Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

It is always good to be here where you are in the chair, Mr Deputy Speaker, knowing what a great influence you have over the Main Committee. First, I must correct the wording of the Notice Paper where it mentions a reform of $1.4 billion. It is in fact $14 billion, a very significant package to assist pensioners. I have been told that it has been changed in the electronic copy.

I raised this motion because I have been inundated with calls to my electorate office about the financial difficulties pensioners are still facing despite the fact that the federal government has given them increases of around $115 per fortnight for singles and $97 per fortnight for couples combined in pension payments as a result of the reforms delivered in September 2009. They also received higher indexation in March and September 2010. These are the most significant increases in the 100-year history of the pension scheme. The federal government is addressing the needs of pensioners after seven-plus years of inaction by the coalition.

Although pension reform has helped ensure that pensions are starting to keep pace with the cost of living, it seems that our state colleagues believe that it should be an excuse to put rent up. This is just unfair. I believe that it is the pensioners who should get the pension rise from last year and not state governments’ public housing authorities. Any rises in the pension benefits should flow through to pensioners. I think we should ask our state counterparts to permanently quarantine last September’s pension rise when calculating pensioners’ public housing rent levels and other costs that are controlled by state and territory governments.

The private sector needs to be responsive too as there is insufficient public housing to cater for all people on pensions and benefits. A pension rise should not mean there is a general rent hike. Organisations such as Shelter Tasmania and various local governments are working together to try and find solutions. The Hobart City Council and Shelter Tasmania point out the difficulties in their research in Tasmania which, like much of the rest of Australia, is experiencing a housing affordability crisis. Monitoring the average rental prices for a two-bedroom home in various suburbs around greater Hobart in the last five years reveals an average price increase of 40 per cent, with the lowest increase being in Glenorchy, 14 per cent, and the highest in my electorate of Bridgwater, 59 per cent. This means that many people on lower incomes are living with housing stress, paying over 30 per cent of their income in rent and many others unable to find or maintain affordable housing, leaving them homeless or at risk of homelessness. In the past rents were capped at 25 per cent of income and the need for that really has not changed. The growing list of people in less-than-adequate housing is being compounded by state governments not increasing the stock of public housing and by taking a component of any rises in pension. It is the famous catch-22 of Joseph Heller fame. People are in public housing because they have a lower-than-average income, yet if the federal government wants to increase their income the states want to charge more rent, leaving them back where they started from or even worse off because of general cost-of-living increases.

The pension increases went across the range of pensions including age pension, adult disability support pension, carer’s pension, veteran’s income support payments, wife pension and widow B and bereavement allowance. The parenting payment and rent assistance also went up in September, so on paper a lot of people should be better off, but the states are preventing this. The federal government also revised the indexation mechanism as part of the 2009 pension reform and now takes into account a basket of goods pensioners buy to better help maintain pensioners’ purchasing power. This basket of goods is weighed to recognise that pensioners spend more of their income on essentials including food, health, clothing, telephone calls and postage. I believe this should have led to reflecting pensioners’ actual expenses, yet we have social inclusion units around the nation expressing the need for more stable housing as part of including people in their communities while on the other hand the opportunity for them to help themselves has been taken away by increasing rents. Somewhere along the line the equation has gone off the road, it has gone haywire.

We have to stabilise people’s incomes to ensure that they have access to reasonable housing. We need to provide adequate public housing and private rentals and then some of the other social inclusion issues can come into play. There has been quite a bit of debate lately on the adequacy of the public housing sector and whether the public housing model is still economic. This is a discussion we should hold, but I believe we are getting further and further away from affordable rent for public housing. Most public housing tenants are on benefits and not working. Any variables in the private sector immediately impact those on the lowest incomes and drive them to try and find cheaper alternatives. Public housing is becoming less and less of an option for many low-income people, so there needs to be another major look at how the rental sector is operating. Funding should be allocated to such groups as Shelter and TasCOSS in Tasmania to undertake this work. We need to get back to where 25 per cent of an income is the rental component—any more than that means that it is dragging you down in terms of affordability.

In the meantime, I believe the federal government should insist on the states quarantining pension rises and seek other ways of supplementing the severe lack of resources to provide affordable housing. It is a major issue for us to deal with in this nation. Our federal Minister for Families, Housing, Community Services and Indigenous Affairs, Jenny Macklin, has already written to the New South Wales government to delay any rent increases, and I believe that that request was considered. I hope the same process will be applied to all states and territories in Australia.

