Ms Anna Burke (Chisholm, Australian Labor Party) Share this | Hansard source

I also rise to talk about the Social Services Legislation Amendment (Defined Benefit Income Streams) Bill 2015, which was a schedule in the original fair and sustainable pensions bill before the House. It was rapidly taken out of that bill in a bit of a strange incident last week, where the poor deputy chair was left in the situation of having a dissent from his ruling moved because of the confusion about what was going on with that bill.

We are a bit perplexed as to why this is all happening at many levels, but no more perplexed than the poor pensioners and part pensioners out there who are on the receiving end of these changes. Whilst the opposition will support these changes in the bill before us today, they will have an impact on many people.

There are many Commonwealth superannuants in my electorate; Commonwealth superannuants who do not live on excessive amounts of income. They live on a defined benefit. That is what this is. They know what they are getting and they have no way of supplementing that income. So if you take away some part pension or if you introduce the 10 per cent cap that is being done today, that has quite a strong ripple effect on these peoples' lives.

In an electorate like mine, where housing costs are very high, that also relates to local government rates, which are coming around and being put up as we speak. A lot of my pensioners who are living on defined benefits struggle each time the rates notice arrives because they are living in a house which, when they bought it, was quite a modest house. It is now quite an expensive house and therefore the rates go up in correlation with the cost of that home. You might say, 'Well, sell the home.' Where do you live then? Any of these movements have unintended and quite dramatic impacts on people who are living on defined benefits. That is what a lot of the people who are impacted by these changes are.

The fair and sustainable pensions bill that went through the parliament last night—thanks to the participation of the Greens, a party that the government said they would not do dirty deals with—proposed to reduce assets tests for age pension eligibility in order to cut the pensions of around 330,000 retirees across Australia and to alter dramatically the plans of 700,000 people aged between 55 and 65 who are currently planning their retirement. Again, many of them live in my electorate. And 90,000 part pensioners will lose their pensions entirely.

One very nervous individual is my mother, who has rung me and is quite concerned about how this will impact on her. Again, living within a set income sounds okay until the car breaks down or until you need to get—as in my mother's case recently—a whole lot of bricks removed from the back of her fence because someone decided to dump them there. That sounds ridiculous to us here but, as a part pensioner—who does not move easily at the best of times—faced with a very large bill from council for a tonne of bricks that she had not dumped at the back of her property, she was quite traumatised. Of course, coming to her aid and support was not the man who was going to charge her a couple of hundred dollars to do this but my younger brother, who went round with a wheelbarrow and moved all the bricks—which caused him an enormous amount of back pain!

If you think about these things, they seem slight, but they have the ripple effect on individuals who do not have the wherewithal to raise money to meet those costs that they face from time to time. Again, this has a huge impact in my electorate. The fair and sustainable pensions bill, which this bill now rolls out from, proposes to cut $2.4 billion to pensions. Before the election it was the Prime Minister who promised no change to pensions. Well, we have seen massive change to pensions. Chisholm is home to more than 17,000 age pensioners. Of these, 8,410 are part pensioners who will see their pensions either reduced or lost entirely due to these measures. Some single pensioners will be $8,000 a year worse off and some couples may lose as much as $14,000 a year. Pensioners with as little as $289,000 in assets will lose because of this cut.

Following the Treasurer's second unfair budget, the biggest complaint from constituents in Chisholm was about the cut to pensions. I am sure that I am not the only member in this place who has been inundated by concerned pensioners and part pensioners in their electorate about what this means and how it will impact on them. Again, I go back to the fact that they are living on a defined benefit—a defined amount of money. They have no way of adding to their income, so any change has a massive effect on them and on their households.

Part pensioners are in a better position than people who are solely on the pension, particularly those who own their own homes and are in a slightly better position than those who are renting. I feel for those who are on a part pension and pension who rent, because any movement has a huge impact on them. These are people who have worked hard, who have had the ability to save money and who have contributed to superannuation but who do not quite make it to being wholly self-funded in retirement. Going back to the bill before us, many of these are Commonwealth superannuants in my electorate who worked at CSIRO and the old PMG—the movement before Telecom and Telstra—and so are living on their defined benefits. Many of them have struggled and many have written to me over many years about how their pensions are already indexed. So, for them, any changes at the margin have a ripple effect.

People earning around $55,000 from their super represent the top end of the income bracket that this government is targeting with this legislation. It is doing this instead of targeting the top 10 per cent of earners who receive the largest tax concessions on massive superannuation portfolios. The top 10 per cent receive 38 per cent of the unsustainable super tax concession and they are seriously hurting the budget. The biggest impost on the budget and the sustainability for the future are not pensioners; it is the tax concession given to those on massive amounts of superannuation. Many, as I said, have written to me with local comments. David in Mount Waverley wrote:

We were not big earners but we were prepared to go without in our younger days so that we could live with some comfort in our later years. Now we are to be penalised for our thrifty ways. We are not millionaires by any stretch of the imagination. We do not want to reduce our cash reserves because we want that for any emergency—such as health problems where we might need expensive medication. Home repairs are also something that might be needed as well. We are already drawing down on our superannuation in order to live comfortably. Perhaps that is what you want—all pensioners living below the poverty line.

