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Thursday, 25 June 2009
Page: 4366

Senator BOYCE (4:34 PM) —I continue my speech from yesterday in the second reading debate on the Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Bill 2009. Retirees can subsequently lose their pension or receive a lesser pension. On this topic of the change in taper rates, I quote some figures from Dr Hickman from SA Superannuants.  These figures were brought to the Senate Community Affairs Legislation Committee inquiry into this bill by the Australian Council of Public Sector Retiree Organisations. Dr Hickman’s figures show that after the change in the taper rate a pensioner would be $673 a year worse off after four years and that this would rise to a maximum of $3,854 after 10 years. This modelling was done by an economist from the Australian Council of Public Sector Retiree Organisations and it suggests that the guarantee given by the government that grandfathering will ensure that no pensioner will be worse off because of the change to the taper rate is not in fact true.

I would also like to bring to the Senate’s attention yet another example of the problems that develop when legislation is hastily inquired into and hastily looked into and the problems involved in what Ms Clare Martin referred to as ‘less equitable and more complex legislation’. The National Council on Intellectual Disability has today also published some work suggesting that people on disability support pensions will be worse off. The National Council on Intellectual Disability asks why people with disability in receipt of a disability report support pension who choose to work and earn income are treated differently from people in receipt of the age pension who choose to work and earn income. Yet again we have an example of multiple tiers developing. The NCID says:

There now exists a double comparative disadvantage. Young people in receipt of the Disability Support Pensioner do not have access to the Work Bonus and also do not have access to the Senior Australian Tax Offset.

They point out that the changes to the income test taper reduce the incentive to work, and this is a policy contrary to the government’s alleged interest in social inclusion and in reforms to employment services. They point out:

  • The base pension increase is quickly chewed up by the new taper for those who will enter the workforce as new workers.
  • The effective marginal tax rate … means that a worker only receives a net benefit of approximately 34 cents for every dollar earned.

We are talking here about people on disability support pensions. They go on to say that treating the contribution to work of young people with disabilities as less than that of aged workers sends a very strong message devaluing people with disabilities.

The NCID have used the average weekly wage of $345 because this is the average received by people with intellectual disabilities working in open employment who are assisted by Commonwealth services. Using that figure, they point out that a person with a disability in receipt of the pension earning $345 a week in comparison with an age pensioner earning the same is at a significant disadvantage at both levels. They earn $56.13 less in net income if they are currently working, using the current taper test, or nearly double that for new workers currently in receipt of the disability support pension. They are $83.73 a week worse off in net income.

The coalition have said that we will not oppose this legislation. However, we will be monitoring its working very closely. We have the government’s guarantee that no-one will be worse off because of the taper rate, that the grandfathering clause will work and will mean that people do not have money ripped out of their pensions when they most need it. But, given that age pensioners are nearly $4,000 a year worse off after 10 years, and given these figures that have been released today by the National Council on Intellectual Disability showing that workers can be $83 a week worse off if they are recipients of the disability support pension, the guarantee is not in any way, shape or form watertight. This is certainly something that I will be monitoring very closely. We in the coalition will ensure that the government keeps its promise.