This government has brought in the most significant changes in pensions in 100 years—after 11 years-plus of neglect by the coalition. The coalition failed to increase the pensions. They failed to do anything for pensioners other than try to take their votes. We addressed it, but trying to improve the life of pensioners has been difficult, because, if their rents are increased, their costs of power and electricity go up—the cost of living is always going up. You talk to pensioners like I do, Member for Gippsland, and they tell you that they go to the supermarket and find that there are increases in different costs. A lot of them are pretty smart at buying specials and knowing where the good markets are so they try to do that.

I have put forward this motion, and I thank those members who are here to speak on it. It is an issue that we need to take up in our communities and we need to make it public here in the parliament. I hope the motion will help to further delay rent increases, and I hope that we can do something about energy increases in the future as well. This is of major significance for many people on the basic pension and therefore their quality of life in our country. I thank members for supporting the motion.

Darren Chester (Gippsland, National Party, Shadow Parliamentary Secretary for Roads and Regional Transport) Share this | Link to this | Hansard source

I am pleased to join the debate on pensions and to speak on the motion by the member for Lyons. I will begin by acknowledging Mr Adams’s long-running interest in the issue of pension reform and his passion for making sure that older Australians, particularly older Tasmanians, are well supported in their retirement. I would also like to congratulate him on his re-election. He is one of the great characters of the parliament and a 5.4 per cent swing towards him gives credit to the work he has been doing. At the risk of driving your primary vote down, though, member for Lyons, let me say that I always appreciate your contributions; they are very thoughtful. I have a lot of respect for the issues you raise, because they are issues that are very consistent with my community in regional Victoria.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

They’re not that far apart.

Darren Chester (Gippsland, National Party, Shadow Parliamentary Secretary for Roads and Regional Transport) Share this | Link to this | Hansard source

There is only a small swim between us. While I do not necessarily agree with every part of the motion before the House, we do have some common ground when it comes to our shared passion for ensuring that the men and women who have worked very hard to build the nation we have today have the opportunity to retire with dignity and to receive the support they need when required from our government. The cost of living increases that the member rightly referred to and the impact that is having on our pensioners is something that is very apparent in the electorate of Gippsland. In fact, it was one of the critical issues in the Gippsland by-election in 2008. In that by-election the topic of the need to increase the rate, particularly for the single age pension, was heavily debated, and I guaranteed older Gippslanders during that campaign that, if I were elected, I would come to Canberra and fight for a better deal on their behalf. I am very pleased that the Rudd government did take some steps to increase the pension. It followed some strong lobbying by members, I believe, on both sides. In particular, the member for Bradfield, who was the Leader of the Opposition at the time, pushed very strongly for an increase in the age pension. I think there is a level of understanding—

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

Mr Deputy Speaker, I seek to intervene.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

Is the member for Gippsland willing to give way?

Darren Chester (Gippsland, National Party, Shadow Parliamentary Secretary for Roads and Regional Transport) Share this | Link to this | Hansard source

Yes.

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

Could the member please detail, in his contribution, the issues that he has brought to Canberra in relation to pensions and how they have been taken up by his party?

Darren Chester (Gippsland, National Party, Shadow Parliamentary Secretary for Roads and Regional Transport) Share this | Link to this | Hansard source

I thank the member. I will take on board the new paradigm referred to in my presentation today. As I said, it was one of the biggest issues in the Gippsland by-election. I made representations to the minister at that time and spoke with the member for Bradfield, who was the opposition leader at the time, and he strongly advocated on behalf of the opposition and in fact proposed a private member’s bill to increase the rate of the single pension, which was, I believe, voted down by the government, and I think that was a mistake. But I do acknowledge that, since that time has passed, the former Rudd government, in one of its better decisions, decided to increase the rate of pension, so I do take the member’s question in the spirit in which it was intended.

One of the key issues for pensioners to understand this situation is that many older Australians have not had the benefit of compulsory superannuation, so their retirement incomes are very limited. They do not have access to large amounts of retirement income, and there is going to be an increased need for government support for those people who have not necessarily had the capacity to plan for their own retirement for a whole range of reasons. I acknowledge the importance of the package referred to by the member for Lyons and stress again that it is something I argued for in my by-election campaign and since that time.

In all this, we must not forget the self-funded retirees, who have been hit very badly by the global economic circumstances and are now facing a situation where their retirement income has been restricted as well. They are often left out of this debate when it comes to discussions of housing affordability. It would be a mistake to think that, just because they happen to own their own homes and have a modest amount of retirement income, they are doing it comfortably in these very difficult times.

