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

I am very pleased to be speaking on the Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015. This is the latest in Tony Abbott's relentless campaign to cut the pension and the latest attack by this government on pensions and Australian pensioners. It is the latest broken promise from a Prime Minister who promised before the last election that he would not touch the pension.

The Prime Minister, of course, has campaigned to cut the pension ever since he was elected. I want to make it very clear from the outset that Labor will oppose this bill and particularly oppose the asset test changes proposed in this legislation. With our vote we will make clear that there is only one party in this whole parliament that will stand up for pensioners, only one party that will fight for a fair pension and only one party that will make sure that Australia has a fair retirement income system. That is Labor. We already know that every single member opposite, Liberal and National party members, have voted once to cut the pension. Last year they all voted to cut the indexation of the pension—a cut that would have left three and half million pensioners with $80 a week less within 10 years. Today they intend to try to cut the pension again. Today the Abbott government will once again break a promise they made to pensioners before the last election. Each and every one of these members of the Liberal and National parties will vote to cut the pension, to hurt Australian pensioners.

I am very proud to say that Labor last year beat this government's savage attack on the pension. We stood side by side with pensioners in every single of corner of Australia and fought the Prime Minister's unfair changes from last year's budget. We stood united with organisations like National Seniors Australia and Council on the Ageing, and we won. To all those pensioners who fought with us: this was your victory, because you stood up to this government. Every pensioner was spared last year's savage cuts. But now we have another fight on our hands—a fight made all the more difficult because of a filthy deal between the Greens and the Abbott government. Senator Di Natale and the Australian Greens have been dudded into accepting a $2.4 billion pension cut in exchange for a six-week extension to the deadline for submissions to the tax inquiry. What a deal! Senator Di Natale has been hoodwinked into claiming that he got the government to put superannuation tax concessions back on the table. He said that over and over again. Since we heard those claims from the Leader of the Australian Greens, we have had the Minister for Social Services, the Treasurer and, just a few short hours ago in question time, the Prime Minister making it absolutely plain that as long as this government is in power there will be no changes to superannuation. So Senator Di Natale and the Greens have been completely fooled, and it is Australian pensioners who are going to pay the price. This dirty deal is nothing more than the government and the Greens getting together to agree to cut the pension. That is really what it is all about. The first act of the new Greens leader has been to sell out Australian pensioners.

It is very clear that there is no intention by this government to review the retirement income system or to consider any changes to superannuation tax concessions. The Greens have been completely conned. They have all—the Liberals, the National Party and the Greens—sold out middle-income pensioners who have worked hard and saved hard their whole working lives. Each and every one of them—whether it is the leader of the Greens, the Prime Minister or the Minister for Social Services, and all of these people are going to vote for them—is going to take money off part pensioners. I will give one example. A part pensioner earning $25,000 a year will lose money as a result of these cuts. At the same time, this government is saying it will do nothing to the very generous tax concessions for the highest-income superannuants—those with incomes of more than $75,000 a year. They are not just happy about it, of course. They have all given it the green light. This deal sends an unequivocal and unmistakable message to every single pensioner in Australia: never, ever trust the Abbott government or the Greens again. It is only Labor that can be trusted to protect the pension.

Because of this legislation, because of the Greens and the government getting together, hundreds of thousands of pensioners are going to face a cut to their pension. In 2017, 330,000 pensioners will lose. Of these, 236,000 will lose part of their pension—a cut of, on average, $3,300 a year. So I hope each and every one of you is going to write to your part pensioners and tell them you are going to take $3,300 out of their pockets. Another 90,000 part pensioners will lose their pension altogether; so you can all write and tell them as well. That will be $5,000 a year that you are going to take out of the pockets of part pensioners. Over the next 10 years, more than one million pensioners will be affected by this cut. Although the government might have all of us believe that all of these pensioners are millionaires, the reality is, of course, very, very different indeed. Because of this measure, because of the changes in this legislation, pensioners with less than $300,000 in assets will lose. Some of these pensioners are on incomes of less than $15,000 a year. Yes, some of them do have assets but they are not all on easy street. This is an attack on those Australians who have worked hard all their lives and saved hard. All they wanted was to enjoy a comfortable retirement. In fact, that is what they have been working their whole lives to achieve.

Mr Ciobo interjecting—

The parliamentary secretary at the table, who is making such a load of racket, is about to vote for a cut to part pensioners. He is doing exactly the opposite to what he promised before the last election, which was to make no changes to the pension. Each and every one of these Liberal and National Party members are going to pull the rug out from under these part pensioners. As one pensioner wrote to me recently:

After years of planning for retirement … retirees are being told that for some they must go it alone and for others their part age pension will be drastically chopped.

She wrote:

A knife has been plunged into the breasts of middle income retirees.

And she is correct. This cut is an attack on middle-income retirees. And some of them will lose a lot. Some singles will lose as much as $8,000 a year. Some couples will lose up to $14,000 a year, each and every year. And this is only the immediate impact. The impact of these changes will be even more acute over time.

According to independent modelling, within 10 years around half of all new retirees leaving the workforce will be affected by these changes. Far more pensioners will be earning an income less than average than above average. According to the same modelling, for couples due to retire in 10 years time, the largest impacts will be felt by those with below average earnings. A couple who are still working and earning $62,000 a year stand to lose $8,600 a year or $224,000 over their entire retirement.

