18 June 2015

Dr CHALMERS (Rankin) (09:24):  I rise today to also speak on the Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015. I think that, to properly understand this bill that is before the House right now, we need to understand and acknowledge the two most recent previous waves of changes proposed or passed to the pension.

The member for Jagajaga last night, in her characteristically wise contribution to this debate, reminded the House, and I want to remind the House again, that when Labor were in office, in the first term of the Rudd government, Labor did make a big change to the pension: we provided the biggest increase in the pension in Australian history. We did that by making difficult decisions elsewhere in the budget to fund what we thought was an important piece of social and economic justice for age pensioners in our community, who were falling behind and finding it harder and harder to make ends meet. I want to commend the work that the member for Jagajaga did in that period, working with the member for Lilley, Prime Minister Rudd, Deputy Prime Minister Gillard and others on a really important package of reforms to pensions in this country. I was proud to have played a small part in that effort as well. So that is the first big change that I wanted to refer to in this debate as an important part of context when we are considering this bill.

The next change, of course, was contained in the first Abbott-Hockey budget last year. In last year's budget, the Treasurer came in here and announced his plans to cut future payments for Australian pensioners. Of course, Speaker, as you would recall, the government tried to pretend that there were no cuts to the pension, but their own budget papers, the documents produced by the Treasury and by the government, showed that the impact of their plans would be to take $3 billion out of the pockets of Australian pensioners. That means something like $80 a week cut from the pension over the next decade. As a result, I am proud to say, of the hard work of members on this side of the House—including the member for Blaxland, who is at the table—campaigning in communities, suburbs and towns right around our nation, we managed to force the government to retreat from these plans to cut pensions. I also want to pay tribute to the pensioners of Australia who participated in that effort—the people who signed the petition, showed up to rallies, wrote to the minister and played such an important part in knocking over a terribly unfair attack on the retired workers of this country.

That was the good news—that that first effort was defeated. Unfortunately, even though it is a new year, a new budget and a new Minister for Social Services, we have the same callous approach to people's retirement incomes, particularly the pensioners of middle Australia, the people who have done the right thing. They have paid their taxes all their lives, they have worked in their jobs, they have raised their kids and put them through school and uni, and now they are under attack again. This new minister has brought back some of the same measures that failed last year: the abolition of the seniors supplement, the abolition of the pensioner education supplement and the abolition of the education entry payment. On top of this, he has added some cuts of his own: changes to the social security treatment of defined benefit schemes, changes to the proportional payment of pensions outside Australia and, perhaps most significantly in terms of impact, changes to the pension assets test.

The sum total of these changes will rip $2.4 billion from the pockets of pensioners. Single pensioners will be up to $8,000 worse off a year and couple pensioners up to $14,000 worse off a year, and 91,000 part pensioners will lose their pension altogether. According to independent analysis from Industry Super Australia, within 10 years half of all new retirees leaving the workforce will be impacted by this measure. So enough of this false claim that the changes are somehow just dealing with a very small sliver of the wealthiest pensioners. We know from independent modelling that they will impact on half of all new retirees leaving the workforce within the next 10 years.

Despite a promise to maintain the Seniors Health Card for retirees affected by these changes, 91,000 people will lose access to a series of pensioner concession card benefits, including discounts on car registration, public transport, council rates, gas and electricity.

The Association of Superannuation Funds of Australia (ASFA) has suggested that the value of these concessions lost could be up to $1,500 per year. These cuts to concessions will disproportionately affect people from areas like mine.

I have 11,803 age pensioners in my electorate, and the message from this government to them over the last two budgets has been clear: 'We are coming after your pension.' If you are an Australian who relies on the pension today, the Liberal Party of Australia is after your pension. Or if you are an Australian working hard, saving for retirement in a few years' time, the Liberals are after your pension.

One constituent who contacts me about the pension assets test frequently—and I want to thank him for his correspondence—expects to lose $150 a week from his part pension. That is nearly $8,000 a year. A single pensioner who owns her own home and is earning less than $25,000 from super will lose around $8,200 a year, a huge chunk of her household income. So it is no wonder that this issue has been so concerning for people in my area. Perhaps no issue in recent months has provoked more phone calls, emails and angry discussions with pensioners in my electorate. And it is on behalf of those pensioners that Labor will not be supporting the most unfair and unwise parts of this bill today

I spoke earlier about the anger in the community. One reason pensioners are so angry at this government is the insulting way that the Prime Minister and the Minister for Social Services refer to retired people. They are so dismissive, describing them as if they are some sort of welfare bludger or as some sort of lazy person on the public teat. I think that is a terribly offensive way to describe people who have worked all their lives. They have paid their taxes and they deserve to be supported by this place.