Also, reflecting on the cost-of-living pressures which the previous member spoke about, there are some policy positions being adopted by the current government which I believe will add further pressure to retirement incomes—in particular, the government’s proposed new carbon tax and the impact that is going to have on electricity prices. I believe that pensioners in particular will feel the pain the most. I am already hearing anecdotes in my electorate of older members of my community who are staying in bed longer in the mornings because they cannot afford to heat their own homes. If those stories are true, it is a real worry for us as a society when we have older people becoming more isolated in their communities, particularly in regional communities, because of cost-of-living pressures. Increases in water bills and other obviously essential services which have been a direct product of poor state government decisions are also having a severe impact on our pensioners and their cost-of-living pressures, not to mention the food prices which the previous speaker referred to.

I do, however, take exception to the member for Lyons’s assertion that there were 11 years of coalition inaction in relation to pensioners. I think the words he used were that the previous government failed to do anything. That simply lacks credibility on several fronts. Most notably, it lacks credibility on the electoral maths. Why did older Australians embrace Prime Minister John Howard and continue to re-elect the government he led if he treated pensioners as poorly as the member claims?

Government Members:

Government members interjecting—

Darren Chester (Gippsland, National Party, Shadow Parliamentary Secretary for Roads and Regional Transport) Share this | Link to this | Hansard source

I notice the interjections from other members. The simple fact of the matter is that no government goes out of its way to do nothing in relation to any issue. It is a juvenile debate, and I think that when we as members wander off into this hyperbole and ignore the facts of the matter we do a great disservice to the Australian people. I do not think that even the failed Rudd government did nothing at all. It tried to do a few things, and unfortunately it was incompetent in its delivery. But the simple fact of the matter is that the previous Howard coalition government increased the real income of pensioners by 20 per cent during the term of that government—that is two per cent per year over the life of the Howard government. In addition to the increase in real income, the coalition delivered one-off bonuses paid to most pensioner categories, as well as a utilities allowance paid to pensioners for the first time. I believe that it was the good economic management of the Howard government that made the increase to real income and the provision of one-off benefits possible. Because of the growth of wages, which was far in advance of the cost of living, in September 1997 the Howard government legislated to index pensions using the male total average weekly earnings if that index was higher than the consumer price index, and this enabled pensioners to keep ahead of cost-of-living increases. I could go on, but I just want to make it clear to the House for the record that the previous Howard government, with the support of the Nationals in coalition, did some excellent work in relation to pensioners. But I accept that there is always more to be done. It is one of those areas of public policy where there is always going to be more work to be done.

As I said, during the Gippsland by-election the former member for Bradfield, in his role as opposition leader, was a strong advocate on behalf of older Australians and certainly made the case very strongly to the people of Gippsland that there was a need for more reform.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

He did that to get you elected.

Darren Chester (Gippsland, National Party, Shadow Parliamentary Secretary for Roads and Regional Transport) Share this | Link to this | Hansard source

I missed that interjection from the member for Lyons. If he would like to make it more clearly, I might be able to take it up with him.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

He did that to get you elected.

Kirsten Livermore (Capricornia, Australian Labor Party) Share this | Link to this | Hansard source

Order! The member will be heard in silence.

Darren Chester (Gippsland, National Party, Shadow Parliamentary Secretary for Roads and Regional Transport) Share this | Link to this | Hansard source

The interjection was not worth repeating after all, so I will just ignore it. But I would like to refer specifically to the final part of the motion, which the member spoke quite eloquently about. It demands that all state and territory governments commit to permanently quarantining last September’s pension rise in the calculation of pensioners’ public housing rent levels and other state and territory government controlled costs. That is one area where the member for Lyons and I will be in furious agreement. Pensioners are telling me in calls, emails and correspondence to my office that they simply are not that much better off once the state government gets their hands on the money. That is a critical issue for us in this place: how do we protect future pension increases, arising from what I believe are good policy decisions, from the grubby hands of state treasurers?

It is a shameful situation when one level of government is giving with one hand and the other level of government is taking with the other. The member quite rightly referred to the situation of public housing rents, and it has been a very significant issue in my electorate, where I have been contacted by pensioners. These people are not mugs; they know when they are being ripped off. They know that, on the one hand, they have a federal government making some big announcements and getting credit—and deservedly so—for increasing the rate of the pension but, on the other hand, they are getting an increase in their public housing rents by their state governments. So I call on colleagues within the state administrations to have a real look into their own hearts when it comes to this issue. It is a very important issue. They are not fooling anyone. The state administrations have fleeced pensioners of at least some of the benefits that are included in the increased pension rates, and they have eroded the benefit of those increased pensions. As I said, I myself have had several letters on the issue, as the member for Lyons has, and I am happy to work with the member for Lyons and all other members of goodwill to achieve a better deal for pensioners in the future. We really need to keep the state treasurers away from any future increases.