Yet, what do these people opposite want to do? For those retirees with $1½ million in superannuation assets or more will not be impacted at all. They will not have any change at all. That is right, the richest retirees will lose nothing at all. Here lies the absolute injustice of what we are debating tonight. The government would have you believe that this bill is fair. Whilst the government are saying that part pensioners must get by on less, they are actively promoting people with much higher levels of assets by refusing to rein in tax concessions for millionaires.

Some weeks ago our colleague Chris Bowen put forward a proposal to rein in the tax concessions that the government provide to people with superannuation balances over $1½ million. The government have just rejected that outright. Of course, this just shows the government's true colours

Opposition members interjecting—

And they cut low-income super; that is exactly right. They still do not get fairness. They think that part pensioners have too much money, but that millionaires with huge balances in their superannuation accounts have too little. That is what this measure really protects. Let us be clear. If you are on a pension, if you are rely on a pension in the future, the Liberals are coming after you. If you have a few million squirrelled away in a superannuation account then the Liberals are there for you; they will protect you. But if you are a pensioner who has saved your whole life, then the government is coming after you and coming after your savings.

Not only is this measure going to mean pensioners are left significantly worse off, but it also has some very significant built-in floors. The government should be aware of these because it was one of their own luminaries, former Treasurer Peter Costello, who, when he was Treasurer said:

The current taper rate of $3 means a retiree loses more aged pension than they earn on their additional savings if they do not achieve a return of at least 7.8 per cent a year.

He went on to say:

This is a large disincentive to save for retirement

Of course, he is correct. This point was reinforced by Professor Andrew Podger who recently wrote that the new assets test taper involves—and I quote—'a very tough wealth tax'. That is what you are all imposing: a very tough wealth tax.

For every $1,000 of assets the pension will be reduced by $3 a fortnight or $78 a year, much more than those assets can deliver in income. That is what you are all doing to these part pensioners. As a consequence pensioners will have a very strong incentive to sell off their assets. There are already people giving pensioners advice about how to do exactly that, to invest in non-assessable assets like the family home or to not save in the first place. These are the flaws that are built into this cut to part pensioners, and the government know it. They know it. They would rather see a cut to the pension than a fair, sustainable pension system. That is because they seem to only have one goal and that is to cut the pension. There is no intention whatsoever of standing up for pensioners or of protecting the pension.

By contrast, of course, Labor have always fought for pensioners. When we came into government in 2007 one of the first things that I did was to ask my department to undertake a review into the pension. We knew that pensioners were doing it hard. Many were living in poverty and finding it hard to make ends meet. The Harmer report into pensions was delivered to me in February 2009. It made three recommendations. The first was a $30-a-week increase to the base rate of the pension. The second was the introduction of a new indexation measure: the Pensioner and Beneficiary Living Cost Index. The third was an increase to the indexation benchmark from 25 per cent of Male Total Average Weekly Earnings to 27.7 per cent of Male Total Average Weekly Earnings. Not only would these changes provide for a fairer pension, but they would also be sustainable as the result of difficult savings decisions that we made at the time.

The Treasury made it clear that by 2021 these measures would be cost neutral. I am very pleased to say that Labor delivered this significant increase to the pension. I would like to particularly acknowledge the contribution that the member for Lilley, as the Treasurer, made to the way in which Labor could deliver this pension increase. Labor delivered, for pensioners, the biggest increase in the pension in its 100-year history. We delivered a new, fairer indexation arrangement that would see the pension keep pace with wages, making sure that pensioners maintained an adequate standard of living. I am very pleased that we were able to deliver these very significant changes. Analysis by Professor Peter Whiteford showed that, as a result of this single reform, poverty among older Australians was cut from 27 per cent to less than 12 per cent. It was a very significant poverty alleviation measure. It literally brought millions of pensioners out of poverty. That is Labor's record—a record we are very proud of.

This government would have you believe that the pension is unsustainable. They would have you believe that the government cannot afford to look after low- and middle-income retirees. But it is simply not true, and Labor knows that the pension is sustainable. Australia is considered to have one of the most sustainable pensions in the world. The Allianz Pension Sustainability Index last year found that Australia's pension system is the most sustainable in the world. According to the OECD, Australia spends just 3½ per cent of GDP on the age pension, compared with the OECD average of 7.8 per cent. Ensuring the continued sustainability of the retirement income system is important, but it has to be done in a fair and equitable way.

Our universal superannuation system—of course, introduced by a Labor government—has taken, and will continue to take, the pressure off the age pension. Labor believe that Australia can afford a fair pension system. We want to be both fiscally responsible and socially just. We believe it is possible to be both—to rein in unnecessary spending and to continue to support growth, jobs and hardworking Australians. We cannot afford to continue to provide generous tax breaks to millionaires with superannuation balances of millions of dollars. That is why we are continuing to make fair and responsible decisions.

The superannuation proposals that Labor has announced are all about putting fairness back in the system. They are fair and they are good for the budget. This Prime Minister thinks that pensioners have got too much money and that millionaires do not have enough. We know, however, that it is possible to be both fair and responsible. We cannot afford to let multinationals avoid paying their fair share of tax. That is not fair or responsible. That is why we have also put forward the changes to rein in the tax concessions for those superannuants with balances above $1½ million.

We know that tough decisions need to be made. That is why we will agree to certain measures in this bill. We will agree to the abolition of the seniors supplement and we will agree to the changes to the social security treatment of defined benefits, but we will not agree to the changes to the assets test, we will not agree to the changes to the portability arrangements for the pension and we will certainly not agree to the cuts to the pensioner education supplement or the education entry payment. We have fought these cuts for a year and we will fight them once again. We will continue to fight for pensioners. It is what we have always done and we always will.

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