.

Notwithstanding this particular political manipulation by the Labor government, it does attempt to address demographic changes that we as Australians have to acknowledge are being experienced. The previous government produced two international reports and found that we currently have approximately five workers for every one person dependent upon social security. By 2040, without some policy changes, it is predicted to be 2.5 workers. Something needs to be done to address this and remove any barriers for older workers remaining productive in the workforce for longer where they can. The measure of increasing the pension age will go some way to addressing the demographic challenges that we face, but we must also ensure that support is provided and any age based discrimination is eliminated to ensure that this change does not become a burden instead of a bonus for individuals and our economy.