More generally, this entire issue of retirement income reform is, I believe, one that the parliament is going to have to spend a lot more time considering in the months and years ahead. We are going to need to be more innovative in making policy reforms that do not penalise pensioners when they happen to get a bit of part-time work. They are not going to be turned into millionaires on the basis of the pension and some part-time work they get on the side. We are going to have to find ways to give them more dignity in their retirement and more control of their own financial futures. I think that is a critical issue of reform for this parliament and beyond. As I said previously, it is important that, when we talk about this issue of older Australians, we do not forget the self-funded retirees. It would be a mistake to think that they are not feeling the pain of the global economic situation at the moment. So I thank the member for raising this issue, and I believe it is a good debate to have.

Bernie Ripoll (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

Madam Deputy Speaker Livermore, I congratulate you and acknowledge that this is your first time in the chair. I am sure you will do a splendid job, as you have done for your constituents in Capricornia, in Queensland. I promise that I will behave and not make your job very difficult. I will make it as easy as possible.

I also want to place on the record my thanks and congratulations to the member for Lyons for placing this very important motion on the agenda for people to debate, because I think that the issue of people’s retirement is very important and that this parliament should work very, very hard and diligently to ensure that we protect people’s pensions and retirement incomes and work on all of those very complex matters about people’s financial security in their later years. I am also pleased to speak on this motion because it gives me the opportunity to acknowledge the very good work that has been done by this Labor government since it was first elected in 2007 in terms of the very broad pension reform that has taken place.

These are not easy matters to deal with. When we start looking at pension reform and the underlying cost to the federal budget, it is quite substantial. I can understand why governments in the past have always been very reluctant to move in these particular areas. I am sure this was the case in the Howard government years, where there would have been some will. I acknowledge that all governments of all persuasions would have truly wanted to make those big changes and reforms. But I think that, faced with the costs, and when they realised just how significant that cost of reform was, they got cold feet. It is probably the nicest way I could say it, rather than say that there was inaction or that the previous government in its 12 years in office did not want to do that. I do not believe that for a moment; I think they did want to do some reform.

I think it was a missed opportunity because they were good years. They were the years when the rivers of gold flowing into Canberra were quite commonly spoken about. The economy was thriving and there was all that opportunity—the best time to make those significant reforms. It did not happen, but that is okay. When we were elected in 2007 we made it a first order of priority for us, as a Labor government, to actually make these changes happen. I note that the member for Lyons said that these are the biggest reforms in 100 years. I have not done my research back that far, but I will take it on his word.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

Take it on my word!

Bernie Ripoll (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

I will take it on the member for Lyons’s word that these are the biggest reforms in 100 years. I have been out in the community saying that at the very least they are the most significant reforms in terms of retirement incomes and pensions in at least three decades. They are very significant.

We took on board the view that at some point in time a government must step up to the plate and make these significant changes. The cost, while it is significant—and it is not something that should be looked at lightly—is something I see as an investment in the future of this country. In some small way it is a repayment for the years of service that many people now in their older years made to this country in a time when superannuation did not exist for them unless they were in a very few privileged positions either in the Commonwealth Public Service or, perhaps, in the military. It is quite significant. I will just place on the record the cost to the budget—it is about $5 billion a year and about $20 billion over the forward estimates. As I said, it is a good investment in the people of Australia

We went further, though; it was not just about a dollar amount increase, important as that was. It was also about indexation and about making sure that, whatever the rate was for pensioner incomes, that was matched to what was happening in reality: when they went shopping, had to pay their bills or had to meet any of the bills like those that everybody else has in their lives. It is also significant to say on indexation that the two indexes that we use, the CPI, the consumer price index, and the MTAWE, the male total average weekly earnings, were not sufficient indexes to give a true reflection of the cost of living for pensioners. So we set about not only fixing the indexation issue in terms of the timing and how much was actually indexed but also creating a new index, which is the pensioner and beneficiary living cost index, the PBLCI. These are the appropriate three indexes to use for pensioners. With those three now in place, they truly reflect the real indexation needed and the cost of living that pensioners and others who receive some sort of other payment have.

I think there could be no further evidence than the last three increases. When we look at the last three times that these pensions were indexed, two of those three times used the pensioner and beneficiary living cost index. I will just put on the record how much of a significant difference there is. We can look at the highest percentage of price increase, in the area of food—which I would say represents the largest percentage of cost to any pensioner. It went up 20.55 per cent as compared to using the CPI, which was 15½ per cent. So it is a significant increase in difference.

The other most significant area was household contents and services, which increased under the PBLCI by 10.2 per cent, compared to the CPI, the consumer price index, at 9.6 per cent. Then, in descending order, health, clothing and footwear and communication were at substantially lower and closer indexes.

