House debates

Tuesday, 24 June 2014


Social Services and Other Legislation Amendment (2014 Budget Measures No. 1) Bill 2014, Social Services and Other Legislation Amendment (2014 Budget Measures No. 2) Bill 2014; Second Reading

6:03 pm

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

I am very pleased to be able to speak on the Social Services and Other Legislation Amendment (2014 Budget Measures No. 1) Bill 2014 and Social Services and Other Legislation Amendment (2014 Budget Measures No. 2) Bill 2014. Between them, these two bills contain many of the harshest measures in this year's budget, and, indeed, some of the harshest measures to ever come before this Australian parliament. These bills are full of the Prime Minister's broken promises, cruel cuts and unfair increases in the cost of living. The bills seek to destroy the fundamental pillars of the Australian way of life. They seek to savagely cut support for ordinary working Australian families and will push hundreds of thousands of vulnerable people into poverty.

The bills represent a cruel betrayal of Australia's 3.2 million pensioners, who were promised by the Prime Minister before the election that there would be no changes to their pensions. The cuts to pensions in these bills will see the living standards of age pensioners, disability support pensioners, veterans and carers dramatically decline. The bills deliver a blow to all of our older Australians—self-funded retirees as well as pensioners. Hundreds of thousands of senior Australians who have worked hard all their lives and diligently put their money away for a secure retirement will have their payments callously cut.

The bills are disastrous for all Australians who believe in a fair, tolerant and compassionate Australia. They seek to write into law this government's plans for a colder, nastier and fundamentally unfair Australia. Australians know the truth—that the measures in these bills are unfair and undeniable broken promises. Over the last 100 years, a social contract in this country has taken shape. It is based on the pillars of the Australian way of life: access to universal health care and education, a fair and secure pension system, support for people who cannot work due to disability or caring responsibilities and support that helps people get into work. It took more than a century to get to where we are today, and successive Labor governments have led the way in strengthening these pillars over the years, making it fairer and more inclusive for all.

Australians are rightly proud of our smart, fair and uniquely Australian approach. Shamefully, not only do the measures in these bills throw out the government's responsibility to maintain and further strengthen these pillars of the Australian way of life, they also go out of their way to tear these pillars down. Of course, the government's best attempts to come up with a rationale for the harsh measures in these bill are based on a complete fallacy; a fabricated sense of crisis.

Australia's economy is strong. Our economic situation is certainly not the crisis that the government has done their best to make it out to be. We have low inflation, low interest rates, a net debt well below comparable countries and a AAA credit rating from all three credit rating agencies, and since the election all we have heard from this government is false claims that Australia's spending on welfare is out of control. We have heard senior government ministers cry that Australia is on a path to countries like Greece and Spain. These claims are just not true.

Just last week the Treasurer's budget credibility was totally destroyed by analysis from the Melbourne Institute using the Household Income and Labour Dynamics in Australia survey—otherwise known as HILDA. This data showed that Australians have dramatically reduced their dependence on welfare in recent times. In 2001 23 per cent of working age people in Australia received a welfare payment each week. In 2011 that had dropped to 18½ per cent. Across the OECD we spend less on welfare than any other country except Iceland.

None of this is to say that we cannot do things better, but it does confirm that the government's whole platform is based entirely on a mistruth. The government and the Treasurer are not ending the age of entitlement; they are ushering in an age of hypocrisy. The Prime Minister wants to pay $50,000 to wealthy women to take six months off work to have a baby with his $22 billion unfair and unaffordable paid parental leave scheme. What an appalling example of this government's twisted priorities.

These bills contain around 30 different budget measures including some of the cruellest attacks on Australia's basic fairness that this parliament has ever seen: cuts to the pension, cuts to low- and middle-income families, forcing young people to live for six months at a time without any support at all. Disgracefully, the government has gagged debate no these bills in the House today. There are just three hours to debate some of the most savage cuts in our nation's history and some 30 individual measures. The Prime Minister wants to see this legislation rammed through this House tonight, and I have to emphasise that it is an absolute affront to the parliament and to the Australian people.

The Treasurer had the gall to remark in this House last week that the Abbott government was the best friend that pensioners have ever had. I have to say pensioners are not fooled. They know that they have been betrayed. The changes to pension indexation arrangements in these bills are a cut. They are a very direct cut to the living standards of Australia's 3.2 million pensioners. The pension is benchmarked to wages for a reason: so the pensioner standard of living keeps pace with the standard of living of the working population more broadly. John Howard knew that; that is why he legislated it. Indeed, the current minister explained to this House in 2011 how the wages benchmark 'enabled pensioners to keep ahead of cost-of-living increases'.

According to the Australian Council of Social Services, pensioners will be $80 a week worse off within a decade because of these changes. That is what everybody on that side of the House has to face up to. It is your responsibility. Everyone in the Liberal and National parties will have to face pensioners in their electorates and tell them that they are supporting legislation that will see pensioners in their electorates $80 worse off within 10 years. This is a cut in anybody's language and as big a broken promise as you can get.

The bills also seek to increase the pension age to 70. It is clear that the Prime Minister's only plan for older Australians is to make them work longer and retire with less. How else would you explain the decision of the government to abolish the low-income super contribution, a measure that reduces the tax burden for 3.6 million Australians who earn $37,000 or less a year, two-thirds of whom are women? How else would you explain the government's decision to further delay the increase in superannuation from nine to 12 per cent and at the same time reverse the proposed changes at the top to tax earnings over $100,000. Measures in this budget will see more people reliant on the pension in the future.

And it is not just pensioners who are bearing the brunt of this government's budget. Self-funded retirees have been betrayed in this budget too. These bills include a cut of $1.1 billion to older Australians through the abolition of the seniors supplement. The seniors supplement is an annual payment of $876 to people who receive the Commonwealth seniors health card. At the same time as they do this, the government is cutting $1.3 billion in concessions for both pensioners and Commonwealth seniors health card holders that goes to help pay for electricity and water bills, rates and public transport fares. It is a double whammy for pensioners and for those seniors who are on the Commonwealth seniors health card. The government is cutting every single cent of that money that the Commonwealth puts towards concessions that these seniors get for things like their electricity and water bills, not to mention hitting older Australians with a new GP tax and the higher cost of medicines.

I remind everyone that before the election the Prime Minister said there would be no changes to pensions. The Prime Minister was not being truthful with pensioners before the election and he is not being truthful with pensioners now. Of course, the Liberal Party has long thought of itself as the party that represents the views of seniors and self-funded retirees, but my office has been inundated with messages from angry seniors who feel betrayed by the Abbott government. The measures in this government's first budget that hurt seniors are printed in black and white in these bills that we are debating tonight.

They are sneaky measures that have provoked such anger amongst seniors across the country and have exposed the fundamental dishonesty that lies at the heart of this government. But, of course, seniors are smarter than that. This Prime Minister says one thing to seniors before an election campaign and then rips money from their pockets straight after the election. This just demonstrates that seniors cannot trust this government. Labor will oppose these cuts because we believe in fairness. These bills are an unprecedented attack on our pensioners and seniors and will hit them hard.

I want to foreshadow amendments that I will move to these bills to remove the following from the legislation: cuts to pensions through the indexation changes; increasing the pension age to 70; abolishing the seniors supplement; the resetting of the social security and veterans' entitlements income deeming thresholds, effectively another cut; cessation of the pensioner education supplement; the removal of the three-month backdating of the disability pension under the Veterans' Entitlements Act 1986; and the pause to indexation in the income-free test areas for all pensioners. These are the measures that Labor will oppose in this legislation.

There are some measures that we will not oppose. The bill includes a measure to include income from superannuation in the assessment of the Commonwealth Seniors Health Card. We will not oppose this measure. We are committed to making sure that our payments system remains one of the fairest and most targeted in the world.

The bills are also a full-scale attack on the cost of living of Australian families, who will have their family benefits and parenting payments slashed at the same time as they are hit with the new GP tax and a new fuel tax. Make no mistake, there is $7½ billion in cuts to family payments. What that means in plain language for families is $7½ billion out of the pockets of families. In each and every one of the Liberal and National Party members electorates, this is money you are taking directly out of the pockets of families. These bills will put more pressure on the budgets of millions of families, and millions of people in those families will be very, very hard hit.

Recent expert analysis from the independent modelling agency NATSEM has put to shame the government's claims that the burden of this budget is shared by everyone. Overwhelmingly analysis has demonstrated that those on the lowest incomes are hit the hardest while those at the top are spared. NATSEM found that around 1.2 million families will be, on average, $3,000 a year worse off by 2017-18. Just think about that. That is what you will be doing to average families over the next two to three years. In contrast, the top 20 per cent of households will have either no impact or a negligible positive impact.

The bills seek to freeze the payment rates for family tax benefits. They seek to freeze the low-income-free area for family tax benefits, including the low-income-free area for those who receive the maximum rate of family tax benefit A—people who earn only up to $48,837 a year. They are low-income families. According to the Department of Social Services, a freeze to the low-income-free area—so, just this one measure amongst the many, many measures in this bill—for family tax benefit A alone will see 370,000 families around $750 a year worse off in 2016-17. That is one measure in this bill.

It comes at the same time that the Prime Minister is trying to abolish the schoolkids bonus, with eligible families losing $410 a year for primary-age children and $820 a year for every secondary-age child. Of course, if the government gets their way, in the next fortnight the schoolkids bonus will be paid to families for the last time. So families will be starting to feel the pain of the Abbott government very, very soon.

As a result of the budget, including measures in these bills, a single income family—a couple family on $65,000 with two school-age children—will be around $6,000 worse off each year, not just once, each year, after 2016. That is $6,000 for a family on $65,000 a year—not what you would call by any stretch of the imagination a wealthy family. This government is going to take $6,000 out of the pockets of those families. That is around 10 per cent of their entire family budget. How could that be fair?

But the government is so arrogant and out of touch it just doesn't seem to care that millions of Australians will be worse off because of these savage cuts. The budget is incredibly short-sighted. Because of these bills single parent families are faced with a huge disincentive to work. The bills create a new single parent supplement which single parents will get when they are kicked off family tax benefit B when their youngest child turns six, another measure in these bills. This measure actively discourages single parents from working. Once a single parent earns just one dollar more than $48,000 a year they will lose this supplement. These families will face an effective marginal tax rate of around 80 per cent for every dollar that they earn above $48,000, taking home just 20c in each of those dollars. This is analysis also done by NATSEM. As NATSEM describes it. this is 'a sudden-death drop' and obviously it is going to have a disastrous effect on the participation of families in those income brackets.

Unsurprisingly, we have heard quite a bit of dissent from some members opposite, especially in the Senate. National Party members and senators have been pretty noisy lately, but I have to say that I would have thought they would be protesting much, much more loudly, because many, many of these low- and single-income families are going to be hit the hardest in this budget. They live in country and regional Australia, and they deserve better than the representation that they are getting at the moment.

The Department of Social Services revealed at a recent Senate estimates hearing that around 700,000 families will lose their family tax benefit part B if the government gets its way and kicks families off the payment when their youngest child turns six. By contrast, Labor will stand up for these low- and middle-income families who will be so savagely hit by the cuts in this legislation. We will oppose the cruellest measures before us today.

I foreshadow the amendments that I will move in consideration in detail that reflect the following: Labor will oppose the indexing of parenting payment single by CPI alone. The government is removing the wages benchmark. Labor will oppose the government's move to freeze the rates for family tax benefits. Labor will oppose revising the family tax benefit end-of-year supplements to their original values and ceasing indexation. Labor will oppose limiting family tax benefit part B to families with children under the age of six and the new allowance which fails to compensate for this measure. Labor will oppose freezes to the income-free areas for family payments. There are some measures which will Labor will not oppose. We will not oppose the measure to tighten the means testing for family tax benefit part B from $150,000 to $100,000.