The Prime Minister and the Minister for Social Services characterise Labor as 'the welfare party' for standing up for pensioners in our community. We are the party who stand up for people who work all their lives. We are the party who stand up for people who put their kids through school and uni and who paid their taxes, and who deserve some dignity in retirement. Again, they deserve our support in this place. They will get it from us; they will not get it from the government.

Pensioners are asking for some certainty in their retirement incomes. When the Prime Minister promised before the election—not once or twice, not as a throwaway line, but nine times—that there would be no change to the pension and he then cut the pension of around 330,000 Australians, that creates anxiety—not certainty. On this side of the House, we understand one thing: if you attack the pensioners of Australia, you attack middle Australia itself. Now that we have seen this deal done between the government and the Greens—a deal that they said would never happen—we are left, on the Labor side of the House as the only party standing up for pensioners and not supporting most of the measures in this pensions package.

We will not support measures that disproportionately affect people who have worked hard; we will not support the abolition of the Pensioner Education Supplement, that modest fortnightly payment for 41,130 pensioners who are studying; we will not support the abolition of the Education Entry Payment, the $208 one-off payment that goes to recipients of some of the other payments; and we will not support changes to the payment of pensions outside Australia. This issue is red hot in my electorate. People in my area are very concerned about the government's proposal to reduce from 26 weeks to six weeks the period that recipients of pensions can be paid their full pension while absent from Australia. We do not think pensioners who go overseas to visit family members should have their payments cut after six weeks. And critically, as I have said, we will not support the change to the assets test, which doubles the taper rate and which alone makes 327,300 current pensioners worse off. Labor cannot support these grossly unfair measures for retirees and low- and middle-income earners in our community.

But we do understand the legitimate concerns about the budget. We do understand that we need to do all we can to improve the budget bottom line, and that means finding sensible savings. That is why we have agreed to support some of the measures in this bill. They are not the most unfair ones. In doing so, and in acknowledging that we need to improve the budget bottom line, we do not accept the government's characterisation of the age pension as 'unsustainable'.

The latest Intergenerational report projects that the age pension will peak at 3.6 per cent of GDP in the middle of this century, based on no change. That is still lower than the current OECD average today of 7.8 per cent. More generally, we know that Australia has one of the most targeted welfare systems across the OECD. This is something that is celebrated about Australia around the world, that Australia does have a well targeted, sustainable system of social security that other countries would love to emulate.

Welfare expenditure in Australia accounted for just 8.6 per cent of GDP in 2013, compared to the OECD average of 13 per cent and, of course, over the last decade there has been a drop in the number of retirees who rely on benefits as their main source of income from almost 66 per cent to 63½ per cent. So if the government were serious about fixing the budget situation they would not be attacking pensioners, they would be looking to close some of the superannuation tax concessions for the very few at the very top of the system.

We do know—and this is a fact, not an opinion—that the cost to the taxpayer of superannuation earnings tax concessions will almost double over the next four years from $11.8 billion in 2014-15 to $22.4 billion in 2017-18, and continue to grow at a rate that is unsustainable. And, of course, high-income earners, particularly the very highest-income earners, receive a disproportionately-large amount of the super concessions because the difference between their marginal tax rate and the concessional superannuation rates grows as their income increases.

Now, this is not just a Labor opinion: the government's own Financial System Inquiry by David Murray—selected by the government—found that 10 per cent of Australians receive 38 per cent of Australia's superannuation tax concessions, more than the combined benefit of the bottom 70 per cent of Australians. Action in this area has been supported and encouraged by a growing consensus of stakeholders. Again, these are not just friends of the Labor Party: the Australian Chamber of Commerce and Industry, the Association of Superannuation Funds Australia; the ACTU, Industry Super Australia and the Australian Council of Social Service. That is a remarkable consensus among business groups, unions and social service groups that action needs to be taken in this area.

The member for McMahon has proposed a very sensible plan to make the super tax concession fairer and more sustainable by reducing the tax-free concession available to people with annual super earnings of more than $75,000 and by reducing the high-income super charge threshold from $300,000 to $250,000. Together, these reforms would save $14.3 billion over the next decade. And they are ready to go. We have done the homework for the government; we could put them on the table today and they could support them and we would get that $14.3 billion in a way that is so much fairer and so much smarter than the way that the government is going about attacking the pension.

As I said, we will not support the pension cuts that hurt retirees and low- and middle-income earners preparing for retirement. We are willing to cooperate on $1.5 billion worth of savings in the bill, because we understand we need to put the budget on a sustainable footing, but I say again: if the government were truly interested in improving the budget bottom line, they would be supporting Labor's plan to make superannuation tax concessions fairer and more sustainable.