This means that this Labor government has taken on board the real issue of raising, once and for all, the base that pensioners get and the supplements, not playing games with the supplements as bonuses or treating them as some sort of small windfall every once in a while—particularly before elections—but actually setting them in concrete. It has the two pillars of pension income: a base rate, which was substantially lifted, and the supplements rates, which was substantially lifted. Then the total package—those two bases that form what pensioners receive—has been linked to proper indexation with the three indexes, taking whichever is highest. I think that those substantial reforms are quite well understood out in the community and have made an enormous change. What that represents today for people receiving pensions is that if they are single and on the pension they receive $716.10 per fortnight, and couples receive a combined $1,079.60 per fortnight. It is a lot of money, and at the same time it is barely enough.

From a federal government perspective, we want to make sure that pensioners do not end up being on the poverty line as a result of poor indexation or poor structures within the pension system. Where this kicks in hard is particularly for those people who are a pensioner, receiving some sort of pension, and who also have to pay public rent through a rental scheme where those rents are then increased by the states and territories in line with CPI. I can understand the requirements of states to keep pace with costs associated with that rental accommodation, but it is important that that does not have a bracket creep effect and minimise the increases that pensioners actually receive. I know that the minister is doing a very good job in this area and has written to the states and territories, asking them to become part of what we are trying to do for pensioners—that is, to raise their amount of their disposable income and to give them a little bit extra in their pockets at the end of the fortnight. We ask them to partner with us to make a commitment to ensure that they either quarantine the rental portion of their increases or that there is some sort of agreement about making sure that we do not have a bracket creep type scenario. I look forward to a positive working relationship with the states and territories in this particular area.

I also want to take the opportunity to say another thing about pensions more generally, and that is that there is great fear in the community that, at some point in time, a government—any government—might take away the pension. I assure all those either listening to or reading this that it certainly will not come from this side of government and it will not come from the other side of government either. In all fairness to everybody in this place, I think we all support and would protect the pension for everything that it does for people. But there are some things to acknowledge, including the ageing population. The fact is that by 2050 there will be twice as many 65-year-olds, and half as many people in the workforce for every one of them to actually fund those, and four times as many 85-year-olds—some significant issues. With the lifting of the pension age, we need to look at increasing the ability and flexibility for people of retirement age to continue to work or to continue to provide for their own retirement, and ensure that the superannuation system also matches what we are trying to do in those areas, through lifting the superannuation guarantee from nine to 12 per cent. In all, this motion represents an acknowledgement of the continuing good work that has been done by this government but also an acknowledgement that we need partners in the states and territories to assist us. (Time expired)

Greg Hunt (Flinders, Liberal Party, Shadow Minister for Climate Action, Environment and Heritage) Share this | Link to this | Hansard source

I am delighted to speak to this motion put forward by Mr Adams, the member for Lyons. I may not agree with all the elements of the motion and some of the assertions it contains; however, the general sentiment of support for pensioners is an absolute verity. In relation to that, I want to set out three issues today. I want to, firstly, look at the role, status and position of pensioners within the seat of Flinders, which has the fifth oldest demographic in Australia of the 150 seats in the Commonwealth parliament; secondly, look at the great national trend of our ageing population; and, thirdly, address one of the specific elements contained in this motion, and that is the assault on electricity pricing which will drive up the price of power for pensioners within Flinders, within Victoria and within Australia more generally in such a way that it is a regressive taxation measure which hurts the poorest but leaves the wealthiest in our country largely free of any significant impact.

Let me deal first with pensioners in the electorate of Flinders. The latest figures that we have are that within the electorate of Flinders there are over 24½ thousand people beyond the age of 65. This demographic represents 26 per cent of the total number of voters enrolled in Flinders. The numbers of those on various forms of pension or income support are in the space of 20,000. So there are a very significant number of people who receive support, assistance or help from the government in some way, having given a lifetime of service and work to the country, the state and the electorate. We have a profound social responsibility to deal with the needs of pensioners and we have a critical economic duty to ensure that we do not have a society which is divided in such a way that there is extraordinary dependency.

There are two great issues for the pensioners of Flinders. For future pensioners, it is about ensuring that there is a superannuation system that gives them an opportunity that we therefore provision in ways which will ensure that they have guarantees, but not in a way which destroys the economic base of our society as we go. The other issue is for current pensioners. There are many members on both sides of this House who have worked towards trying to boost the standing of and support for the seniors community. Seniors need two things. They need to have an adequate living basis—what is sometimes called a living wage—so the pension needs to address their basic needs and their ability to prosper; and this needs to be coupled with rules that will provide incentives but not penalties for additional work to supplement the pension, so they can have a meal out or purchase presents for the grandchildren and they can take some time for themselves. It should not be a subsistence lifestyle which is mandated. With the basics that are provided, there should be an opportunity and incentive there for those who can acquire additional income to work and to have that choice without incurring a penalty. That is of fundamental importance to the pensioners of Rye, Rosebud, Dromana, McCrae, Blairgowrie, Hastings, Somerville, Mount Martha and so many other parts of the Mornington Peninsula, not to mention the extraordinary population on Phillip Island in Cowes, Rhyll, Newhaven and Ventnor. All of those towns along the surf beach and nearby San Remo have very high numbers of seniors, as do Corinella and Coronet Bay. These towns rely on their seniors—they are the backbone of their society—so we need to do all that we can to help them.

