House debates

Tuesday, 24 June 2014


Social Services and Other Legislation Amendment (2014 Budget Measures No. 1) Bill 2014, Social Services and Other Legislation Amendment (2014 Budget Measures No. 2) Bill 2014; Second Reading

6:03 pm

Photo of Jenny MacklinJenny Macklin (Jagajaga, Australian Labor Party, Shadow Minister for Families and Payments) Share this | Hansard source

I am very pleased to be able to speak on the Social Services and Other Legislation Amendment (2014 Budget Measures No. 1) Bill 2014 and Social Services and Other Legislation Amendment (2014 Budget Measures No. 2) Bill 2014. Between them, these two bills contain many of the harshest measures in this year's budget, and, indeed, some of the harshest measures to ever come before this Australian parliament. These bills are full of the Prime Minister's broken promises, cruel cuts and unfair increases in the cost of living. The bills seek to destroy the fundamental pillars of the Australian way of life. They seek to savagely cut support for ordinary working Australian families and will push hundreds of thousands of vulnerable people into poverty.

The bills represent a cruel betrayal of Australia's 3.2 million pensioners, who were promised by the Prime Minister before the election that there would be no changes to their pensions. The cuts to pensions in these bills will see the living standards of age pensioners, disability support pensioners, veterans and carers dramatically decline. The bills deliver a blow to all of our older Australians—self-funded retirees as well as pensioners. Hundreds of thousands of senior Australians who have worked hard all their lives and diligently put their money away for a secure retirement will have their payments callously cut.

The bills are disastrous for all Australians who believe in a fair, tolerant and compassionate Australia. They seek to write into law this government's plans for a colder, nastier and fundamentally unfair Australia. Australians know the truth—that the measures in these bills are unfair and undeniable broken promises. Over the last 100 years, a social contract in this country has taken shape. It is based on the pillars of the Australian way of life: access to universal health care and education, a fair and secure pension system, support for people who cannot work due to disability or caring responsibilities and support that helps people get into work. It took more than a century to get to where we are today, and successive Labor governments have led the way in strengthening these pillars over the years, making it fairer and more inclusive for all.

Australians are rightly proud of our smart, fair and uniquely Australian approach. Shamefully, not only do the measures in these bills throw out the government's responsibility to maintain and further strengthen these pillars of the Australian way of life, they also go out of their way to tear these pillars down. Of course, the government's best attempts to come up with a rationale for the harsh measures in these bill are based on a complete fallacy; a fabricated sense of crisis.

Australia's economy is strong. Our economic situation is certainly not the crisis that the government has done their best to make it out to be. We have low inflation, low interest rates, a net debt well below comparable countries and a AAA credit rating from all three credit rating agencies, and since the election all we have heard from this government is false claims that Australia's spending on welfare is out of control. We have heard senior government ministers cry that Australia is on a path to countries like Greece and Spain. These claims are just not true.

Just last week the Treasurer's budget credibility was totally destroyed by analysis from the Melbourne Institute using the Household Income and Labour Dynamics in Australia survey—otherwise known as HILDA. This data showed that Australians have dramatically reduced their dependence on welfare in recent times. In 2001 23 per cent of working age people in Australia received a welfare payment each week. In 2011 that had dropped to 18½ per cent. Across the OECD we spend less on welfare than any other country except Iceland.

None of this is to say that we cannot do things better, but it does confirm that the government's whole platform is based entirely on a mistruth. The government and the Treasurer are not ending the age of entitlement; they are ushering in an age of hypocrisy. The Prime Minister wants to pay $50,000 to wealthy women to take six months off work to have a baby with his $22 billion unfair and unaffordable paid parental leave scheme. What an appalling example of this government's twisted priorities.

These bills contain around 30 different budget measures including some of the cruellest attacks on Australia's basic fairness that this parliament has ever seen: cuts to the pension, cuts to low- and middle-income families, forcing young people to live for six months at a time without any support at all. Disgracefully, the government has gagged debate no these bills in the House today. There are just three hours to debate some of the most savage cuts in our nation's history and some 30 individual measures. The Prime Minister wants to see this legislation rammed through this House tonight, and I have to emphasise that it is an absolute affront to the parliament and to the Australian people.

