Monday, 22 June 2015
Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015; Consideration in Detail
As a general rule, I support means testing and the idea that people who have more money should pay their fair share, so on the face of it you would think I would vote with the coalition government and the Greens on this Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015, but I cannot bring myself to do that. In this case I will support the Labor opposition. I will do that for a range of reasons. For a start I cannot bring myself to support a broken promise. The Liberal and National parties before the 2013 federal election made it very clear that there would be no change to pensions—and this is clearly a change to pensions. That is wrong, and I will not support a broken promise.
I also find that I cannot support something that does not have appropriate grandfather provisions. At the end of the day pensioners have made a lot of decisions over many years to get themselves in the situation they are in. It is not fair out of the blue to strip income away from them, and that is what some of them are now going to face. We already heard the example of some pensioners losing $8,000 a year. When you are on a modest income a small amount of money can make a disproportionate difference. That extra bit of money might be your only discretionary income. In fact, that extra bit of money might already be built into the costs structures you have in your life these days. The government cannot simply come along and with no warning take it away from them.
I would have a much different response to this bill if there were appropriate grandfather provisions so that every current pensioner has their current arrangements maintained. The grandfather provisions would ensure that people who are soon to retire are also able to retire with the old arrangements. Make these sorts of changes something for the future so that people who are still maybe 10 years away from retirement can factor them into their calculations and plans.
I also am concerned that these changes are badly designed. It does not make any sense that, say, a couple with $600,000 in assets would effectively have a bigger income than someone with $800,000 in assets. For a start, that is unfair, but it is also a disincentive to people to save and to be putting as much money as they humanly can into superannuation. And what of the people who have been struggling to save outside the superannuation system—say, to leave some extra for their kids? What about those people? It is not acceptable simply to say that people can draw down their super more quickly, because the reality is that this asset threshold includes all of their assets, including non-super assets. For some people, it will include substantial sums of money that they have saved to leave an inheritance for their children—people who have, say, gone without things their whole life to leave that little nest egg for their kids. So the government cannot just defend its bill by saying people can draw down their super more quickly, because it just does not work that way. In fact, for a single person, by the time they have their car, their goods and chattels, a bit of super and a bit of cash aside from super, there is not actually a lot of super there, and they will draw it down much too quickly and in fact, before they know it, be on the full age pension, and they will have lost their nest egg that perhaps they were keeping for any unforeseen medical bills and so on.
I will just close by making the point—I have made it many times in this place—that we are a rich country. We can afford to look after the young, students, the unemployed, the sick, the disabled and older Australians. With an annual federal budget of close to $400 billion a year, with the right priorities, we can look after the people that need to be looked after. We can certainly afford to pay more to people on the full age pension. The issue here is not that it is one or the other. We have enough money to keep the existing pension arrangements and to find a bit of extra money for people who are on the full age pension at that end of the spectrum. That is what we should be turning our minds to: working out how we can help people on lower incomes better while keeping in place the arrangement for people who are a little bit better off.