At the national level we are witnessing an ageing society, so we need to have a balance between immigration and population growth, but it has to be a sustainable population. I remember putting this argument forward in the Australian in April and being criticised by many in the Labor Party—before they adopted it as a theme in the last election. I am not saying that is causation, but it is interesting that the ALP attacked what was, I think, a fairly non-controversial idea, particularly when it subsequently proved to be the basis of one of their election platforms.

That brings me to the third issue, that of power pricing. Today we see that there is a plan, proposal or idea that the government is putting forward which will drive power prices higher for pensioners. This will be most significant for pensioners because it is a regressive form of taxation.

We see that the emissions trading scheme and the carbon tax—they are different sides of the same coin—operate primarily by using electricity prices as the principal lever. This works by taxing the entire economy. Whether you fix the volume of emissions under an emissions trading scheme but keep the price fluid or you fix the price but keep the volume fluid under a carbon tax, either will drive up electricity prices dramatically.

Let us take not just my views on this but those found in official government documentation. The Independent Pricing and Regulatory Tribunal of New South Wales made provision for the impact of the government’s emissions trading scheme on electricity prices. The tribunal said that without an ETS electricity prices would be allowed to rise over a three-year period by approximately 35 per cent. That is an enormous impact as it is. With an emissions trading scheme—or, by extension, under a carbon tax—the additional impact would be a further 25 per cent. That would take the total increase in electricity prices over three years to 60 per cent. That additional 60 per cent represents an extraordinary component of the income stream available to pensioners on limited resources. More significantly, it comes on top of what the IPA has recently found to be a 60 per cent increase in electricity prices to date.

I am a passionate advocate of genuine action on climate change such as cleaning up and converting power stations, including Hazelwood and Yallourn in Victoria—the brown coal power stations—from coal to gas on a competitive incentives basis. But this mechanism neither cleans up the power stations nor offers equity to pensioners. So we see that, under the New South Wales modelling, a 60 per cent increase to date will be met with a further 60 per cent increase in power prices. The result, of course, is that it does not have any significant impact on Australia’s emissions. How do we know this? Because we have had a test run with a 60 per cent increase to date, and that has not had a major impact on electricity consumption, because electricity is an essential service. That is the point: electricity is an essential service. If you tax an essential service for which there is no ready alternative you will see a minimal impact on consumption of that inelastic good but a major substitution effect on the individuals who have been hurt. They will not be able to buy schoolbooks for their grandchildren or swimming lessons for their grandchildren. They will not be able to go out to the cinema or a restaurant. It produces enormous pain without necessarily producing the intended outcome.

We think there is a better way for pensioners—that is, provide incentives to reduce emissions through a carbon buyback form of direct action. Let us clean up the power stations and do other things such as cleaning up our farms by providing incentives that will reduce emissions directly. All of this stands in stark contrast to a 60 per cent increase in electricity prices to date and a further 60 per cent increase in electricity prices as outlined and proposed by the government under its emissions trading scheme. (Time expired)

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

Madam Deputy Speaker Livermore, congratulations on your first time in the chair. The member for Flinders has been doing what he does best, which is to spend most of his time replicating the same speech and scaremongering. He has been doing it now for some time. He is trying to scare the pants off age pensioners by confusing what is going on in the states now—their electricity systems, supplies and costs—with a proposed, potential, energy scheme that has not even come into being. That is the type of talk he goes on with to scare pensioners. Yet he cannot look at the record of a decade or more of neglect of pensioners in this place by the Howard government.

While I was sitting here, I thought about what this government has sought to do to assist the aged in our community, particularly age pensioners. All superannuation reforms of any merit, note or structural change have been brought about by Labor governments. Those on the other side said, ‘These are important reforms.’ The pension reforms introduced in 2009 were introduced under Labor; the other mob did nothing for 10 years. Those were the most significant reforms since 1909. This government has put record amounts of investment into affordable housing of all types, not just into the stock itself but into trying to increase access to it. That is our record, but all we hear from the other side is the broken record of some potential power increases confused with a potential energy and emissions scheme. We have had the other mob trying to scare the pants off pensioners. They never did anything of note to assist pensioners but they come in here with their unctuousness and criticise us. I think it is bit rich of the member for Flinders—and I half suspect that he does not even believe what he is saying anyway, frankly, and nor do most of those on the other side.

