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

7:27 pm

Photo of David GillespieDavid Gillespie (Lyne, National Party) Share this | Hansard source

I rise to speak about the Social Services and Other Legislation Amendment (2014 Budget Measures No. 1) Bill 2014 and the Social Services and Other Legislation Amendment (2014 Budget Measures No. 2) Bill 2014. Before we commence the discussion, we have to see in which context these bills arrive in this parliament. In 10 years time, the projected debt will be $667 billion if this government does not address the problem and institute some changes. Members from the other side are very good at pulling the emotional argument. People have not put us here as legislators just to play on emotions; they want us to fix things. Part of the hard reality of our budget situation is that if there is no change to the structural over-commitments that previous governments have made, we will have serious financial problems. The current budget is making some very hard changes. No-one is arguing about that, but there is a reason. On the coalition side we did not all wake up and just say, 'What can we do to make life difficult for people?' We have looked at the projected looming deficit and thought that life really is going to get difficult for the citizens of the nation if we do not address the problem.

The member for Herbert made a very impassioned speech that applied common sense and made some really sensible suggestions. The descriptions and comparisons with other nations in Europe were quite apt, because that is the situation in our country is heading towards if we do not change things. The rate of rise of our debt was higher than 17 other OECD countries. Sure, our absolute figure of debt to national wealth is not as great as other countries but when you put things in perspective, the whole financial system of the euro a couple of years ago was about to buckle and fold because of the debt. There were riots in the streets and banks closing in Greece. Do we really want to head in that direction? It is too late to change when it is there in front of you. We are taking sensible, hard-nosed decisions to get our nation's finances back in order.

To put things in perspective, this budget would reduce the debt from the projected $667 billion down to $389 billion in 10 years time. That is still an unbelievable amount of national debt compared to what this nation has had since we were formed. People roll off billions like they were millions a few years ago. People do not understand the scale of the debt. They equate it with countries that were on their knees and still remain in a very precarious financial situation.

The situation that is different for us here is that most of the debt we have accrued by issuing bonds around the world is that most of this interest and the debt is owed overseas. Take our near neighbour, Japan, whose Prime Minister is visiting this country in the near future. They have a huge debt, but most of their debt is borrowed by the government from their citizens, so the government is paying their citizens the interest rate in a major part. Whereas the vast majority of our interest payments are going out of the country.

Japan has huge reserves, like the economies of Europe and America, where a lot of their national debt is circulating back inside the country. No nation wants to be in debt to the tune these other countries I have alluded to are, but at least they have a much bigger gross national product. Our gross domestic product is very similar to our gross national product, but a lot of these economies have huge income streams from around the world. They have many very, very large companies that operate around the whole world. We are in a different situation. We cannot afford to be so liable in terms of debt, because if there is another period of financial turmoil in the world, we are very vulnerable. In addition, it just offends my sense of logic that if we do not change things, every month we will be paying $3 billion of debt overseas. Imagine what you could do with $3 billion in your back pocket every month. We could build fast rail, we could do flyovers on the Pacific Highway, we could build schools and hospitals and whole new universities in the span of three years in government of paying $3 billion in interest out of our Treasury. We could achieve amazing infrastructure builds for the nation that would then deliver us greater wealth.

The other reason we have to support these bills is the reality of our ageing population. Our social security payments occupy 35 per cent of our government's income from taxpayers. That is a huge amount of money. But if you look at what is happening with our ageing population, instead of one in five of us becoming a pensioner supported by the others that are not, by the middle of the century—and time ticks over rapidly—that will be one to 2.7. So for those of us who have children and those who have grandchildren, note that I would need to have twice as many children to be paying and supporting me if I ended up being a person dependent on the state for my security in my old age. That is a scary statistic—every 2½ or 2.7 people working to support one person who relies on the state. The numbers do not lie. That is what we are looking at. So we need more workers and we need more population.