The Treasurer had the gall to remark in this House last week that the Abbott government was the best friend that pensioners have ever had. I have to say pensioners are not fooled. They know that they have been betrayed. The changes to pension indexation arrangements in these bills are a cut. They are a very direct cut to the living standards of Australia's 3.2 million pensioners. The pension is benchmarked to wages for a reason: so the pensioner standard of living keeps pace with the standard of living of the working population more broadly. John Howard knew that; that is why he legislated it. Indeed, the current minister explained to this House in 2011 how the wages benchmark 'enabled pensioners to keep ahead of cost-of-living increases'.

According to the Australian Council of Social Services, pensioners will be $80 a week worse off within a decade because of these changes. That is what everybody on that side of the House has to face up to. It is your responsibility. Everyone in the Liberal and National parties will have to face pensioners in their electorates and tell them that they are supporting legislation that will see pensioners in their electorates $80 worse off within 10 years. This is a cut in anybody's language and as big a broken promise as you can get.

The bills also seek to increase the pension age to 70. It is clear that the Prime Minister's only plan for older Australians is to make them work longer and retire with less. How else would you explain the decision of the government to abolish the low-income super contribution, a measure that reduces the tax burden for 3.6 million Australians who earn $37,000 or less a year, two-thirds of whom are women? How else would you explain the government's decision to further delay the increase in superannuation from nine to 12 per cent and at the same time reverse the proposed changes at the top to tax earnings over $100,000. Measures in this budget will see more people reliant on the pension in the future.

And it is not just pensioners who are bearing the brunt of this government's budget. Self-funded retirees have been betrayed in this budget too. These bills include a cut of $1.1 billion to older Australians through the abolition of the seniors supplement. The seniors supplement is an annual payment of $876 to people who receive the Commonwealth seniors health card. At the same time as they do this, the government is cutting $1.3 billion in concessions for both pensioners and Commonwealth seniors health card holders that goes to help pay for electricity and water bills, rates and public transport fares. It is a double whammy for pensioners and for those seniors who are on the Commonwealth seniors health card. The government is cutting every single cent of that money that the Commonwealth puts towards concessions that these seniors get for things like their electricity and water bills, not to mention hitting older Australians with a new GP tax and the higher cost of medicines.

I remind everyone that before the election the Prime Minister said there would be no changes to pensions. The Prime Minister was not being truthful with pensioners before the election and he is not being truthful with pensioners now. Of course, the Liberal Party has long thought of itself as the party that represents the views of seniors and self-funded retirees, but my office has been inundated with messages from angry seniors who feel betrayed by the Abbott government. The measures in this government's first budget that hurt seniors are printed in black and white in these bills that we are debating tonight.

They are sneaky measures that have provoked such anger amongst seniors across the country and have exposed the fundamental dishonesty that lies at the heart of this government. But, of course, seniors are smarter than that. This Prime Minister says one thing to seniors before an election campaign and then rips money from their pockets straight after the election. This just demonstrates that seniors cannot trust this government. Labor will oppose these cuts because we believe in fairness. These bills are an unprecedented attack on our pensioners and seniors and will hit them hard.

I want to foreshadow amendments that I will move to these bills to remove the following from the legislation: cuts to pensions through the indexation changes; increasing the pension age to 70; abolishing the seniors supplement; the resetting of the social security and veterans' entitlements income deeming thresholds, effectively another cut; cessation of the pensioner education supplement; the removal of the three-month backdating of the disability pension under the Veterans' Entitlements Act 1986; and the pause to indexation in the income-free test areas for all pensioners. These are the measures that Labor will oppose in this legislation.

There are some measures that we will not oppose. The bill includes a measure to include income from superannuation in the assessment of the Commonwealth Seniors Health Card. We will not oppose this measure. We are committed to making sure that our payments system remains one of the fairest and most targeted in the world.

The bills are also a full-scale attack on the cost of living of Australian families, who will have their family benefits and parenting payments slashed at the same time as they are hit with the new GP tax and a new fuel tax. Make no mistake, there is $7½ billion in cuts to family payments. What that means in plain language for families is $7½ billion out of the pockets of families. In each and every one of the Liberal and National Party members electorates, this is money you are taking directly out of the pockets of families. These bills will put more pressure on the budgets of millions of families, and millions of people in those families will be very, very hard hit.