To return to the positive: I thank the member for Lyons for raising this issue. We all, in our electorate offices, experience phone calls from pensioners telling us that, when they get a much-needed pension increase—never enough, and it will not be—state instrumentalities try to increase and in some instances succeed in increasing the rental for their housing stock, including for pensioners. What we are saying is: fair’s fair. We insist that there be a moratorium on increasing rental costs every time there is a pension increase. We do not believe it is fair.

But that is not the only thing that affects pensioners—and we have to put the facts on the record; we cannot hide from them. These are just some of the issues raised by pensioners in my office: the rent increases in public housing with every pension increase; the increase in the cost of living—grocery and petrol price increases et cetera—which we try to take into account with the three indexation methods that we use; the cost of medicines not on the PBS, which is a constant; the fact that the Medicare scheduled rebate for medical services does not increase with increases in the cost of services of health providers—for example, pathology; and, of course, the issue of electricity cost increases, which should not be confused with a yet to be brought in emissions trading scheme. So there we have it.

As is the case for the member for Flinders, my electorate has one of the highest proportions of aged persons in Australia. In fact, it has the highest proportion in Tasmania. When you look at the issue of pensions nationally, it is pretty scary. We had to carry out a massive reform of the pension system in order to put it on a sustainable footing and we have done that. Whether that reform is enough will be an issue we will need to resolve by our advocacy and by continual monitoring.

Just for the record, the age pension was first paid in 1909, and the Commonwealth spends more on the program than on any other specific-purpose program. The Australian government spends around $20 billion per annum on the aged population. It is also important that the figures are put into context. By 2047 it is estimated that some 7.2 million Australians will be aged 65-plus. That will represent 25 per cent of the expected population, which is almost double the current 13 percent. So unless we act—and we did, and we need to continue to do so—the pressure on this nation will be extraordinary.

Currently there are around five people of working age to support every person aged 65 and over, and this figure will be halved to 2.4 people by 2047. That has incredible implications socially and economically. Increasing longevity, whilst good in the main in a personal sense, means that people are receiving the age pension for far longer than in the present, and demographic change means that the cost of a given pension increase today will almost double as a share of gross domestic product by 2050. So we needed to act, and we did act. In addition to the measures I mentioned earlier, I would point out that in 2008 pensioners—and others—also received benefit from the economic stimulus to assist them to adjust to the increasing pressures of the financial crisis. So we have a good record and one that the government should be proud of. People should not be affected by the scaremongering of the member for Flinders.

Just recently more than four million Australians received a rise in their pensions and other income support payments and allowances due to indexation. Amongst these were two million aged-care payment recipients—and in my electorate alone there are some 13,170 aged-care payment recipients. For the record, pension payments increased by $15 per fortnight for singles on the maximum rate and $22.60 per fortnight for couples combined on the maximum rate. Following these increases, total pension payments for those on the maximum rate, including the base rate and pensions supplement, is $716.10 per fortnight for singles and $1,079.60 per fortnight for couples combined.

The September pension rise was, as other members have pointed out, due to an increase in the pensioner and beneficiary living cost index in the six months to June 2010, and it is worth noting that pensions are indexed twice a year to the highest increase of three measures: the consumer price index, the pensioner and beneficiary living cost index and the male total average weekly earnings. The pensioner and beneficiary living cost index was introduced as an additional index mechanism as part of our 2009 pension reforms. It takes into account a basket of goods pensioners buy to help maintain pensioners’ purchasing power. The basket of goods is weighted to recognise that pensioners spend more of their income on essentials including food, health, clothing, telephone calls and post. Out of interest, the pension has been indexed to the PBLCI at two of the last three indexation points, demonstrating the success of this additional indexation mechanism at better reflecting pensioners’ actual increases.

So the federal government sought to assist pensioners and we did so. We made it part of our commitment from 2007. We introduced and carried out our reforms in 2009—indeed, I spoke in June 2009 supporting those pension increases. We have sought to reform superannuation, we have tried to increase massive investment in affordable housing and we have supported pensioners through the economic stimulus. There is much more to do and we ask the state governments and territories to do their bit by not hiking up rental affordability for housing once the pension rate increases. (Time expired)

Bert Van Manen (Forde, Liberal Party) Share this | Link to this | Hansard source

I congratulate the member for Lyons on his motion. In Forde we have a large number of retirees, and their questions and concerns to me are very much along the lines of what the other members have spoken about here today. So I have no concerns with the raising of the issue; much more work needs to be done in this area. It is important to note that a recent report from Mercer, an Australian centre for financial studies—which ranks pension systems based on adequacy, sustainability and integrity—rates our pension system as still the fourth best in the world.