But we also need to tweak the other side of the equation: we need to get our spending trajectory going in a sustainable direction. That is why we have made these difficult decisions. The other reason—and the member for Herbert and other people have mentioned it—is a valid argument. When the pension came in in 1909, the average age of a male was 55. If I am lucky I am going to live until I am 81 or 82 so that is a big difference. Most people would not have been eligible for the pension when it first came in because they would have worked and shuffled off this mortal coil before getting to the pension age. But now it is the minority that are unlucky like that. Most of us live more than our three-score years and 10. Most of us live four-score years so we are getting a good deal.

When I started my medical degree, the average age was almost a decade lower, and that is just in the space of one lifetime. With the advances in health and nutrition and interventions that are happening now and with the vast reduction in smoking, I expect the average expectancy when I get to 82—touch wood—will be much higher. We are all going to be living a lot longer. If we are going to make that sustainable, we have to change things.

But we made a commitment in the campaign. We told the populace that we would not change the pension in this term, and we are not. It is still going to go up twice a year with indexation. It is just that it is a sustainable form of indexation: the CPI. The last pension increase in March this year did not even go up by MTAWE; it went up by CPI because CPI was higher.

We have had a wages explosion over the last decade or so. I cannot see it continuing at that rate of increase because Australia is already a very expensive place to do things. If we are going to remain competitive in the world—and we live in a global economy—we will not be seeing the huge wages growth that we have seen in the last decade. I actually think that the CPI is going to be a much better bet for pensioners to increase their pension than MTAWE. I do not think people should be afraid at all if they are pensioners.

When the opposition are scaring pensioners, they are giving the impression that the pensions are being cut now, but they are not. The pension age changes, which are being gradually brought in until 2035, will not affect the current pensioners now. But, if you heard the last speech from the other side, you would get the impression that they are saying that pensioners who are receiving the pension now are going to be affected by the increase in the age of eligibility for the pension, and that is absolute nonsense.

Things do change, and other nations are adjusting their situations as well. We have to make sensible, long-term projections. There are a lot of sensible changes. We are keeping the clean energy supplement, but we are just changing the name. All the adjustments for the carbon tax that were promised to gold card holders, Commonwealth seniors health card holders and pensioners are being honoured. We are also going to get rid of the carbon tax, which will put them ahead another $550 a year.

Indexation is a very sensible way of managing overcommitments, and we have paused the indexation in some of these areas because we could see that they were not sustainable. Everything is being done for a reason. The previous speaker made out that we just dream up cruel, hard, harsh things to do to people. We are doing it to make the whole system sustainable in the long term.

I turn now to disability support pensions. If you are unfortunate enough to have a disability, of course the nation will support you. But we do not want people to become dependent on it if they can work to a degree. That is why compulsory, work focused activities such as work experience, education, training and job searching will help certain disability support pension recipients, particularly if they are young—under 35. From 1 July we are changing the system so that people who have a disability will still be encouraged to work. Obviously, if you have a clear disability and you cannot work, these changes are not going to be applied to you. It is just for those who have a disability who can still work. It helps with their morale and their sense of worth and self-esteem if they can still maintain a position in the workforce.

There are some other areas that clearly needed adjustment, including the portability of student payments and disability payments. You could be classified on a disability pension but go overseas for 19 weeks and still get your disability support. Now, fair go! I think that, if someone is able to travel the world for 19 weeks, maybe their disability is not as severe as it was assessed initially. I think that is a sensible review. The other changes that are being brought in with this budget are, on the face of it, a change for people. But, if you look at the benefits for the people who are experiencing the changes, they are still way out in front with the amount of support they get from the state. Whether it is family tax benefit A or B, there is still a benefit.

We have the prince of social security systems around the world. It is sustainable if we manage it sensibly. We do not want to be seen as cruel, as our opponents make us out to be. We are just being sensible and rational. I have mentioned the indexation, I have mentioned the changes to the pension, and I have mentioned these portability issues. They are all reasonable. I support these bills and commend them to the House.


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