Anthony Byrne (Holt, Australian Labor Party, Shadow Parliamentary Secretary for Foreign Affairs) Share this | Hansard source

I am pleased to speak today on this issue of great importance to retirees from the United Kingdom who are living in this country. I have been advised that there are over 242,000 people living in Australia receiving payments from the United Kingdom who have had their pensions frozen. Contrast this with British expatriates living in the United States, the European Union and a number of other countries outside the Commonwealth. They receive a fully indexed pension.

It seems extraordinary that residents from the same country are arbitrarily discriminated against purely on the basis of where they chose to reside. An example is contained in a video that was uploaded to YouTube in an attempt highlight the nature of this issue. This video explains it quite succinctly. It refers to a fellow called Ron who is a British expat living in the US. He retired in 1999 and moved to the United States for his lifestyle. As another example, Bob is a British expat living in Australia who retired in 1999 and moved to Australia to be with his grandchildren. In 1999 Ron received a pension of £66.75 a week. While living in the US he now receives £84.25 a week from the British government. In 1999 Bob received a pension of £66.75 a week and eight years later, in 2007, Bob still receives £66.75 a week. This is only one example and there are clearly many more, including some British expat pensioners in their 90s who receive only £10 a week. We heard from the member for Wakefield that we have got one who is receiving £4 a week, the same amount they received when they moved to Australia in the 1970s.

In 2001 the Howard government terminated Australia’s social security agreement with the United Kingdom. The termination of the agreement was announced in an attempt to force the UK government to address conditions such as the non-indexation of pensions. This attempt, I think, has clearly failed. The consequence is that, in addition to pensions now not being indexed, new arrivals from the UK of pension age now need to accrue 10 years residence in Australia to qualify for the Australian age pension. Six years later I believe the Howard government has saved a lot of money by not paying pensions. But what about those people who have come in good faith to this country; what about the government negotiating a new agreement with the British government pertaining to their pensions?

In my electorate of Holt there are over 7,400 residents who were born in the United Kingdom. A significant proportion of these people came prior to 1991 and a significant proportion will have moved to Australia after spending their working lives in the United Kingdom. They have settled in large numbers in Cranbourne, Hampton Park and Doveton. They did this to spend time with children and grandchildren and because they enjoy the Australian lifestyle and climate. A retired British expat settling in Hampton Park in 1991 would have received a pension of £52 a week. If this situation had continued, that same British expat would have received a frozen pension of about £52 a week. If this British expat had settled in the US or the Philippines, the pension would be over £80.

The UK government’s main reason for not indexing pensions is the cost. It would cost roughly £420 million a year, we believe, to unfreeze these pensions. It is argued that the policy change would be unfair to taxpayers in the UK and that the British government would need to negotiate bilateral agreements with each country individually to change the indexing. These arguments are difficult to swallow for the many British retirees living abroad, particularly when the UK National Insurance Fund Account balance—on the figures that I have—is £38 billion and increasing each year. This is £27 billion more than the UK government actuary’s required minimum working balance. Indexing the pension would only make a small difference to the growing balance of the National Insurance Fund Account, which it is estimated will reach almost £70 billion by 2012.

According to British Pensioners in Australia Inc, the pensions of 490,000 British expats are indexed by the UK government—these recipients are residing in the United States, the European Economic Area and countries such as the Philippines and Turkey. Reports indicate that a simple change to British law would enable the indexation of pensions in countries such as Australia. Bilateral agreements would not be necessary for this change to occur.

The important point for this chamber and for the Australian government to realise is that this is not just Australia’s battle. Whilst the largest proportion of British expats are in Australia, there are many others who are affected worldwide. Other Commonwealth countries, in particular, also have organisations lobbying for change. This is an issue that is not difficult to fix up. I have a lot of constituents in my electorate who have been affected by this. They deserve to have an outcome. They deserve to be paid their pension entitlement—the one they have paid into for much of their working lives. (Time expired)

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