Recent expert analysis from the independent modelling agency NATSEM has put to shame the government's claims that the burden of this budget is shared by everyone. Overwhelmingly analysis has demonstrated that those on the lowest incomes are hit the hardest while those at the top are spared. NATSEM found that around 1.2 million families will be, on average, $3,000 a year worse off by 2017-18. Just think about that. That is what you will be doing to average families over the next two to three years. In contrast, the top 20 per cent of households will have either no impact or a negligible positive impact.

The bills seek to freeze the payment rates for family tax benefits. They seek to freeze the low-income-free area for family tax benefits, including the low-income-free area for those who receive the maximum rate of family tax benefit A—people who earn only up to $48,837 a year. They are low-income families. According to the Department of Social Services, a freeze to the low-income-free area—so, just this one measure amongst the many, many measures in this bill—for family tax benefit A alone will see 370,000 families around $750 a year worse off in 2016-17. That is one measure in this bill.

It comes at the same time that the Prime Minister is trying to abolish the schoolkids bonus, with eligible families losing $410 a year for primary-age children and $820 a year for every secondary-age child. Of course, if the government gets their way, in the next fortnight the schoolkids bonus will be paid to families for the last time. So families will be starting to feel the pain of the Abbott government very, very soon.

As a result of the budget, including measures in these bills, a single income family—a couple family on $65,000 with two school-age children—will be around $6,000 worse off each year, not just once, each year, after 2016. That is $6,000 for a family on $65,000 a year—not what you would call by any stretch of the imagination a wealthy family. This government is going to take $6,000 out of the pockets of those families. That is around 10 per cent of their entire family budget. How could that be fair?

But the government is so arrogant and out of touch it just doesn't seem to care that millions of Australians will be worse off because of these savage cuts. The budget is incredibly short-sighted. Because of these bills single parent families are faced with a huge disincentive to work. The bills create a new single parent supplement which single parents will get when they are kicked off family tax benefit B when their youngest child turns six, another measure in these bills. This measure actively discourages single parents from working. Once a single parent earns just one dollar more than $48,000 a year they will lose this supplement. These families will face an effective marginal tax rate of around 80 per cent for every dollar that they earn above $48,000, taking home just 20c in each of those dollars. This is analysis also done by NATSEM. As NATSEM describes it. this is 'a sudden-death drop' and obviously it is going to have a disastrous effect on the participation of families in those income brackets.

Unsurprisingly, we have heard quite a bit of dissent from some members opposite, especially in the Senate. National Party members and senators have been pretty noisy lately, but I have to say that I would have thought they would be protesting much, much more loudly, because many, many of these low- and single-income families are going to be hit the hardest in this budget. They live in country and regional Australia, and they deserve better than the representation that they are getting at the moment.

The Department of Social Services revealed at a recent Senate estimates hearing that around 700,000 families will lose their family tax benefit part B if the government gets its way and kicks families off the payment when their youngest child turns six. By contrast, Labor will stand up for these low- and middle-income families who will be so savagely hit by the cuts in this legislation. We will oppose the cruellest measures before us today.

I foreshadow the amendments that I will move in consideration in detail that reflect the following: Labor will oppose the indexing of parenting payment single by CPI alone. The government is removing the wages benchmark. Labor will oppose the government's move to freeze the rates for family tax benefits. Labor will oppose revising the family tax benefit end-of-year supplements to their original values and ceasing indexation. Labor will oppose limiting family tax benefit part B to families with children under the age of six and the new allowance which fails to compensate for this measure. Labor will oppose freezes to the income-free areas for family payments. There are some measures which will Labor will not oppose. We will not oppose the measure to tighten the means testing for family tax benefit part B from $150,000 to $100,000.

Labor believe in a targeted family payment system, where government support goes to those who need it the most. That is why we have always supported means testing, especially in our family payment system and in our age pension system. Of course, it was Labor that introduced means testing for the private health insurance rebate, which was vehemently opposed by those opposite. We also introduced means testing for family tax benefit part B. In our first budget in government, we introduced means testing for family tax benefit part B for the first time. We were accused by members opposite of committing class warfare for introducing a means test at all. We were accused of saying that people earning $150,000 a year were rich. Yet now, in an act of pure hypocrisy, we see this Liberal Government—led by a Prime Minister, a man who devoted an entire chapter of his book to the evils of means testing—reducing the primary earner income limit for family tax benefit part B to $100,000. Perhaps, if you go back to what they accused us of in the past, the Prime Minister believes that families with an income of $100,000 are the new rich. We do not believe that. That is not the case at all. But we will not stand in the way of this measure because, as I said, we do believe in targeting family tax benefit payments.

We will not move an amendment to remove this item from the bill. But I do want to say to the government that this is a very unsophisticated way of going about it. We would not have designed this measure in this way. We do believe it would have been more sensible to have a gradual taper to cushion the hard edge that will be created by the government's policy. We would have thought it would have been more beneficial if there were a more sophisticated design. But as I said, we will not obstruct for the sake of it. If the government were to come back with a more sensible approach, we would certainly be prepared to have a look at it. We want to operate on the basic test of fairness.

Perhaps the cruellest measure in these bills is the Prime Minister's brutal attack on young job seekers. Measures in these bills will mean young people under the age of 30 who are looking for a job will be forced to wait six months before receiving any income support. In some cases, they could be much longer without any income support. The government is saying to these young people who lose their jobs or who cannot find a job, 'You are on your own.' If a young person has not found a job after six months without income support, a measure in these bills will require them to take part in a Work for the Dole scheme. If they have still not found a job after six months on Work for the Dole, then they will lose their payments for a further six months. These bills have the potential to confine young people to an endless cycle of periods without any income support at all. Make no mistake about this at all. If this is passed in its current form, these bills will see many young job seekers pushed into poverty, into crisis and into homelessness. In fact, the budget apparently includes extra money for emergency assistance that the government believes will be required as a result of the measures in these bills. Once again, the Department of Social Services has admitted that they anticipate around 500,000 new claims for emergency assistance as a result of this measure alone.

Imagine a government which takes a decision which it knows will push people into poverty. That is what this government has done. We will oppose this mean and nasty attack on Australia's young people. We will also oppose the government's plans to push young people under 25 off Newstart onto the lower youth allowance, both of which are in these bills today. This is a cut of around $48 a week, around $2,500 a year, from some of the lowest-income people in the country. We will not support such punitive measures. How on earth does the Prime Minister think that these young people are going to find work if they have absolutely nothing to live on?

Let us be very clear about the meaning of these measures that affect young people. They represent an abandonment of young people by this government. They reflect the gross unfairness at the heart of this government's budget. To put this unfairness into some perspective, a 24-year-old living independently on Newstart will be slugged with an almost 20 per cent cut in their support, while someone on $200,000 will pay $400, a meagre 0.2 per cent reduction in their income. Prime Minister, how can this be seen to be fair? Australians know it is not fair. The Prime Minister has made clear in this legislation that he is happy to see vulnerable low-income earners, and in particular young people, do the heavy lifting in this budget. By contrast, Labor understands the importance of giving young people a hand up to find work, not cruelly telling young Australians: 'You're on your own.' Labor will stand up for young people by opposing these measures.

Once again I foreshadow that I will move amendments to remove the following sections of the bills. We will oppose: extending the ordinary waiting period for working-age payments; the cessation of the Education Entry Payment; moving people under 25 years from Newstart onto Youth Allowance; forcing young people under 30 to wait six months without any support at all; pausing indexation for the low-income-free area for student payments, including the student income bank limits; and pausing indexation of income-free areas for all working-age allowances.

The bills include changes to the Disability Support Pension. I have already indicated our opposition to pension changes, so I will not touch on those again. The bills include a measure to review the eligibility of the Disability Support Pension for those under 35 years of age. We will not seek to remove these measures from the bills today, but we will seek to get more information about them in the forthcoming Senate inquiry.

There are very serious matters in these bills. If the government refuses to agree to Labor's amendments, which would remove the harshest measures from these bills, Labor will oppose the legislation in its entirety. I will move these amendments because Labor will never stop fighting for what is right and fair for all Australians.


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