The report notes that the provision of financial security in retirement is critical for both individuals and societies, as most countries—as has been acknowledged here today—grapple with the social and economic effects of ageing populations. The question that then needs to be asked is: what part of that retirement income is going to be funded by governments and how much is going to be funded privately? It is necessary for governments at present to fund a significant component of a retiree’s income as the superannuation system is a relatively recent alternative, with certain exceptions. We have not really started to see the long-term benefit of that.

The ability of people to save for retirement, or for those in retirement to have their income keep pace with rising living costs, is an increasingly difficult problem, both from the perspective that a lot of people are not contributing themselves and from the perspective that the government does not have the ability to constantly increase pensions to keep pace with living costs. In my view, it is not appreciated that this problem is in part or largely created by government monetary and economic policies. For governments to constantly increase pensions to keep pace with cost-of-living or rent increases they have to do one of two things: either increase their taxes, which is a primary source of revenue, or go further into deficit to solve those issues. Those two issues are important in discussing pension increases. The reason for that is that the increase in supply of money is a true indicator of what inflation really is. If inflation is the increase in the supply of money, the CPI or other measures are only really a measure of those effects of inflation. It is therefore necessary to identify the true causes of this issue for pensioners struggling to maintain their lifestyle.

It not only applies to pensioners but also applies to families in relation to housing affordability. We have talked about rental affordability for pensioners. It also applies to families. It also applies to governments in trying to rein in or manage the costs of building infrastructure or maintaining health and education systems. The problem is not only local but also global. We have however been somewhat insulated in Australia due to the previous coalition government running budget surpluses and accumulating capital. We have also had a robust banking system, although it still has its concerns as well. Therefore, until governments are prepared to deal with those underlying fundamental issues of those massive increases in costs based on an increasing supply of money, we are not going to deal with the issues of keeping pace with the costs of living. In addition, if governments are going to continue to increase their deficits or their spending to fund these increased pension payments, we will have an ongoing problem because deficits by their nature create more money in the system and that creates that inflationary problem. So it becomes a cycle of the dog chasing its tail.

Seeking to pass this problem off to the state governments, as the motion proposes, is not the solution, because the state governments are suffering from the same issues. It is an acknowledgment by the federal government that they either do not understand the cause of the problem or, if they do understand, have no desire to really fix the problem. They would rather pass it off to someone else.

Pensioners are facing issues on a number of fronts. This is irrespective of whether they are solely reliant on the age pension, receive a part age pension and some investment or private pension income or are fully self-funded retirees. They are facing increasing electricity prices, in part as a result of chasing expansive green power as an offset to the supposed man-made climate change problem. They are facing increased local government rates, fees and charges as local governments struggle to deal with issues of keeping pace with infrastructure and the stuff they have to do. They are facing increased water prices as councils seek to recoup the costs of massive capital expenditure incurred in seeking to drought-proof towns and cities. That is a particularly relevant discussion in Forde and Queensland. They are facing increased food and grocery costs as businesses seek to pass on the increasing costs they face due to increasing input costs, including electricity, raw materials, interest rates, wages, rents et cetera.

The member’s motion seeks to link the state increases in rents and power costs with any rises in pension payments to limit state increases in rents in particular. This is also applicable to residents in nursing homes and retirement villages, where they determine fees on a percentage of the age pension received. It is also far-fetched to accuse utility companies—in this case, electricity companies—of increasing power costs as a result of pension increases. The motion seeks to pass the buck to the states for the federal government’s inability to manage its finances in a manner that maintains downward pressure on inflation and therefore cost-of-living increases. Pensioners do risk becoming impoverished, however—not through the actions of the state and territory governments but through the actions of the federal government and its management of finances, as noted previously. In order to deal with these issues on a long-term basis we need to encourage those currently in the workforce to save more for retirement via the superannuation system.

Whilst a number of speakers have mentioned the need to deal with that as well, the current government has recently reduced contribution limits, so it is reducing the incentive for people to save. It is also a longer term issue, because the superannuation system has not been in place long enough to see the flow-through effects of that savings capacity. There was a report in today’s media saying that a lot of people and even businesses do not fully understand our superannuation system. So we need to do a lot more work to educate them to accumulate that capital that is necessary for them to fund an adequate retirement. As all members here have touched on, the ageing population problem is going to result in a continuing greater impost on governments if we do not start to accumulate a larger level of funds through our superannuation system.

Kirsten Livermore (Capricornia, Australian Labor Party) Share this | Link to this | Hansard source

Order! The time allotted for this debate has expired. The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting.