Steve Georganas (Adelaide, Australian Labor Party) Share this | Hansard source

I too rise to speak on the Social Services and Other Legislation Amendment (Pension Loans Scheme Enhancements) Bill 2021. The Pension Loans Scheme, or PLS, now renamed by the government as the Home Equity Access Scheme, is meant to allow older people who are asset rich but cash poor to access an income. The intention was to enhance the living standards of our senior Australians who are unable to access the age pension because they did not meet the income test. Why, then, are the take-up rates so low? That is the question we should all be asking. Clearly there are a number of barriers that are preventing Australians from accessing the program, and these include things like equity of access, complexity of financial products, unintended consequences of safeguards against excessive debt, higher-than-average interest rates and cultural issues.

In fact, these very same concerns have been raised with me in the electorate office recently. I was contacted by a constituent, Peter. He and his wife are both retired and on a pension with a small, self managed superannuation fund. They explained that, like many Australians, they receive a fortnightly part age pension and a drawdown from their self managed super fund for the rest of their needs. The couple own their own home, which, like for so many other properties, has increased in value over the years. They inquired about the possibility of supplementing their pension income through the PLS but found the process to be difficult, overly complicated and contradictory. Again, they appear not to be alone in this.

I met with Peter to listen to his experiences and his wife's experiences, and I was shocked to hear about the conflicting advice they received from Centrelink regarding the implications of joining the scheme. My constituent explained that when a pensioner has a PLS in excess or uses funds for a purchase the asset results in a decrease in pension. The government allows the pensioner to draw down on the difference of up to 150 per cent via the PLS and then charges 4.5 per cent interest on the amount, which compounds over the years. Peter sought clarification from Centrelink about how the PLS would affect his personal pension under the current asset test but received very unclear and contradictory advice. That's just one example of the advice that's being given to people who are seeking the PLS.

Following our meeting in December, I took it upon me to write to the minister responsible to seek clarifications for my constituents about how the scheme affects the pension and asset testing and particularly about Peter's situation. The minister's response highlights that, indeed, the proceeds from the loan or any asset purchased with the loan would have an impact on the pension. But there is clearly a lack of clarity and transparency in the PLS which is dissuading people from using it. And changing the name to the Home Equity Access Scheme does very little to clear things up—it's just a name change.

It is true that the 2018-19 budget included some modest changes, including expanding eligibility to full-rate pensioners and self funded retirees, increasing the maximum fortnightly payment rate under the PLS from 100 per cent to 150 per cent of the full pension and importantly reducing the interest rate from 5.25 per cent to 4.5 per cent—a very modest reduction.

We supported these changes because, after all, they meant that more senior Australians, including full-time pensioners, could perhaps increase their income, and I welcome the fact that this bill expands the scheme even further. It introduces more financial safeguards and greater payment flexibility, allowing two advance annual lump sum payments to help participants with larger expenses. It's a testament to the people who have been vocal advocates in this area that the government finally gave in and reduced the interest rate again to 3.5 per cent.

We on this side have long fought for this measure to bring greater equity to the system, but the changes have come too late for too many. Interest rates in Australia have never been lower, yet participants in this particular scheme, the PLS, have been paying a higher interest rate than almost every mortgagor in the country. This is a similar problem to that of deeming rates, which are set much higher than standard interest rates and ultimately penalise pensioners. What kind of government makes money from pensioners? This is what's happening in this case.

On this side of the House, we believe that this scheme, which allows people to unlock their housing access to improve their retirement incomes, should be fair, easy and understandable for all senior Australians to access. Unfortunately, this government has again missed an opportunity to introduce real changes that affect the lives of pensioners for their betterment. There are still older Australians unable to access the program despite owning real property. For instance, many tens of thousands of Australians live in land lease communities. These Australians own their own homes but, because they do not own the land, they're unable to access the scheme. This is extremely unfair. The government must look at this issue, make further changes and open the scheme for these Australians.

The PLS needs to be fair, transparent and easily accessible. The government can and should do better by people like my constituent Peter and all other pensioners trying to live their retirement years in dignity. We are supporting this bill, but at the same time we want to ensure that all pensioners are supported to live in dignity. They deserve nothing less, and unfortunately this government has a very bad track record when it comes to supporting pensioners. We've become used to seeing this government try to chip away at people's age pensions, and that has been the record of this Morrison government.

Pensioners have worked very hard to receive in the course of their working lives a small pension to live in dignity. The age pension is a proud Labor legacy. It was introduced by Alfred Deakin's government under pressure from Labor to ensure that older Australians could live with dignity. Pensioners, as I've said many times in this place, have worked hard all their lives. They've contributed to our economy and our society by paying taxes, and they've built the foundations that we walk on today. They deserve respect and dignity, and they deserve a government that is on their side. Only Labor will fight for pensioners. When Labor was last in government, we increased the pension—a real increase, not CPI or cost of living and other things. It was a real increase of $30 per week.

Over the past seven years, this government has had a record on cutting pensions or trying to cut the pension time and time again. It seems like a national sport for the Liberals and Nationals to attempt to cut the pension in every budget, every year. For example, in 2014, they tried to cut pension indexation, a cut that would have meant pensioners would be forced to live on $80 a week less within 10 years. In the same year, they cut $1 billion from pensioners' concessions. Then they axed the $900 senior supplement to self-funded retirees receiving the Commonwealth seniors health card. In 2015, they did a deal with the Greens to cut pensions for around 370,000 pensioners by as much as $12,000 a year by changing the pension asset test. In 2016, they tried to cut the pension to around 190,000 other pensioners as part of a plan to limit overseas travel for pensioners to six weeks. That same year, they tried to cut the pension for over 1.5 million Australians by scrapping the energy supplement for new pensioners. The government's own figures showed this would have left over 563,000 Australians who were receiving a pension or allowance worse off than they were. And who can forget that they have spent years trying to increase the pension age to 70?

Most recently, in August last year the government was caught out by Labor on its pension freeze for 2.5 million pensions. This side of the House fought very hard to stop this cruel pension freeze. The Morrison government still has cuts to the pension before this parliament. For example, it wants to completely take away the pension supplement from pensioners who go overseas for more than six weeks. This would see around $120 million ripped from the pockets of pensioners. As I have said in this place many times, pensioners who have worked all their lives and paid their taxes have a right to live wherever they want to in retirement—whether it be overseas, whether it be moving from South Australia to Queensland, whether it be moving from Victoria to Western Australia or whether it be moving from Australia back to their ancestral home in Europe or somewhere else around the world. They have every right to do so. They've worked all their lives. They've paid their taxes. They have the right to retire in dignity and live where they want to. Yet this government still wants to make pensioners born overseas wait longer before qualifying for the age pension by increasing the residency requirement from 10 to 15 years. All this is occurring while the cost of living continues to rise, including spiralling out-of-pocket healthcare costs because of the Medicare freeze put in place by this coalition government.

Cutting the pension really is in this government's DNA. Pensioners won't forget this government's record on cutting the pension. Pensioners have worked their entire lives. Pensioners deserve dignity. They deserve to live out their last years in serenity, quiet and peace, not constantly juggling paperwork and trying to see how they can earn much-deserved retirement pension dollars in their old age.

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