Colin from Box Hill North hit the nail on the head when he wrote:

Changing retirement rules for people in middle Australia who have already retired is unfair and wrong—particularly when the big end of town still avoids paying its fair share of tax. While the dream of experiencing many of the things we put off over the past 20 years so that we could save for our retirement appears to be over, there is still one thing we can do—we still have a VOTE which no government of the day can control.

Robert in Box Hill wrote to me to say that these unfair changes to the pension should be knocked back and that the government should only consider pension changes:

… when the Government commits to exposing the richest in our society to their fair share of pain, a commitment they have singularly failed to make. This will have the effect of immediately relieving suffering from those with the least, while supporting the general thrust towards making the pension system more sustainable.

And many more wrote in the same vain, but I think it was Colin who said, 'We are not going to be experiencing our dreams of travel now in our retirement, but we still have a vote.' They are out there, and they are going to be using their vote.

At $2.4 billion, these bills altogether represent the single biggest saving measure in this budget. It is achieved by cutting the incomes of 330,000 middle-income retirees. Labor has proposed that, instead, the generous tax concession for around 70,000 very wealthy people be slightly reduced to save the budget more than $14 billion. This was condemned by the government as not a large enough measure—as not being sufficient. It is a lot more sufficient and it hurts a lot fewer people. Indeed, the people targeted probably would not feel it at all. Superannuation tax concessions, if left unchecked, are fast outstripping the cost of pensions. According to the budget papers, the annual cost of the concession on employer contributions to super is set to climb from $16.3 billion to $20.15 billion in the next four years. The annual cost of the concession on super fund earnings is set to climb from $13.4 billion to $30.4 billion. Thirty-eight per cent of these concessions go to the top 10 per cent of account holders—Australians earning more than $260,000 per year; the top one per cent.

The set of bills before us mean that from 2017 the assets test threshold for home-owning couples will be lowered from $1.15 million to $823,000. For single home owners it will drop from $775,000 to $547,000. In addition, the current $1.50 taper rate will change to $3. Pauline Vamos from the Association of Superannuation Funds Australia said:

… increasing the taper rate for part-pensioners from $1.50 to $3.00 per $1,000 of assets, while also increasing the threshold at which the asset test starts to apply, would require a couple to save around $120,000 more for a comfortable retirement, requiring a super balance of $630,000. This will have a greater impact on single retirees, who will need to save $180,000 more in superannuation or a total balance of $610,000.

The Treasurer may well say that all you need is a 'good paying job', but the reality is that many people simply will not be able to achieve this without extra savings. Under Labor's plan, rather than hurting the people stuck in the middle, people with very high superannuation balances in excess of $1.5 million will have overly generous tax concessions reduced. The tax-free status of superannuation earnings disproportionately benefits high-income earners. Labor's policy would mean that people with very large superannuation accounts would still enjoy $75,000 a year of tax-free income before earnings over that amount attract a concessional tax rate 15 per cent. I would argue that in retirement, in this bracket, if you own your own home, $75,000 is a pretty good income to be living off. Contrast this with the government's set of bills which will see a part-pensioner couple with a superannuation income of less than $40,000 now lose $13,500. This is a huge amount, a huge impact, and, again, there is no way of making up this shortfall, because the individual has no way of actually earning any additional income.

We are a long time retired nowadays. This is the issue. This is the drama. It is not something new and it is not something the government recently discovered. If we go back to the days of Peter Costello as Treasurer, he produced the first Intergenerational report many years ago, indicating that we needed to be doing something about this to sustain both the budget and good retirement incomes for individuals—not welfare; retirement incomes. These set of measures will not do that. Even though we are supporting the bill before us today, it will still have a ripple impact upon those who are living within their means and have no way of adding to those means. Before us we have a bill that seeks to hurt those who can least afford it, as opposed to Labor's policy which is fairer. It reduces generous concessions to those who can afford it, and it would save $14 billion.

This is coupled with the Greens who proudly trumpet the fact that by supporting this suite of measures they would secure agreement from Tony Abbott to look at reducing tax concessions and high-income super. They are wrong. They are completely wrong. The Prime Minister confirmed it the day after they reached this so-called agreement. He said that the government will not include the super tax concession in its tax white paper. So the Greens have done a deal, got through a suite of measures that are going to hurt people, on a promise that they would have some discussion into the future. What do they get? A couple of weeks extra for people to make submissions to an inquiry. This will make no impact. It will certainly do nothing to assist in finding savings measures or ensuring that we have good retirement incomes for the future.

All the Greens have done is strip middle-income retirees of their pensions. They have received no gains from the government, who always focus their sights on lower- and middle-income earners, never the top earners. It is a shocking betrayal by a political party that pretends to care about people.

We have a suite of bills before us; one passed last night. This measure was carved out of it and is being reintroduced today. Whilst it is being supported by Labor, it will still have impacts upon pensioners now and into the future.

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