Labor believe in a targeted family payment system, where government support goes to those who need it the most. That is why we have always supported means testing, especially in our family payment system and in our age pension system. Of course, it was Labor that introduced means testing for the private health insurance rebate, which was vehemently opposed by those opposite. We also introduced means testing for family tax benefit part B. In our first budget in government, we introduced means testing for family tax benefit part B for the first time. We were accused by members opposite of committing class warfare for introducing a means test at all. We were accused of saying that people earning $150,000 a year were rich. Yet now, in an act of pure hypocrisy, we see this Liberal Government—led by a Prime Minister, a man who devoted an entire chapter of his book to the evils of means testing—reducing the primary earner income limit for family tax benefit part B to $100,000. Perhaps, if you go back to what they accused us of in the past, the Prime Minister believes that families with an income of $100,000 are the new rich. We do not believe that. That is not the case at all. But we will not stand in the way of this measure because, as I said, we do believe in targeting family tax benefit payments.

We will not move an amendment to remove this item from the bill. But I do want to say to the government that this is a very unsophisticated way of going about it. We would not have designed this measure in this way. We do believe it would have been more sensible to have a gradual taper to cushion the hard edge that will be created by the government's policy. We would have thought it would have been more beneficial if there were a more sophisticated design. But as I said, we will not obstruct for the sake of it. If the government were to come back with a more sensible approach, we would certainly be prepared to have a look at it. We want to operate on the basic test of fairness.

Perhaps the cruellest measure in these bills is the Prime Minister's brutal attack on young job seekers. Measures in these bills will mean young people under the age of 30 who are looking for a job will be forced to wait six months before receiving any income support. In some cases, they could be much longer without any income support. The government is saying to these young people who lose their jobs or who cannot find a job, 'You are on your own.' If a young person has not found a job after six months without income support, a measure in these bills will require them to take part in a Work for the Dole scheme. If they have still not found a job after six months on Work for the Dole, then they will lose their payments for a further six months. These bills have the potential to confine young people to an endless cycle of periods without any income support at all. Make no mistake about this at all. If this is passed in its current form, these bills will see many young job seekers pushed into poverty, into crisis and into homelessness. In fact, the budget apparently includes extra money for emergency assistance that the government believes will be required as a result of the measures in these bills. Once again, the Department of Social Services has admitted that they anticipate around 500,000 new claims for emergency assistance as a result of this measure alone.

Imagine a government which takes a decision which it knows will push people into poverty. That is what this government has done. We will oppose this mean and nasty attack on Australia's young people. We will also oppose the government's plans to push young people under 25 off Newstart onto the lower youth allowance, both of which are in these bills today. This is a cut of around $48 a week, around $2,500 a year, from some of the lowest-income people in the country. We will not support such punitive measures. How on earth does the Prime Minister think that these young people are going to find work if they have absolutely nothing to live on?

Let us be very clear about the meaning of these measures that affect young people. They represent an abandonment of young people by this government. They reflect the gross unfairness at the heart of this government's budget. To put this unfairness into some perspective, a 24-year-old living independently on Newstart will be slugged with an almost 20 per cent cut in their support, while someone on $200,000 will pay $400, a meagre 0.2 per cent reduction in their income. Prime Minister, how can this be seen to be fair? Australians know it is not fair. The Prime Minister has made clear in this legislation that he is happy to see vulnerable low-income earners, and in particular young people, do the heavy lifting in this budget. By contrast, Labor understands the importance of giving young people a hand up to find work, not cruelly telling young Australians: 'You're on your own.' Labor will stand up for young people by opposing these measures.

Once again I foreshadow that I will move amendments to remove the following sections of the bills. We will oppose: extending the ordinary waiting period for working-age payments; the cessation of the Education Entry Payment; moving people under 25 years from Newstart onto Youth Allowance; forcing young people under 30 to wait six months without any support at all; pausing indexation for the low-income-free area for student payments, including the student income bank limits; and pausing indexation of income-free areas for all working-age allowances.

The bills include changes to the Disability Support Pension. I have already indicated our opposition to pension changes, so I will not touch on those again. The bills include a measure to review the eligibility of the Disability Support Pension for those under 35 years of age. We will not seek to remove these measures from the bills today, but we will seek to get more information about them in the forthcoming Senate inquiry.

There are very serious matters in these bills. If the government refuses to agree to Labor's amendments, which would remove the harshest measures from these bills, Labor will oppose the legislation in its entirety. I will move these amendments because Labor will never stop fighting for what is right and fair for all Australians.

6:32 pm

Photo of Andrew BroadAndrew Broad (Mallee, National Party) Share this | | Hansard source

As you may have already observed, very rarely do I put my name on the list to speak on something, unless it is something I can add value to in the debate—things I can try to defend and talk about. This is a fairly significant piece of legislation that we are talking about here today. It has some major challenges and I have listened for the last half hour about what some of those challenges are. But I have a strong belief in the future. Australians work hard and I think Australians understand that sometimes we have to make difficult choices in order to put our country back on sound footing.

I have a strong belief in the common sense of Australians and I think that will ultimately lead us through. But what we have right across Australia are victims of bad financial management. We have had a very difficult number of years where the country, in my opinion, has not been run well. We have moved private debt into public debt, and now the day of reckoning is upon us and we have to address that debt and make some changes. We cannot do that without tackling some of our social security measures. Social security is a third of our total budget, after all. If we are going to address the future and set ourselves up for prosperity, we have to make some reforms. The reforms in the legislation before the House are difficult reforms. We do not make light of those reforms and we do not joke about those reforms, but, frankly, we have not been elected to this place to turn up and be the people who throw away money and want to be everyone's heroes. We have been elected to make difficult decisions. What defines us as human beings is how we make those difficult decisions and how we head forward. Many of those decisions will affect people in my electorate significantly, but I believe that if we tighten our belts and walk together we will have prosperity out the other side.

I want to talk about one particular reform in this package that I believe needs to be re-looked at. It is not an issue that has any impact on the forward estimates, and for this reason I can talk about it with some level of clarity. I am a strong believer that a robust democracy welcomes diversity of thought. I do not think that one party or one coalition always has to think the same on every issue. I think that we are mature enough—hopefully in the media—and mature enough as a country to be able to have a diversity of views and not see it as disunity.

What worries me about this legislation is the pension age increase from 67 to 70. Frankly, I believe this is a fairly blunt tool to address what is a significant structural problem right across our country. I want to lead into this.

Mr Brendan O'Connor interjecting

Mr Butler interjecting

Photo of Craig KellyCraig Kelly (Hughes, Liberal Party) Share this | | Hansard source

Just bear with me. I want to lead into this. In my electorate, life expectancy is 4.7 years less than in many city electorates. We need to have a little look at how we can address that. In addressing that by raising the pension age misses the point. Life expectancy has gone up in the country, but it has largely gone up amongst white-collar workers, not blue-collar workers. Health expectancy in the country has gone up, but it has not gone up for blue-collar workers. This is an issue that has been looked at right across the world. The French have looked at it extensively as they looked at how to address the issues of an ageing population. The Germans have looked at it. If you look across the world, the retirement age in New Zealand is 65, in the United Kingdom it is 65, in the United States it is going to 67, in Australia it is going to 67, and in Germany it is 65. We will be endeavouring to go to 70, which will be the oldest retirement age in the world, and I do not think that is a good move.

The German study has told us that the mortality of manual workers is substantially higher than the mortality of salaried workers. One in three people do not make it to 65. It would be remiss of me not to defend the people I have worked with in shearing sheds and in manual works right across the country. I know the physical toll that work takes on people. I think we need to be smarter in how we look at issues to do with retirement benefits into the future.

Those who have got superannuation will retire at a time of their choosing, but the life expectancy of the poor has not increased and the poor cannot retire at a time of their choosing. The challenge we have got is how do we fund an ageing population. Some of the measures we are addressing will have been addressed by the time we get to 2035 and 2037. The population bubble will have moved through by 2037, which is two years after the retirement age of 70 will been reached in this legislation. We are building nursing homes for that ageing population bubble that is moving through, but by the time we get to 2037 we will have excess beds and have already laid out the taxpayer revenue. So I think there is merit in rethinking how we address people in their senior years and looking after those who cannot work and who do not have large savings in superannuation. Moving the retirement age to 70 is not a structural reform that I believe we should make as a country.

There are some who say to me that the retirement pension was first introduced at 65 in 1920 when life expectancy was 63 and, therefore, many people would die before they got to the retirement age. I do not hold the view that that is something the Australian people aspire to have reintroduced as a policy. I hold the firm view that people believe that Australians work hard and that those whose bodies have given up and who do not have retirement savings should be able to access the pension at 67 and not 70.

There is a discussion that life expectancy is so much longer, but life expectancy is not as long as we think it is. We all think we are going to go on forever. I was at an investment seminar one time and it was a reality check when the guy at the front said: 'One in three people in this room will not make it to 65 anyway, so if you know you are that one in the three then do not worry about saving, just have a good time.' The truth is we all think we are going to go forever.

Life expectancy has increased only because child mortality has increased. We have not seen huge significant gains in the number of years that we live to. We have not seen huge significant gains in our health expectancy as well. This is something that needs to be redressed as we think through a good policy. We do need to look at health and life expectancy in our regions. It needs to be said that some of our regions are not well serviced by ambulances. Anyone who has had a sick relative would know that retrieving people who are having a heart attack or a stroke in under an hour is a very significant contributing factor to the survival rate when people have those sicknesses.

I will not talk for the full 15 minutes because I think I have made my point clear. We have to make very tough structural reform. I do not back away from that, but I do think it is a mistake for us as a government to go to 70 years of age. I think 67 years is adequate. I do stand by and defend all of the manual workers in my electorate—and I have been one. I am very aware that Australians work harder than most across the world. I do not see why we have to have the oldest retirement age in the world. For those who think that we have significantly increased the retirement age, I am going to read a little line written 3,286 years ago by a guy called Moses. He said:

The days of our lives are seventy years;

And if by reason of strength they are eighty years,

Yet their boast is only labour and sorrow;

For it is soon cut off, and we fly away

So 3,000 years ago life expectancy was 70 or at best 80. Have we really improved things that much? Do we really as a country want to make the retirement age 70? I do not think that is something we should be doing in this budget.

6:42 pm

Photo of Brendan O'ConnorBrendan O'Connor (Gorton, Australian Labor Party, Shadow Minister for Employment and Workplace Relations) Share this | | Hansard source

I rise to oppose the Social Services and Other Legislation Amendment (2014 Budget Measures No. 1) Bill 2014 and the Social Services and Other Legislation Amendment (2014 Budget Measures No. 2) Bill 2014 for a variety of reasons. Before I go to the more substantive contribution I want to make, I want to associate myself with the member for Mallee and his concern about the proposition that by 2035 people should not receive the pension until the age of 70. I think the member for Mallee made a very compelling argument against the proposition that has been put forward by the government in relation to the retirement age. In particular he is concerned that people who work in manual labour and people who work in physically difficult circumstances will have great difficulty working until the age of 70. As we stand now, everybody under the age of 50 will have to wait until they are 70 to receive the pension. I think the government is being wrongheaded. It is harsh. It would place us in a position unequalled in the world. No other country has embarked upon such a radical proposition.

The previous government's move to the age of 67, which I think will also be a tough challenge, was as a result of a comprehensive review into Australia's pension system and a significant improvement to the base rate for the pension and improvements to indexation. This government's proposition—that the age of 70 be the point where a person will be entitled to the age pension by 2035—has had no proper examination. There has been no proper consultation. There has been no rigorous review at all. It really is an example of the lack of regard and the lack of consideration by this government for the many measures in these bills.

I daresay that not only does the member for Mallee have some concerns about that proposition but I did not hear him advance an argument in favour of any of the measures in these bills. He may vote for it but I did not hear him at all support any of the measures. You probably can understand why, Deputy Speaker, when you read the bills. This proposed legislation seeks to write into law Tony Abbott's cruel and callous budget. These bills taken together will leave millions of Australians worse off. They include the measure to index pensions by CPI instead of wages—an attack, I would contend, on 3.2 million Australian age pensioners, disability support pensioners, carers and single parents. It may suit the Prime Minister in question time to continue to disregard the truth when questions are put to him, but the facts are that as a result of this measure we will see pensioners in this country within 10 years lose $80 off their pension, $80 off their household budget, a budget already stretched for the majority of pensioners in this country. It really underlines the cruelty of the government and how out of touch the Prime Minister, the Treasurer, the Minister for Social Services and the entire cabinet and government MPs are. I do suspect, however, that those members who go back to their electorates, like the member for Mallee, are a little more sensitive to the concerns that are shared by those who will be directly affected. These measures also include a cut to the family tax benefit part B when a child turns six, an attack upon 600,000 single parents and single income families. They include measures to abolish the seniors supplement, a further attack on senior Australians.

There are many harsh measures in this budget and I would argue that one of the worst measures, one of the harshest measures, will be the cuts to young job seekers' income. These proposed measures will cut young job seekers off Newstart for six months. It will not matter that those job seekers look for work each day, each week, each month for six months, they will receive nothing in support from this government. It also leaves job seekers aged between 22 and 24 worse off by around $48 a week as they get moved from Newstart to youth allowance. That is a fall of about 18 per cent of their income, $2,496. We can compare that with a person who has an income of $200,000 and is being asked to pay a temporary levy—let us say what it is, a tax—of two per cent after $180,000 earned. That person will be paying $400 a year, 0.2 per cent of their income, and the person that is going from Newstart to youth allowance will be paying almost 20 per cent of their income. That is a 100-fold difference in terms of the proportion of the Newstart person's income that will be lost as opposed to the person on $200,000. So I cannot accept the view put by the government that this is about people sharing the burden, when you have people living below the poverty line who may be losing up to 20 per cent of their income. As the member for Jagajaga said, this is an attack on a generation of young people looking for work, and Labor will fight this legislation.

The whole premise of this budget, indeed the whole premise of the measures contained within these bills, is based on two lies. The first is that we are in a budget emergency, and I will deal with that. The fact is that we are not in a budget emergency. We have relatively low unemployment, although that is a challenge and will be an ongoing challenge. We have low interest rates. Our economy is in a good state and was left in a good state by the previous government. Indeed, since the global financial crisis it has grown as an economy faster than almost any other developed nation. As a result, the current government inherited a good economic situation. Yet the government's measures are predicated on the notion that there is a budget emergency so that they could effectively slaughter the incomes of pensioners and job seekers and sick people and the like. If there really was a budget emergency, and I am happy to hear the arguments as to why one would suggest there is, then why is it that the government will be proceeding with a $22 billion plan to give $50,000 to wealthy families to have a baby? This measure really does expose the deceit of the government to suggest there is a budget or fiscal emergency. That $22,000 million that would be expended is not only inequitable, it is a very unfair measure, particularly in light of the cruel cuts that are contained within these bills.

The second falsehood, and the member for Jagajaga in her contribution went to this, is that Australia's welfare spending is out of control. That also is not true. You can always find better ways to provide support. You can find efficiency dividends, you can find savings—you can always make these decisions. We would argue that we made such decisions in government. However, across the OECD, as the member for Jagajaga said, we spend less on welfare than any country other than Iceland. Welfare expenditure in Australia accounted for just 8.6 per cent of GDP last year, compared to the OECD average of 13 per cent. Just last week the Melbourne Institute released a report which clearly indicated that Australians are also dramatically reducing their dependence on welfare. In 2001, 23 per cent of working age people in Australia received a welfare payment each week. In 2011 that had dropped to 18.5 per cent.

These measures are cruel. The member for Jagajaga outlined in detail the extent to which these measures are cruel, unfair and not substantiated by any compelling argument by the government. Yet, despite the scale of these measures and the impact that will be felt by millions of Australians, this government has confined this debate to three hours: 30 measures, 10 measures per hour to be debated in this chamber, despite the fact that they will inflict pain on millions of Australians. Not only are these bills wrong; the manner in which the government have chosen to debate them—or, should I say, fail to debate them and argue their case—is an indictment of the government and shows how out of touch they really are.

These measures will have a terrible social impact on many, many families and pensioners. This is going to tear the compact between the Commonwealth government and its citizens in relation to so many of the current forms of support that people look to so that they can make ends meet. Together, these bills include $7.5 billion in cuts to family payments. Low-income couples with children and single parents will suffer the most. These bills seek to freeze the rates and thresholds for family tax benefits, including the low income free area for those who receive the maximum rate of FTB A of $48,837. According to the Department of Social Services, a freeze to the low income free area for FTB A alone will see more than 370,000 families around $750 a year worse off in 2016-17. Remember, this comes off the back of losing the schoolkids bonus, which the Prime Minister is trying to abolish. So the combination of these measures will impact severely on families.

I want to return to the points I made in relation to young job seekers. I have already talked about the amount of income a person moving from Newstart to youth allowance will lose. I also have concerns, as does every member of the opposition, about job seekers under the age of 30 having no support for the entire six months from this government. Any income provided to job seekers should be providing support for them to find work. It is in fact an obligation that, if you receive income from the government to find work, you must look for work. Indeed, I agree that if people are in a position to look for work and they receive any income they must look for work or there could be consequences for that income. But this is providing nothing whatsoever. Instead of leaning down and lifting a person up, it appears this government wants to lean down and push those job seekers further down to the margins of society. The problem with that proposition is that you are going to see people suffer as a result.

There is no question in my mind that there will be an increase in antisocial behaviour, an increase in crime on our streets and an increase in homelessness as a result of the cruelty of this government. The fact is that the young job seekers of this nation are our future. To treat them so shabbily and harshly I think is not only socially reprehensible, it is economically stupid. But it seems that, no matter what we say, the government has chosen not to listen to us on these issues. These bills are replete with measures that will hurt millions of Australians. The government should rethink its position because, quite frankly, the cruelty is unprecedented. I am sure the millions of Australians who will be affected know that and they are going to let the government know that very soon.

6:57 pm

Photo of Ewen JonesEwen Jones (Herbert, Liberal Party) Share this | | Hansard source

It is a pleasure to follow the member for Gorton and I will have a little bit to say about his contribution later on. Mind you, I will say right from the word go that one of Prime Minister Abbott's favourite sayings is that there is nothing new in politics—and I think members opposite are now finding out the joys of opposition. When the member for Gorton was in government there were no problems gagging a debate, no problems shutting things down, no problems at all; it was about getting the business of government done on the day. Today, when we say we want to get things through before the end of the financial year because they are time critical, suddenly this is a problem, suddenly it is the end of civilisation as we know it, suddenly this is shutting down debate. It is proof again that the more things change the more they stay the same.

The suite of measures in these social services bills present us with just about the starkest choice we can make in this place. These bills give us the chance for us on this side of the House to tell the Australian people that we want our social security system to be sustainable, not just for the next four to 10 years but sustainable into the future. We won the election on 7 September and on 17 September incoming Treasurer, Joe Hockey, made a speech which I have referred to quite often. In that speech he said that as an incoming government we have to do three things: we have to tell the people what the problem is, we have to tell the people what we are going to do about it and we have to take the people with us when we do it. That is the important part for me.

Going into the last election we attacked Labor's six years of record debt and deficit, which was a real issue for us and had to be addressed. We had the best terms of trade for many generations, the best this country had ever seen, yet we racked up the six largest deficits in the history of this country. I think that says a lot about what we had to do and the challenge we had in front of us. We had to tell people what we would do about it, so the budget was handed down. I will say this to anybody who will listen to me: I do not expect anyone to be skipping down the streets singing our praises. But the people who are coming to me, almost to a person—except for those so ideal logically left that they cannot see it—all say that, even though they are not happy about what has happened in their individual circumstances, 'We know something had to happen. I'm not real keen about what you've done to me, but I know something had to happen.' I think that is the difference.

This bill is also a chance to consider what the Labor Party stand for and how they present as an alternative government to the Australian people. Labor will tell you all the way through: 'Labor will stick to two per cent growth in spending in real terms. This budget cuts to the very core of our being.' But spending growth in real terms in this budget is at 2.7 per cent. Mind you, Labor never achieved two per cent growth in real terms, so they would have to cut another 2.7 per cent. Even with these measures, we will not get into surplus in the next four years of the forward estimates. That is how serious this job is.

What were we elected to do? We were elected to axe the carbon tax and we presented that as our first order of business in this place. It was passed as the first order of business in this place. What did Labor take to the election? Labor took to the 2013 election a policy that they were going to axe the tax that, in 2010, they said they were not going to implement. In 2010, they said, 'Under no circumstances will we have a carbon tax.' They implemented that. Coming up to the 2013 election, they said that they would axe the tax—they would kill it—and now they are fighting to the death to keep it. In 2007, when we lost the election on Work Choices, we stood aside and just let the thing pass through. Lots of things were good about Work Choices and some of them are still in the legislation, but, because Labor made that their reason for getting elected, it was passed through on the voices. There was no objection. In 1993, Paul Keating won the unwinnable election against John Hewson's GST, or value-added tax, by saying, 'If you elect them, don't think that Labor will save you. We will pass it through on the voices.' He stood for something; these guys stand for whatever they think is going to sell them to the public at the time.

We were elected to build the roads of the 21st century. Minister Warren Truss and Assistant Minister Jamie Briggs have announced a $50 billion infrastructure plan—and a significant part of that is around Townsville. Anthony Albanese, the opposition spokesperson on infrastructure, has claimed every road and every project as Labor's. I am sure that he will stand at the opening of the second Sydney airport saying he started it, he turned the first sod and it was already under construction.

We were elected to stop the boats. There have been no boats in six months because we have a minister and a plan that actually mean something. We have a minister with some steel to his spine and a policy with steel to its spine that will actually do something. It was eternal vigilance under Philip Ruddock that made sure that, when we lost government in 2007, there were four people in detention. So what we say we mean. Labor came in saying that they would keep our policy and then changed it. Everyone had a go on that side; I think there must have been four or five immigration ministers. They were as weak as water when it came to immigration.

We were elected to fix the budget mess. In 1996, we came in and there was a $10 billion black hole and $96 billion worth of gross debt. We had rising terms of trade and we came in after a government that had made some structural changes to the economy and to the way Australia did business, and we benefited from that. We have falling terms of trade now. We have some significant issues to deal with. In 2001, John Howard and Peter Costello stared down the Asian financial crisis and we went into deficit for one year and $6 billion. We were back in surplus the very next year. In one year we did that. In 2007, Kevin Rudd stood up and said he was an economic conservative—he was 'John Howard lite'. They attacked the GFC and we approved the first round of stimulus, but it was the second round of stimulus that has led to this whole thing. As Andrew Robb said, when he was opposition finance spokesperson, your normal household expenses go along and then maybe you decide to make an extension to your house. For one year your expenses spike—and that is what should happen when you are attacking a GFC: your expenses spike, and then they come back down to where they should be as you go along. Labor were going along nicely, they spiked expenditure and that was the new base for expenditure. Now we are faced with this massive deficit. They go on about OECD figures and everything like that. It is not so much about the percentage of debt to GDP; it is about your ability to repay. Because our budget has so many structural spends in it, we have very little cash at the end to pay off debt.

The member for Hughes, Craig Kelly, summed this up the other day. We are heading towards $667 billion worth of gross debt at the moment. We are paying $1 billion worth of interest per month, every month—and that is at the lowest interest rates in the history of the world. What if interest rates spike and go back to, say, 1983 levels, where government bonds were 16 per cent, and that is how government raises capital to pay off debt or to guarantee debt? If our interest rates go to 16 per cent and government bonds have to be offered at 16 per cent, who knows what we are going to have to pay? Who knows what the interest bill is going to be? So, when we won on September 7, we got to work. We knew we had to do something.

I will address the issue of pensions. Pensions will go up. We said there would be no changes to pensions and there will be no changes to pensions. We have said that we will take to the next election a policy that, after the next election, we will be proceeding with legislation to ensure that pensions go up but only by CPI. The member for Mallee addressed the issue of the rise in the age at which the pension can be accessed to 70. In 1908, when the pension was brought in, the age was 65. The life span of the average Australian male in 1908-09 was 62, so you would have been dead for three years before you got the pension. If we applied that rule today, and if that rule had kept pace with Australia's life span, you would not access the pension until you were 85, because the average life span of the average Australian male is 82—or near enough to 82 years of age. It is not an extravagance. As the Prime Minister and the Minister for Social Services, Kevin Andrews, would say: we do not take any joy in this. What we are doing is trying to make sure that these things stay sustainable.

Can I address the six months leave. It is not six months' worth of leave for those who are unemployed and under 30. This is about kids leaving school with no options and just saying, 'We are going to go home and go on the dole.' That cannot be allowed to happen. Who is going to end up more socially isolated—the person who is doing work for the dole or the person who is sitting at home and just being given a cheque every fortnight and told to go away? Who is more likely to commit a crime—the person sitting at home just collecting a cheque every fortnight and playing on the Xbox, with no contact with anyone, or the person who is participating in workplace training? For every year that you have been working, you get a month off that six months. So if you have been working for six years and you are 24, you go straight onto benefits. We are not leaving anyone alone for no matter what and for however long. You will be supported. You will be supported by training, and you will be paid to train. You will be paid to work. You can do something, you can work with someone else, you can break that cycle. So I support these bills.

We need to be serious and we need to be constructive if we are to have a social security system into the future. At the moment, social security spending is 35 per cent of our budget. And this is whilst we have a massive debt with a limited capacity to repay. I would put it down as being the same as a business person who has a low-debt-to-asset ratio and is making $1 million a year. There is a gap in there of $1 million a year. But if he has got a structural spend in there of $2 million a year for staff, you cannot afford to pay off that building. t is basic maths. You have to have the ability to repay. It is not just your debt-to-asset ratio that we should be looking at here; it is your ability to repay. We have so many structural spends in our budget that we have to make sure that our system is sustainable. That is what this bill is all about.

Can I just say, again, that I do not expect anyone to be skipping down the streets singing our praises with this budget and these measures. I do not expect anyone to be over the moon saying 'fantastic'. But if I can use this quote:

In periods of growth we must put away savings for the downturns. But far from saving, the previous Government kept ratcheting up our debts—spending money it didn't have.

Our predecessors had Australia on a path of deficit and debt to the next century.

Make no mistake, this path would only make future choices harder, future possibilities bleaker and rob Australians of the future opportunities they deserve.

Our Government could not stand back and ignore the problem. Although we did not create it, we will take the responsibility to fix it.

That was Peter Costello in his first budget handed down in 1996. And it is as true today as it was then. What followed on from there was 11 years of pretty good government—of lowering taxes and of growth in real wages.

We must face up to the fact that Australia is living beyond its means. We must all have our shoulder to the wheel on this; we must all do our bit. These bills are not an attack on anyone. These bills are to ensure our social security system is sustainable into the future. Labor will say that pensioners are losing $80. That is a great line. It fits into your 10-second grab for TV. It is a fantastic line, but it is completely disingenuous and it is not true. You can ask a pensioner which they would rather have—a pension that goes up by CPI or no pension. Would you rather have nothing at all? Do we address the problem when it becomes Greece? Do we address the problems when we shut the banks and not let people get their money? Do we address the problem when it is a problem or do we address the problem when we can do something about it, when it is manageable, when we have got the ability to stand here and say 'enough is enough'? We have to start turning the corner; we have to start heading it down.

This budget is a good budget. These bills are good bills. Minister Andrews is doing the right thing by the Australian people and the right thing by everyone with these social security bills to make sure our system is sustainable into the future. This is not about the electoral cycle; this is not about winning votes; this is about what is doing right for the country. I stand shoulder to shoulder with the Prime Minister and with the Minister for Social Services. And, to quote Anthony Albanese, I will go door-to-door if I have to. That is also a line from The American President. I thank the House.

7:12 pm

Photo of Jill HallJill Hall (Shortland, Australian Labor Party) Share this | | Hansard source

This budget is a bad budget. This legislation is bad legislation. When I listened to the previous speaker talk on this legislation, I would have believed that he was talking about something totally different to the legislation that we have before us today. He talks about people putting their shoulder to the wheel. And the Treasurer talks about the lifters and the leaners. The people that those on the other side of the House, those in the government, are asking to put their shoulder to the wheel are the people that can least afford to put their shoulder to the wheel. The people that they are asking to be the lifters are those that have the least ability to be the lifters. And the leaners—well, we all know who the leaners are. They are certainly not the people that are supported by the legislation that we are talking about here in the parliament today.

The previous speaker talked about a crisis, an emergency. He talked about how the sky was falling in and how we are in such a dreadful situation here in Australia. He compared Australia to Greece. I could not believe it. I really could not believe that. When we look at our social security system and consider how much we actually spend on welfare and how we compare to other OECD countries, we spend the second-lowest amount on welfare in the OECD. The only country that spends less is Iceland. The government talks about an ever-increasing number of people relying on social security.

In 2001, 23 per cent of working-age people in Australia received a welfare payment each week. In 2011, it had dropped to 18.5 per cent, once again showing that you cannot believe what people on the other side of this House say. They distort the facts, they do not tell the truth, they say one thing before an election—as we are all learning very, very quickly in this parliament—and then do something totally different after an election. The deceit that is being waged upon the Australian people is second to none, and it was interesting to hear the previous speaker refer to WorkChoices and that it was pretty good sort of legislation. It is the party of WorkChoices. It is the party that decides it is going to target those people who can least afford to be targeted. Unfortunately, for the Australian people, this budget will put a disproportional burden on those people who can least afford to bear the burden. And the people who earn high incomes—the member for Gorton gave a very good example of that—will be forgoing two per cent—will be paying two per cent more—while people on Youth Allowance will have a 20 per cent reduction in their income over the same period of time.

The more you earn, the smaller the proportion of your income you will have to forgo. That is the mentality, that is the ideological and philosophical bent of those people on the other side of this parliament. They believe that if they can disadvantage people and put them in a situation where they are just living from day to day to survive then they will be able to keep them in that situation. I know that the Treasurer, the Prime Minister, his ministers and most of the backbenchers have a belief that there are two kinds of Australians: the Australians who are deserving—the Australians that should have high incomes and good jobs; and the other kind of Australians—the Australians who actually look to government for support—who should be demonised, ostracised and put in a position where they have to bear the burden of all the harsh policies. This is a government that has such an ideological bent. It is a government that really, really wants to hurt those people who can least afford to be hurt, and this legislation, believe me, is delivering in buckets to those people.

I would like to concentrate on the pension. We heard the member for Herbert say that there is no cut to pensions. That it is a fallacy. We are debating legislation today that will reduce the amount of pension that pensioners will receive in Australia. If nothing happens until after the next election, this is the vehicle that it is going to be happening under. I must say that I agreed with the member for Mallee when he said that increasing the pension age to 70 is a bad idea. If you are a blue-collar worker, and you are working in heavy manual labour each and every day of your life, by the time you are 70 you are lucky if you can move. I have constituents coming to my office who have worked for BHP, who have worked in the mines or who have worked in heavy manual occupations over many, many years making enormous contributions to Australia. To think that those people who are on pensions do not make contributions to Australia, is wrong. They made their contributions in the past. Now that they have reached retirement age we, as a country, can afford to support them because they have contributed over many years to the wealth of this country. We have people who have worked hard. I think many on the other side may not have met and sat down with a blue-collar worker. I know that the member for Mallee obviously has. He talks about working in the shearing sheds. He knows how hard it is. If you are a welder and you are bending down each and every day, your knees go on you. Maybe you have been doing that heavy kind of work because you have poor literacy skills. When you are no longer able to keep working in your blue-collar job and you are not in a position where you can go out and get a nice office job in a nice sterile environment, what happens? You end up in a situation where you are thrown into poverty. I really do not think that the members on the other side of this House understand what it is like out in the real world where people struggle from day to day to earn money to put food on the table. The decision to increase the pension age to 70 was, I think, a thought bubble. There was no community consultation, it was not researched and it will mean that Australia has the highest pension age in the world by 2035.

I think, I believe and I know that the people I represent believe that this is the wrong way to go. My office has been inundated with phone calls about this very issue. I have had pensioners ringing my office in tears, worrying about how they are going to survive. I really do not know what this government is thinking with its harsh and uncaring measures in this budget.

There is no measure more harsh than the changes to Newstart and youth allowance. For a person under the age of 30 to be in a situation where for six months they earn absolutely no income is unforgiveable, inconceivable. What does it mean to a person who loses their job, who cannot find another job and has to survive with no money whatsoever. I know when I was younger my husband lost his job. He was under 30. We had three children and it would have been absolutely terrible could we not have accessed some sort of income support. My husband is over 65 and works full time. I work full time. I am in a very different position from the one I was in at that time. At that one point in our lives, this legislation would have thrown us into poverty. We had three children, two under five. We would not have been able to survive. I honestly do not think that this legislation is going to do anything for us as an inclusive, egalitarian society.

The Department of Social Services anticipates around 500,000 new claims for emergency assistance will result from this measure. And the other side of this is that money that goes to charity to support people will decrease as well. I really do not know where we are going with legislation like this. We have a government which is talking about a manufactured budget crisis. We have low unemployment, low interest rates, a AAA credit rating from all credit rating agencies. Now we have a government targeting the most vulnerable in our society, young people whom we support. We should give them the tools to find employment, rather than throwing them into poverty. Many of the tools that were available to help people find work, to connect to the work force, even simple little tools such as the Job Guide and have been taken away. They are no longer there for vocational counsellors and people who are helping young people to consider the careers they may want to pursue. Every little aspect has been attacked by a very mean-spirited government, a government which says one thing before the election and another thing after the election, a government which is making changes to the pension which will lead to an $80 a week reduction in the pension.

Sorry, Member for Herbert: I do not like to say it but the fact of the matter is that it is true. You can use whatever platitude you want. The fact of the matter is that this legislation is going to hurt the most vulnerable people in our society and you on the other side of the parliament are going to let this happen. You are not going to stand here and represent your constituents.

On Friday, I had a family come to see me who actually lived in the electorate of Paterson they felt they needed to come to see me because they felt they would not get a fair hearing from a Liberal member of parliament. The father, on a disability pension, had a hereditary disease which is affecting his eyes. He was losing his sight and had hearing loss and a back injury. His wife had suffered from schizophrenia but she was the carer for him and their disabled daughter who had intellectual problems and mental health issues. They were going to lose their family tax benefit because she stayed at home to look after both of them. They were surviving okay. They made ends meet, but they were being attacked by this budget and they did not know how they were going to survive. These are real people whose lives are being affected by this government. I urge the government to rethink these measures. It is real people whose lives they are affecting. People are not going to be able to put food on the table and coupled with the GP tax and all the other harsh measures in this budget, it should be rejected.

7:27 pm

Photo of David GillespieDavid Gillespie (Lyne, National Party) Share this | | Hansard source

I rise to speak about the Social Services and Other Legislation Amendment (2014 Budget Measures No. 1) Bill 2014 and the Social Services and Other Legislation Amendment (2014 Budget Measures No. 2) Bill 2014. Before we commence the discussion, we have to see in which context these bills arrive in this parliament. In 10 years time, the projected debt will be $667 billion if this government does not address the problem and institute some changes. Members from the other side are very good at pulling the emotional argument. People have not put us here as legislators just to play on emotions; they want us to fix things. Part of the hard reality of our budget situation is that if there is no change to the structural over-commitments that previous governments have made, we will have serious financial problems. The current budget is making some very hard changes. No-one is arguing about that, but there is a reason. On the coalition side we did not all wake up and just say, 'What can we do to make life difficult for people?' We have looked at the projected looming deficit and thought that life really is going to get difficult for the citizens of the nation if we do not address the problem.

The member for Herbert made a very impassioned speech that applied common sense and made some really sensible suggestions. The descriptions and comparisons with other nations in Europe were quite apt, because that is the situation in our country is heading towards if we do not change things. The rate of rise of our debt was higher than 17 other OECD countries. Sure, our absolute figure of debt to national wealth is not as great as other countries but when you put things in perspective, the whole financial system of the euro a couple of years ago was about to buckle and fold because of the debt. There were riots in the streets and banks closing in Greece. Do we really want to head in that direction? It is too late to change when it is there in front of you. We are taking sensible, hard-nosed decisions to get our nation's finances back in order.

To put things in perspective, this budget would reduce the debt from the projected $667 billion down to $389 billion in 10 years time. That is still an unbelievable amount of national debt compared to what this nation has had since we were formed. People roll off billions like they were millions a few years ago. People do not understand the scale of the debt. They equate it with countries that were on their knees and still remain in a very precarious financial situation.

The situation that is different for us here is that most of the debt we have accrued by issuing bonds around the world is that most of this interest and the debt is owed overseas. Take our near neighbour, Japan, whose Prime Minister is visiting this country in the near future. They have a huge debt, but most of their debt is borrowed by the government from their citizens, so the government is paying their citizens the interest rate in a major part. Whereas the vast majority of our interest payments are going out of the country.

Japan has huge reserves, like the economies of Europe and America, where a lot of their national debt is circulating back inside the country. No nation wants to be in debt to the tune these other countries I have alluded to are, but at least they have a much bigger gross national product. Our gross domestic product is very similar to our gross national product, but a lot of these economies have huge income streams from around the world. They have many very, very large companies that operate around the whole world. We are in a different situation. We cannot afford to be so liable in terms of debt, because if there is another period of financial turmoil in the world, we are very vulnerable. In addition, it just offends my sense of logic that if we do not change things, every month we will be paying $3 billion of debt overseas. Imagine what you could do with $3 billion in your back pocket every month. We could build fast rail, we could do flyovers on the Pacific Highway, we could build schools and hospitals and whole new universities in the span of three years in government of paying $3 billion in interest out of our Treasury. We could achieve amazing infrastructure builds for the nation that would then deliver us greater wealth.

The other reason we have to support these bills is the reality of our ageing population. Our social security payments occupy 35 per cent of our government's income from taxpayers. That is a huge amount of money. But if you look at what is happening with our ageing population, instead of one in five of us becoming a pensioner supported by the others that are not, by the middle of the century—and time ticks over rapidly—that will be one to 2.7. So for those of us who have children and those who have grandchildren, note that I would need to have twice as many children to be paying and supporting me if I ended up being a person dependent on the state for my security in my old age. That is a scary statistic—every 2½ or 2.7 people working to support one person who relies on the state. The numbers do not lie. That is what we are looking at. So we need more workers and we need more population.

But we also need to tweak the other side of the equation: we need to get our spending trajectory going in a sustainable direction. That is why we have made these difficult decisions. The other reason—and the member for Herbert and other people have mentioned it—is a valid argument. When the pension came in in 1909, the average age of a male was 55. If I am lucky I am going to live until I am 81 or 82 so that is a big difference. Most people would not have been eligible for the pension when it first came in because they would have worked and shuffled off this mortal coil before getting to the pension age. But now it is the minority that are unlucky like that. Most of us live more than our three-score years and 10. Most of us live four-score years so we are getting a good deal.

When I started my medical degree, the average age was almost a decade lower, and that is just in the space of one lifetime. With the advances in health and nutrition and interventions that are happening now and with the vast reduction in smoking, I expect the average expectancy when I get to 82—touch wood—will be much higher. We are all going to be living a lot longer. If we are going to make that sustainable, we have to change things.

But we made a commitment in the campaign. We told the populace that we would not change the pension in this term, and we are not. It is still going to go up twice a year with indexation. It is just that it is a sustainable form of indexation: the CPI. The last pension increase in March this year did not even go up by MTAWE; it went up by CPI because CPI was higher.

We have had a wages explosion over the last decade or so. I cannot see it continuing at that rate of increase because Australia is already a very expensive place to do things. If we are going to remain competitive in the world—and we live in a global economy—we will not be seeing the huge wages growth that we have seen in the last decade. I actually think that the CPI is going to be a much better bet for pensioners to increase their pension than MTAWE. I do not think people should be afraid at all if they are pensioners.

When the opposition are scaring pensioners, they are giving the impression that the pensions are being cut now, but they are not. The pension age changes, which are being gradually brought in until 2035, will not affect the current pensioners now. But, if you heard the last speech from the other side, you would get the impression that they are saying that pensioners who are receiving the pension now are going to be affected by the increase in the age of eligibility for the pension, and that is absolute nonsense.

Things do change, and other nations are adjusting their situations as well. We have to make sensible, long-term projections. There are a lot of sensible changes. We are keeping the clean energy supplement, but we are just changing the name. All the adjustments for the carbon tax that were promised to gold card holders, Commonwealth seniors health card holders and pensioners are being honoured. We are also going to get rid of the carbon tax, which will put them ahead another $550 a year.

Indexation is a very sensible way of managing overcommitments, and we have paused the indexation in some of these areas because we could see that they were not sustainable. Everything is being done for a reason. The previous speaker made out that we just dream up cruel, hard, harsh things to do to people. We are doing it to make the whole system sustainable in the long term.

I turn now to disability support pensions. If you are unfortunate enough to have a disability, of course the nation will support you. But we do not want people to become dependent on it if they can work to a degree. That is why compulsory, work focused activities such as work experience, education, training and job searching will help certain disability support pension recipients, particularly if they are young—under 35. From 1 July we are changing the system so that people who have a disability will still be encouraged to work. Obviously, if you have a clear disability and you cannot work, these changes are not going to be applied to you. It is just for those who have a disability who can still work. It helps with their morale and their sense of worth and self-esteem if they can still maintain a position in the workforce.

There are some other areas that clearly needed adjustment, including the portability of student payments and disability payments. You could be classified on a disability pension but go overseas for 19 weeks and still get your disability support. Now, fair go! I think that, if someone is able to travel the world for 19 weeks, maybe their disability is not as severe as it was assessed initially. I think that is a sensible review. The other changes that are being brought in with this budget are, on the face of it, a change for people. But, if you look at the benefits for the people who are experiencing the changes, they are still way out in front with the amount of support they get from the state. Whether it is family tax benefit A or B, there is still a benefit.

We have the prince of social security systems around the world. It is sustainable if we manage it sensibly. We do not want to be seen as cruel, as our opponents make us out to be. We are just being sensible and rational. I have mentioned the indexation, I have mentioned the changes to the pension, and I have mentioned these portability issues. They are all reasonable. I support these bills and commend them to the House.

7:43 pm

Photo of Pat ConroyPat Conroy (Charlton, Australian Labor Party) Share this | | Hansard source

I rise to speak on this very important legislation, the Social Services and Other Legislation Amendment (2014 Budget Measures No. 1) Bill 2014 and the Social Services and Other Legislation Amendment (2014 Budget Measures No. 2) Bill 2014. This is a budget built on a lie. It is built on a confected budget emergency. The facts are these: debt is low and will peak at less than one-third of the OECD average. The obsession with this mythical debt problem is symptomatic of a government, of a coalition and of a Liberal Party that have been taken over by people akin to the Tea Party in the United States. They have been taken over by the worst elements of US Republican politics, and they have married it with the worst elements of Thatcherite Conservative Britain. They paint this bleak future and say there is no alternative—TINA—but to gut our social security system to attack low- and middle-income Australians because they have no choice.

It is rubbish. Our economy is in good shape. With modest changes, the economy is sustainable. The priorities they have chosen, including their ridiculous $21 billion gold plated Paid Parental Leave scheme, demonstrate that they are choosing priorities that attack low- and middle-income Australians and defend welfare for the wealthiest in this country. The truth is that they are attacking the families of the people I represent. There is no fairness, there is no justice, and there is no equity in their actions. I will fight them. Labor will fight them.

There are 26,800 people in the electorate of Charlton who receive a pension, including over 18,000 age pension recipients. Every single one of these people will suffer as a result of this budget and these bills. Before the election, Tony Abbott said there would be no changes to pensions. But now he is doing just that. For the past 20 years the age, disability and carer pensions have usually been indexed in line with male average weekly earnings. This helps the pension keep pace with the true cost of living. Now this government is seeking to change the indexation rate for pensions—from average weekly earnings to consumer price index. This will mean pensioners will generally receive less of an increase to their pension in March and September. For example, if this indexation had been in place for the past four years, a single pensioner on the maximum rate would be around $1,500 a year worse off than they are today. This one change, over four years, would effectively wipe out the great pension reform that Jenny Macklin introduced while she was minister for Social Security. It is astounding that those opposite try to argue that this is not a cut. These changes will see the cost of living for pensioners go up, but their pensions will not rise in line with it. The government's own budget papers demonstrate the scale of the cut. It will see 26,800 people in Charlton receive less money each week. No matter which way you look at it, it is a cut.

Today I heard from Desmond, who is 66 years old and lives in Edgeworth. Two years ago, Desmond was diagnosed with terminal heart and lung conditions. He rarely leaves home as he is on an oxygen machine. He visits the doctor each week and knows that the $7 payment to see the doctor, to visit a specialist, to get a blood test or to get an X-ray will have an impact on his bottom line. Despite all this, Desmond says he is 'doing okay'. His wife works and he receives a part pension. He says:

We don't live the high life, but we survive. But if the government takes money out of the pockets of pensioners, we'll be affected in all sorts of ways. We like to visit our son, who lives in Sydney, once a month. With less money, and also because of the petrol tax, we may not get to go as often. We have little luxuries like Henny Penny or pizza once a month. We don't want to lose those little extras that we enjoy. The budget is cruel, it is not realistic.

The government has already ripped $1.3 billion from the National Partnership Agreement on certain concessions for pensioners concession card holders and seniors card holders. This is one of the fundamental reasons why those on the other side are engaging in untruths and falsehoods when they say that there is no cut to the pension. This $1.3 billion, paid to the states and territories, supports discounts for pensioners, Commonwealth seniors and health card holders on rates, water, sewerage, power, car rego and public transport. The New South Wales government released their budget last week; and, despite the New South Wales government's general record of being unable to stand up to their colleagues in Canberra, pensioners and seniors were given a reprieve, with the Liberals state government committing to cover the funding shortfall and continue the pensioner concessions for one year. But it is a short reprieve—and, coincidentally, it takes them past the next state election. It is, however, not long enough to take the issue out of the spotlight and it is not long enough to give any certainty to pensioners and seniors in New South Wales that their vital discounts will survive beyond the next budget and the next election cycle.

These bills will cut the seniors supplement attached to the seniors health card for self-funded retirees. This is a loss of $876.20 per year for singles and $1,320.80 per year for couples. No matter which way you look at it, this is a significant hit to the budgets of people on fixed incomes. In addition, these bills will require people to work harder for longer, by increasing the pension age to 70, the highest pension age across the OECD. We have heard speakers on the other side talk about what action other countries around the world are doing. No country is supporting an increase in the pension age to 70, and the government has provided no evidence to support this increase. It is a measure that will clearly impact on people with physical jobs. It is okay for office workers to be told to work until 70 and it is okay for people like me to be told to work until 70. But my brother, who is in his mid-40s, is a concreter, and I have serious reservations about the his body's ability to hold out until he is 70. And he is one of many manual workers who will really struggle with this change. But it is not just in the stereotypical blue-collar jobs that people will suffer. My wife is a nurse. Most nurses spend their entire day on their feet engaged in heavy lifting, and I doubt that many of them would be comfortable lasting until 70 in their working life. The government did not consult, or take expert advice, before making these changes. It will mean people have to work longer and their pension will be significantly reduced when they finally do get to retire.

Charlton families are under attack by the Abbott government, and those on low incomes—single-income families and single parents—will suffer the most. There are currently almost 11,000 families in Charlton receiving the family tax benefit. Every one of those families will be affected by these changes if those on the other side push this unfair legislation through parliament. Families on family tax benefit part B will now have their payment cut off completely when their youngest child turns six. This will impact on 8,500 families in Charlton.

Karen, from my electorate, is from one of these families. Karen contacted me to share her concerns about the pressure her family is going to experience as a result of these unfair cuts. Karen and her husband live on her husband's income of approximately $60,000 per annum. Their mortgage is around $260,000, and they have two children, aged 11 and 16 years. Karen says these changes are going to make things so much harder to live day by day. She says her family does not live an extravagant life and they are frightened they will have to make some very tough choices if these changes come to fruition—choices like the children forgoing sport and school excursions. Karen's family will be around $6,000 worse off each year by 2016 as a result of this legislation. This equates to a cut of around 10 per cent of their entire family income.

These are not Labor's figures. These are figures produced by NATSEM, the premier modelling outfit in the country on family incomes. This is a modelling organisation that the Prime Minister was very happy to rely on and quote when in opposition, but suddenly when he is in government these figures are not to be believed. How can you equate Mr Abbott's promise before winning the election to help with the cost of living and cutting the income of low- and middle-income families income by over 10 per cent? Imagine the impact on a family on $60,000, which is well below the average income in this country, of losing over 10 per cent of their family income. That will gut their family. It will place massive pressure on the family. Inevitably, it will see more pressure on them, lost opportunities for their kids, and an increase in family tension and break-ups.

And, to add insult to injury, at the same time as this huge, inequitable attack on low-income families, the government are intent on pushing through their ridiculous Paid Parental Leave scheme, which will pay millionaires $50,000 to have a baby.

Just by way of contrast, while 8½ thousand families in Charlton will lose significant income from family tax benefit part B, over 80 per cent of women in Charlton will receive less than $20,000 under the government's proposed PPL scheme, while families in the electorates of North Sydney and Warringah will receive $50,000. Why is a baby in Charlton worth $30,000 less than a baby in North Sydney or Warringah? It demonstrates the skewed priorities of the government.

In addition to slashing family tax benefit part B, the government is proposing that family tax benefit payments be frozen for two years. These measures will disproportionally impact families on the maximum rate, including single mothers and those on the lowest incomes. Many of these families are already struggling to make ends meet. They are already cutting back and they feel they are being targeted by this government.

Felicity, in my electorate, is certainly one of those who will be directly affected by these cuts. Felicity says:

I'm a single mother of a 7 year old Autistic daughter. Losing the FTB Part B will mean I will not be able to afford the rent on my house. I live in private rental accommodation due to a 20+ year wait list for department of housing. My rent is $280.00 per week.

I pay my rent and get a little food shopping, then I am broke till my carers payment comes in the next week. I save hard to pay for specialists for my daughter. I can't afford a specialist for myself so I don't go, this can affect my health!

I will have to rely on community centres for food packages each fortnight just to get through.

My daughter will end up going without so I can provide a roof over our heads.

Labor is opposing what I can only describe as some of the meanest cuts I have ever seen, to some of the most vulnerable people in our communities.

We are opposed to cutting parenting payment single; freezing of the payment rates for family tax benefit; slashing family tax benefit end-of-year supplement and ceasing indexation; and cutting families from FTB part B when the youngest child turns six.

We oppose these measures because they stand in stark contrast to our values. Labor's approach to social services will always be one of fairness and equity. We are opposing these measures because they are deeply unfair and grossly inequitable. Those on the other side just do not get that and they do not get it because they do not share our values. They never have and they never will.

I have already brought to the attention of the House many harsh measures in this budget, but perhaps the most cruel of all are those which will impact on young people looking for work. This government is destroying the social security safety net. This bill contains measures which will exclude young job seekers, under the age of 30, from receiving Newstart benefits for six months. Once eligible, the benefit will only be available for six months per year. That means that, if you are under 30 and, for whatever reason, you find yourself out of work then you are on your own. You will not receive assistance from this government.

School leavers will face more than a decade of this instability, their choice now being between further study, through which, thanks to the government, they will now accrue a significantly higher student debt, and throwing themselves at the mercy of the six monthly 'on again, off again' income support cycle. Labor will not support this measure.

The well-known and respected Novocastrian, Marcus Westbury, wrote in the Newcastle Herald recently on this topic, saying:

It's hard to understand the logic here. Youth unemployment rates usually track well above the rest of the community. Young people are the least likely to have the savings to work their way through it. It's a recipe for crime, drugs, desperation and despair—for harming yourself and harming others.

It's a system that takes the potential leaders and contributors of tomorrow and dumps them on the scrap heap before being given a chance to find their feet.

It isn't just deeply unfair: it will be a matter of life and death for some young Australians. Our kids. Our friends. Our families. We are cutting people off from the ability to eat, to pay the rent, to survive.

The budget is built on a lie. It is a confected budget emergency. It is an excuse to break solemn promises those opposite made before the election: no changes to the pension, no cuts to health, no cuts to education. The Prime Minister, before the election, was asked very clearly and very specifically, what would happen if he came to government and the figures around the budget were different from those disclosed previously. He said, 'This will be a government of no excuses that will not change his policies.' He is clearly in breach of that promise and, quite frankly, he has no excuse because the Pre-Election Economic and Fiscal Outlook clearly painted what the fiscal picture was and he is using a confected budget emergency to pursue his ends.

The government realise they have a fairness problem. And it took them awhile to realise this. But the Australian people see their budget as fundamentally unfair. That is why the government keep trying, very unconvincingly, to talk about fairness in question time. But no matter how much you repeat it, it does not make it true. Saying something is fair does not make it fair; saying something is necessary does not make it so. The measures in this bill that we are opposing are an attack on the fabric of Australian society. It is an attack on the modern Australian settlement and it is an attack on equity and fairness. We will fight this attack. We will defend low- and middle-income Australians. We will defend our historic Labor values, while those on the other side mire themselves in hypocrisy, cant and crocodile tears.

7:58 pm

Photo of Mark CoultonMark Coulton (Parkes, National Party) Share this | | Hansard source

I too rise tonight to speak on the Social Services and Other Legislation Amendment (2014 Budget Measures No.1) Bill 2014. This bill calls on everyone and every business to contribute, to join, to grow the workforce, to boost productivity and to help build a stronger economy with more investment.

I have listened to the contribution of the previous speaker. The one thing missing from his contribution was financial responsibility. While it might be his party's creed to put the expenses of this generation onto our children and grandchildren, we need to take responsibility for the situation that we are in. Saying that the budget was fine, the state of the economy was fine and that Labor, over six years, had not trashed the economy of this wonderful country is merely a falsehood.

The other irony of what the previous speaker said, when talking about the elderly and the pensioners, is that as I have been getting around in my electorate it has been those very people who have been coming up to me, and saying, 'We understand why you are making these changes. We understand why a country has to live within its means.' Being financially responsible and living within your means was part of the upbringing for people of that generation. They understand that, regardless of what happens, the bills need to be paid.

This bill covers a range of different aspects of social services but there are a few things I would like to touch on that are relevant to my electorate. One is welfare dependency. Intergenerational welfare dependency in my part of the world is a huge problem. People are coming up to me and saying that they agree with this 'earn or learn' concept. Those people are coming up to me and saying, 'We are waiting for a work for the dole program come to our town.' The green army—it is not in this bill—will provide a similar outlet for younger people.

Quite often, elderly people are concerned about their children and their grandchildren and understand that having a job is vitally important for the self esteem of individuals and of the entire community. Aboriginal elders have come to me and said, 'We need to get these work for the dole programs going.' They understand that if people leave school—quite often in towns in my electorate they are leaving school at far too young an age—and they get into that welfare trap for six months, it is very difficult to get them back.

I was talking to the largest employer in Dubbo. He said that hardly any local people are turning up on his doorstep, now, asking for jobs. This is in a town with reasonably high unemployment. At the moment he is filling the shortfall with backpackers and people such as that. That is not a good outcome.

My aim in this place is to make sure that everyone in my electorate gets a chance at a job and a chance to understand and appreciate the rewards that come from a hard day's work. My aim is that everyone in my electorate gets a chance to earn money. My aim is to teach children that money does not just come out of an ATM; that there is an effort required. The sad reality is that in a lot of towns in my electorate there is a disconnection. Children are growing up not knowing what it is like to have a parent who goes to work. They are growing up thinking that every couple of weeks there will be money going into an ATM machine, and that that is their pay.

That is killing these towns, these communities and these people. That is the reason that the life expectancy of a child growing up in some of the towns in my electorate in the west is still 15 years less than for a child growing up in a wealthy or urban area. Hopelessness and despondency comes from having no employment.

There are other measures that need to be in place for people—not just when they leave school. Minister Scullion was in Dubbo last week or the week before and announced $1.6 million for the Get Real Program. This program aims to grab these kids when they are still in middle high school. The children sign a pledge. It says:

I willingly commit myself to participate in the Get Real Program and undertake that by my 17th birthday, I will be in full time education in school or TAFE, be undertaking industry training or be in full time employment.

A large number of these kids are Aboriginal boys and girls. They sign this pledge. What they get with the pledge is mentoring and someone who will help them with the difficulties of getting into employment and understanding the obligations and responsibilities of employment.

This idea that there are people who do not want to work—who choose to be unemployed and sit at home on the dole—is a myth. Back in 2004 or 2005, when I was the mayor of the Gwydir Shire, we had work for the dole under the Howard government. We had a team doing work on community infrastructure. They were painting the CWA hall and doing some fencing around the showground and the like. They turned up in a bus and it had 'work for the dole' on the side of it. I was thinking, 'That's not a good thing; that's demeaning for these people.' To thank them for the work they did we put on a barbecue for them in the last week. I was chatting to these people about what it was like being on work for the dole and they said, 'It is good. It is good to have a reason to get up in the morning. It is good to be able to look at what you have done for the day and the week and take satisfaction from that.'

The supervisor told me that the crew that finished up was nothing like the crew that started, because employers would start ringing up and saying, 'Have you got someone who could do this job?' and the participants would roll into proper work. So I totally disagree with the concept that the previous member in this debate was talking about: that there is despair in people who have been taken off the dole. We need to have the dignity of work. Unemployment flows through to other issues such as lawlessness, abuse of children, lack of attendance at school. If the adults in a household are undertaking meaningful employment during the day there is a fair chance that at night time they will be asleep, and not having a party. Therefore the children in those households will be asleep, so they might be able to attend school the next morning. If some people believe that that is some sort of victimisation, I disagree.

I stand proud with this budget and these measures because they are taking the difficult decisions the previous government pussyfooted around. We have had previous ministers in the Labor government come to my electorate and look concerned; they say the right things and are politically correct, and then walk away and make absolutely no change at all. To make change is not easy; it is not always popular. That is what this measure in this budget is doing.

Quite frankly, I do not doubt that the previous members do have people write to them with concerns. I will admit I have had some of my constituents write to me about their concerns. Some of them are justified and some of them are concerns about misinformation—this idea that people on pensions are going to be drastically affected and the like. But clearly the majority of people I have been in contact with understand this, and the fact that people are concerned across a wide range of our society probably indicates that this budget has hit the mark and that the load has been shared as fairly as it can be.

To go back to the earn or learn measure: we know there are some people who are just not suited for work. They may not have a disability but they just do not have the skills to maintain full-time employment. They are graded—from the top of my head, I think they have been identified as a category 3 or 4 person. They are exempt from the six-month measure. We need to care for the vulnerable in our society. There has also been talk of people in manual labour having to work until they are 70. If people have a physical injury or cannot work, there is still the disability support pension for those people. There is still the opportunity to make a career change and go into some other pursuit, as many of the shearers in my electorate do when they get to their 40s—mainly into agricultural pursuits—to get away from that difficult backbreaking work. I spent the first 30 years of my working life doing physical work; I understand it. I worked with people in shearing sheds. I have done it myself and so I understand it. If we get away from the doom and the gloom and the scare that is going on around this, what we are offering people with this bill is dignity—an opportunity for them to participate in society. Do not underestimate that desire.

I represent a large rural electorate—a third of New South Wales. It is one of the most agricultural electorates in the country. But I represent in this place more Aboriginal people than I do farmers, and I take that responsibility very seriously. I spend the clear majority of my time, when I am in my electorate, working with those communities and I can tell you they are not opposed to these measures. They, indeed, welcome these measures. I have had great conversations, mainly with older women, in those communities who despair for the chances of their children. But there are good things happening. There are good stories in my electorate, from these communities in what would be considered tough towns; there are more good stories than tough ones. There is the work that the Clontarf Foundation is doing—which this government, the previous government, state governments and private industry have supported—where we are getting young lads now from Coonamble who are working in the construction industry in Sydney. We have boys in Moree who are doing one day a week at the local GrainCorp depot and spending their school holidays working at a job for real money. If someone can explain to me why that is a bad thing I would like to hear it.

We care for those who are most vulnerable but if you are able-bodied, fit and healthy and of working age, you are not entitled to do nothing. It is not a way of life that you can choose. If you have difficulty with your health or if you have difficulty in meeting those requirements then as a society we should care for you—but it should not be a choice. I am proud of this budget. I am proud of this particular bill. I would like to acknowledge my colleague, Minister Andrews, who was in here a little while ago. This has taken a lot of courage and a lot of understanding of what is needed and the bills have my complete support.

8:13 pm

Photo of Rob MitchellRob Mitchell (McEwen, Australian Labor Party) Share this | | Hansard source

I rise to speak on the Social Services and Other Legislation Amendment (2014 Budget Measures No. 1) Bill 2014 and the Social Services and Other Legislation Amendment (2014 Budget Measures No. 2) Bill 2014, and to talk about how the changes to family tax benefits are going to have disastrous effects on families right across Australia, especially in the electorate of McEwen. In McEwen we have 16,139 families who receive family tax benefit A. We have 13,856 families receiving the important assistance of family tax benefit B. In total, that is 29,995 families who are going to be worse off because of the cruel and heartless cuts in this budget. That is almost 30,000 families who are now going to be struggling even harder to make ends meet and provide for their families.

I would like to pay particular attention to family tax benefit B because it is a direct assault on those families who have either made a decision to raise their family with one parent working and one parent remaining at home to look after the kids or those from single parent families. Either way, the Abbott government's cut to this payment is a direct assault on their livelihoods.

I was contacted by a constituent—a chaplain—from Puckapunyal, which is part of my electorate. This constituent, regrettably, openly states he votes for the Liberal Party. He states:

We are a single income household. My wife provides support to the community, through the school and church—all volunteered. We do this as a sacrifice as she could work as a high school teacher, but feels it is better for our children and our community to volunteer her time to teach children resilience, to read and provide support to single parents (particularly supporting families where members are deployed on operations overseas).

The reduction of the family tax benefit is going to really...hurt families in our area and community groups as we are forced to move into paid work. A better solution would be tax concessions to single income families where they participate in volunteer community work at least recognise how they reduce the cost to our government.

So there you have it. Even staunch Liberal supporters can see how unfair and detrimental these cuts to family benefits are going to be.

Single-parent families, who struggle hard enough on one income while striving to raise their kids in the best environment possible, are going to suffer immensely with these cuts. Another constituent in McEwen, Mr Edwards from Riddells Creek, is a single father of four who works full time, as well as studying part time. He states:

Under this budget, I will lose Family Tax Benefit B and my education expenses will significantly rise. I don't know how I'm going to be able to send my kids to uni if these changes happen. No one offered my daughter a free scholarship.

I would also like to highlight the hypocrisy of the Prime Minister when he is trying to make these callous changes to the family tax benefit. Earlier this year, the Prime Minister said that families on $100,000 a year should no longer get social security. This a bit of a 180-degree turn by the now Prime Minister, because, back in May 2011, he said the Labor government was punishing aspiration and hardworking families earning $150,000 a year. The now Prime Minister said, 'These are class-war cuts that the government is inflicting on people.' So it is class warfare when families on $150,000 a year lose benefits but not when a single parent on a part-time salary cannot afford to take his or her kids to the doctor? This is an important point. The Abbott government is slashing vital assistance and payments from families right across Australia and is simultaneously taxing products and services that families rely on every day—in particular, the heartless $7 GP tax and, of course, the broken promise of the fuel tax increase.

The senior supplement is another important payment offered to our senior citizens to help them pay for bills such as energy, rates, phone and motor vehicle registration. The supplement is offered to those who are self-funded retirees or those who have a Commonwealth Seniors Health Card. These are men and women who have fought hard all their lives and saved their hard-earned pennies so that they would be able to have a nice, quiet, relaxed retirement. The seniors supplement helps these Australians pay for regular bills—which, which most people here know, usually come all at once.

Michael O'Neill represents National Seniors Australia. Regarding the cuts to the supplement, along with all the other cruel cuts to senior payments, he states:

You don't have the luxury of folk who are still in the workplace and able to build up surplus, build up that cash in the bank to help overcome the rainy day when you get a run of health bills, for example, coinciding with your electricity or gas bill or whatever else.

What Mr O'Neill highlights is that pensioners, especially those on a strict income for retirement, do not have the cash flow when the bills come in. In cases where all bills come up at once, it may be the difference between paying the bill and putting food on the table. In this day and age, this is just unacceptable. It is unacceptable that a retiree who has worked hard and paid taxes their entire life should have their $870 a year—or $1,300 for a couple—slashed by this cruel budget. But Tony Abbott is happy to pay wealthy women $50,000 to have a baby. So you take $870 from pensioners earning $20,000 a year but give $50,000 to people who earn $200,000 a year.

Even those who are trying to get their start in the workforce, or those re-entering the workforce, are being punished by these harsh Abbott cuts. With these changes, those job seekers under 30 are going to have to suffer through six months of no income unless they are undertaking some form of study. That is not always practical or reasonable in rural and regional areas where jobs are short and distances are long. That is six months of mortgage payments for young people starting a family or buying a home. It is their rent, groceries, fuel and medical expenses gone. Six months. It just shows how out of touch this government is to think that someone can just go without any money to pay for all of these essential day-to-day expenses.

These are the people who are already living pay to pay, working to a tight budget and even then struggling to make ends meet. How are they going to be able to support themselves or their families? Tony Abbott is stripping money away from those who are least able to afford it. The Abbott government's changes to social security are going to have a disastrous impact on the lives of the majority of Australians.

In closing, I and Labor will continue to fight to ensure all that Australians are given a fair go, regardless of their pay packet and regardless of their postcode.

8:20 pm

Photo of Paul FletcherPaul Fletcher (Bradfield, Liberal Party, Parliamentary Secretary to the Minister for Communications) Share this | | Hansard source

I am very pleased to speak on the Social Services and Other Legislation Amendment (2014 Budget Measures No. 1) Bill 2014 and Social Services and Other Legislation Amendment (2014 Budget Measures No. 2) Bill 2014. These bills introduce an important package of measures in the 2014 budget in the social services portfolio. The measures in these bills take their effect while supporting the most vulnerable and, at the same time, taking significant steps to ensure that the government can live within its means—something which is of fundamental importance if we are to continue to deliver the support which is so important for those who are vulnerable in our community and who need that support.

In the time that is available to me this evening, I would like to cover three points. Firstly, I would like to make the point that if there is an imperative on this government to get spending under control, then, as a matter of logic, it follows that you need, amongst other things, to focus on the areas of largest spending within the Commonwealth's budget. The second thing that I would like to highlight is that these are decisions that all governments need to make, and, notwithstanding some of the claims we have heard from the other side of the parliament this evening, similar measures have been introduced by Labor in the past. I would like thirdly to focus on the importance of indexation and measures which adjust the rate of indexation as a particular policy tool for taking decisions now which will assist us in getting spending under control over the longer term.

Let's turn firstly to the proposition that we have a task that faces this government on behalf of the Australian people to get the growth in spending under control. Let's remind ourselves of the legacy which this government has inherited from the wanton and irresponsible approach of the previous Rudd-Gillard-Rudd government. Over the period 2012-18 the previous government had planned a spending increase of 16 per cent in real terms. That puts us right ahead of the pack. Countries like the Netherlands at one per cent, Belgium at two per cent, Japan at three per cent and many other countries with which we would ordinarily compared ourselves have planned a growth of spending which is well below the profligate increase in spending which the Rudd-Gillard-Rudd government had been pursuing during its time and which it had baked into the forward estimates in the budgetary settings which we inherited.

It is no coincidence that, as a consequence, the previous government racked up deficit after deficit, and it is also no coincidence that therefore, as a consequence, government debt was on track to reach a gross figure of $667 billion by 2023-24 had no corrective action been taken. Of course, the key point is that this government—the Abbott government—is acting responsibly to take corrective action.

If you are going to take corrective action in relation to a budget which in 2014-15 involves total expenditure of around $415 billion then the logical thing to do is to look first to the big items of expenditure. Of that $415 billion, where are the programs and line items where the largest amount of spending is occurring? Of course it is a number of programs within the social security portfolio. If we look at table 3.1 in the budget, we see that, of that $415 billion to be spent in 2014-15, $42 billion is income support for seniors, $19.3 billion is in the family tax benefit, $16.9 billion is income support for people with a disability, $10.2 billion is job seeker income support, $9.5 billion is residential and flexible care and $7.6 billion is income support for carers. I am simply making the point that, if you have imposed upon you by the incompetence of the previous government a need to get spending under control—if the national interest dictates that you must take action to get spending under control—then as a matter of logic it follows that you must make sure that you go to the largest spending programs and that you have actions and initiatives that go to the largest spending programs. As I have indicated, a significant number of the largest programs fall within the social security and welfare area.

Indeed, social security and welfare in total in 2014-15 makes up $146 billion of the $415 billion in total. Therefore, it is of the first importance that there are policy measures being pursued in the social security portfolio—as indeed there are in portfolios across government—to get spending under control. This government is not shirking its responsibility in the area of social security. We have a task to get spending under control and, what is more, we have a significant structural challenge and a challenge that is simply going to get worse if we do nothing about it.

We have an ageing population. We all know the figures. We all know how the dependency ratio is going to change so that the number of people in the workforce as a proportion of the number of people who are not in the workforce and who are, in the main, drawing on income support funded by those taxpayers who are in the workforce. That ratio is moving against us and will continue to move against us over time, creating an additional structural pressure. Therefore, a responsible government must identify that pressure and must act to respond to it. Indeed, one manifestation of the changes and the trends that we are facing and of the critical importance of the social security and welfare budget within our broader budgetary task is the simple quantitative fact that, for each month that the government's budget measures, including the measures contained in the bill before us this evening, are delayed, it will cost Australian taxpayers over $117 million.

The strategic importance of the measures in this bill cannot be overstated. If you are going to reinstate spending discipline—if you are going to take action to deal with the challenges that we face—then you need to address measures in the social security and welfare portfolio just as you need to address such measures across all portfolios.

The second proposition that I would like to put to the House this evening is that all governments need to make necessary and difficult decisions in the social security portfolio from time to time. That is again simply a logical and inevitable corollary of the fact that such a very large proportion of total Commonwealth spending falls into this portfolio. Again, it is an absolute incident of a civilised society that we provide support to those who need it; but, if we are to do that, to continue to afford to do that and to do that sustainably, we must make sure we manage this spending in a disciplined and strategic fashion.

In listening to our opponents on the other side of the chamber you would think that these kinds of measures were ones they would never have contemplated taking during their time in government, but I was interested to read a recent article in the Australian Journal of Labour Economics, which had this to say:

In the 2009-10 Budget the government held the thresholds for income-testing the lower rate of Family Tax Benefit Part B and the Baby Bonus fixed in nominal terms, and changed from wage to price indexation for FTBA.

So some of the policy measures and techniques that are being used in this budget, that being given effect to in the legislation before the House this evening, are policy measures of a kind which the previous Labor government also employed from time to time. It is a matter for regret that perhaps they did not show more discipline and application in the use of these kinds of measures.

Another example I could point to is the decision that the then Labor government made to increase the eligibility age for Newstart from 21 to 22. From the shrieks of indignation that we hear from the other side of the chamber you would think that these kinds of measures had never been contemplated by Labor. But, in fact, under the previous Rudd-Gillard-Rudd government the decision was taken to increase the eligibility age from 21 to 22. Similarly, in January 2013 it was the Gillard government's decision to switch recipients of Centrelink's single parent payment to the Newstart allowance. That had the impact at the time of moving a substantial number of sole parents onto Newstart.

Nobody says these decisions are easy—they are not easy decisions—and this government absolutely recognises and understands that millions of Australians depend upon social security in its various forms. Therefore, these decisions must be made in a careful and conscientious fashion. But at the same time we need to take decisions which cause the system to be sustainable and affordable. Manifestly, in the main, in the approach that the Rudd-Gillard-Rudd government took for over six years there was a failure to take decisions that maintained the financial sustainability of the system.

I want to turn thirdly, therefore, to the fact that there are a number of techniques that are used in relation to this budget and that are contained in the measures in the bill this evening which involve, for example, a pause to an indexation or deal with matters such as the thresholds for eligibility for particular benefits. It is important to note that these are decisions which, if we take them now and if we stay the course with them, will deliver increasing structural savings for the budget over a number of years without needing to reduce the payments that any individual is receiving. I want to quote a recent article by Ross Gittins in the Sydney Morning Heraldnot, it might be said, an unqualified friend of the Abbott government; that might be an understatement, but he is, nevertheless, a respected economic journalist. He had this to say:

The thing about the indexation solution is that the initials that is a small, but they compound with each year that passes.

I want to make another point about the importance of the measures that we are taking in this area—the measures contained in the bill before the House this evening. I want to refer to some remarks recently made in a speech to the Sydney Institute by the Treasurer Hockey, who highlighted the fact that under the welfare system some half of all households receive a taxpayer funded payment of some sort. Again, that goes to the point that it is so important that we focus on the totality of the expenditure in this area if we are to achieve our aggregate objectives in terms of budget but also, and therefore very importantly, maintain and preserve our capacity to provide the vital support to those who need it. Because if we lose control of our budget, if we lose control of our financial position, then ultimately the risk we face is that we are not in a position to provide the financial support that those who are unable to provide for themselves need, the financial support that is expected as an element of life in a civilised society.

The measures in this bill will have a significant impact on expenditure across a range of programs in the social security portfolio. They are measures which are part of our overall approach to getting spending under control to a sustainable path to reducing the deficit each year and to addressing the very significant structural challenges that the Commonwealth budget faces and that reflect in turn underlying demographic factors. It is very important that we take necessary if difficult decisions now so that we can preserve our capacity to provide support to those who need it and that we can preserve that capacity over the long term. The alternative is the approach that the previous government took: putting off necessary decisions year after year; continuing to spend in a profligate, undisciplined, poorly managed way; racking up ever-growing debt and deficit; and putting off necessary decisions, failing to take the decisions that are in the interests of Australians—and, ultimately, that will disadvantage all Australians, including those who are the ones who most need the support of government.

8:35 pm

Photo of Lisa ChestersLisa Chesters (Bendigo, Australian Labor Party) Share this | | Hansard source

Listening to the debate tonight and seeing those who have stood up to make statements in favour of these bills and these changes, it is no wonder that this government today moved to guillotine and gag debate. There are a number of government MPs in marginal seats, MPs elected at the same election I was for the first time, that are clearly in hiding. Where is the member for Lindsay making a statement on the effects that this bill will have on her community—the member for Reid, the member for Hindmarsh, the 'three amigos' from Tasmania? Why has the government put their marginal-seat MPs into hiding? Is that why they have guillotined debate and stopped them from speaking out in this debate—trying to protect the seats of the people who will be most at risk, the people in the marginal seats?

We have seen National MPs speak in this debate. I find it quite odd that they are quite willing to go out there on the fools errand to defend a bill based on a budget that attacks the most vulnerable in our community, particularly regional people.

The changes outlined in this bill do attack the most vulnerable in our community. They are radical changes and tear at the social fabric that keeps our communities together. These bills and the measures in them will push people into poverty like we have not seen for generations. This is not the Australia that most Australians want.

The Bendigo electorate is like many regional electorates. We strive to make our region a better place. We work and live together. We encourage our entrepreneurs and we take care of our most vulnerable. We expect our government to do its bit to ensure that we can face our difficulties. Bendigo people, like most regional households and people, are not wealthy people. The median income for a single person is about $500 per week, the median family income is roughly $1,100 per week, and the median household income is just under $1,000 per week. These are not millionaires living in the seat of Bendigo. Like many, they are working with what they have got and just getting by. The measures in this bill will hit the people of the Bendigo electorate hard, as they will the people of many regional electorates. Almost everyone in my electorate will affected in some way by the changes in this bill, and some will be affected much harder than others will. These unfair measures are from an unfair budget—a budget that was a shocker to regional Australians, a horror budget that confirmed that the most vulnerable would bear the brunt of the government's twisted priorities.

This budget will push up the cost of living for every Australian family and every Australian. Clearly, this budget was drafted by people who have never lived from pay cheque to pay cheque; who have never sat round a table looking at the bills, working out which ones they will pay, which ones they will put off, and which ones they will pay by credit card. The Prime Minister's budget is smashing families' budgets across our nation and in Bendigo.

Changes to the family tax benefit will hurt many people, including many of the families in my electorate. Prior to the election, the Prime Minister said—and he said this in Bendigo; he came up a couple of times—he would help families with the real cost of raising children. Yet these bills are a savage attack on these families. These bills will hit low-income families and families with single parents—the majority of people in my electorate—the hardest. These bills seek to freeze the rates and thresholds for family tax benefits. According to the Department of Social Services, freezing the income free area for FTB part A alone will see more than 370,000 families around $750 a year worse off in 2016-17. This comes at the same time that the Prime Minister is trying to abolish the schoolkids bonus. For eligible families, that means they will lose over $400 per year for primary school children and over $800 per year for secondary school children. As a result of these measures and this budget, single-income families on $65,000 with two school-aged children will be around $6,000 a year worse off by 2016. These are so many of the families in my electorate. These are those average, median families that I referred to.

That is around 10 per cent of their entire budget. There are not too many people in this place taking a 10 per cent pay cut. There are not too many people at the very top end of town taking a 10 per cent pay cut. In fact, there are none. Yet we are expecting those on the smallest of incomes to take the biggest pay cuts. Changes to the family tax benefit arrangements and changes to single parent families are unfair.

Together, the changes and the cuts to family tax benefits and family payments will result in $7.5 billion. Just imagine for a moment the hit on our local economies of ripping $7.5 billion dollars from local economies. Every dollar that a low-income family or individual has is spent. Small businesses in my electorate are already starting to talk to me about the effects that this budget will have on their customer base. If working people or people on low incomes have no money, then they will not be buying locally. They will not buy that second pair of shoes that their child may need, they may not buy the jumper they need, they may not pay for outings or excursions. This is what happens when you introduce austerity into our communities.

Changes to the pension are also unfair and demonstrate another broken promise. Australians who have worked hard their whole lives, who have paid taxes the whole time they were earning deserve a secure retirement. They deserve respect. They have earned this respect by being the taxpayers of the past. Pensioners should not have to worry about whether they can afford to put the heating on, whether they can afford to catch up with their grandkids, or whether they can afford to pop out for something as simple as a coffee with their neighbours. Yet, for people who have worked hard their whole life paying taxes, this Prime Minister and this government now sees these pensioners as a burden on the government. It is wrong and unfair to treat hardworking Australians this way in their retirement. Let us just be real about the pension. It is not big bucks. It is just under $22,000 a year for someone on a single pension. I would like to see many people in this place try to survive on that kind of income. Again, every dollar you take away from a pensioner hurts not only their household budget but also the local economy. They will not spend it in their local shops. They will not spend it supporting jobs in the service industry. There are just under 30,000 pensioners in my electorate who will be hurt by these budget measures. These pensioners are loud and they are angry. I am proud to say I will stand and fight with them and fight these changes.

The changes that affect young job seekers are also unfair. Young people under the age of 30 are going to face real difficulties if they find themselves unemployed. How will they pay for their accommodation, find enough money to eat, and ensure that they can continue to exist when their government is removing their unemployment payments for six months? What on earth does the government think that these young people are going to live on? What are they going to eat? How will they get to the job interview?

An assumption is made by the government that everyone under the age of 30 must still live at home with parents or have a trust fund. It is simply not true. People under 30 increasingly already have their first home, if they are lucky enough. They might have a child on the way. Not everyone under the age of 30 is living with their parents or has the ability to move back in with their parents if they find themselves unemployed. It is simply unfair to say to someone who could spend every hour of every day looking for work that they must live on nothing.

Until this government came to office and these budget measures came before the House, there was a mutual contract that the Australian government made with Australian job seekers. That contract was that, if you actively look for work, your government will not only support you to find work but will also financially support you while you look for work. Let's be honest about the kind of financial support that our government provides people looking for work. It is a very modest income. It is already hard to survive on Newstart payments. It will be even harder when they are at zero.

It appears the government is also of the belief that, if you take away support for young job seekers, they will find a job. They will just go out and take any job. What if there are no jobs? The government clearly seems to not understand that there is a jobs crisis in our community. Youth employment in the Bendigo area is above 13 per cent. The majority of the work that young people do today is in the service industry, and, because of other budget measures, that service industry is already contracting, meaning that those young people are going to find it even harder to find work. If you do not have a jobs plan and yet you are going to kick people off any kind of support payment, you are going to force more and more people into poverty.

These changes to Newstart and Youth Allowance are unfair. It is not just me speaking out about this budget and these changes; there are a number of community leaders also speaking out. Ken Marchingo, from Haven; Home, Safe, which is a homeless organisation, said:

What we've seen—

from this government—

is ideology dressed as economics. The notion that people under the age of 30 are somehow so well progressed in their life that they can lose their job, meet their rent, meet their utilities, feed and clothe themselves whilst unemployed … Who on earth are they—

this government—


Ken also said that the heavy lifting is being done by the poorest people.

Kim Sykes from Bendigo Community Health said that there needs to be a rethink of these policies as they will further embed disadvantage. She said:

We can't allow a society to be built around that concept.

That is the idea that, if you are poor, without a job and struggling, it must be your fault and your fault alone. Kim said:

There is a real risk that many of the measures in this budget are going to affect the most vulnerable in our community—

and in our society. I agree with Kim and I agree with Ken. This budget does attack the most vulnerable in our community and the bills before us tonight contain some of the cruellest and harshest measures in the government's first budget. Many in my electorate are asking: where is the decency, where is the honesty and where is the humanity of this government? At Listening Post, when I am in the street and when I am talking people on the phone, shock from budget night has become anger—anger that this government could attack the most vulnerable in our community.

The Prime Minister insists that he believes, in the marrow of his bones, that the budget and therefore these changes are fair, but he is wrong. The Prime Minister's budget and the changes in this bill are not only regressive but cruel. They are unfair and they are un-Australian. They tear up a community contract, a social contract, that we have that ensures that we take care of our most vulnerable. They are designed to specifically incur and entrench intergenerational social, educational and financial disadvantage. These changes target the poor, the sick, the young, the elderly and the unemployed. The changes in this bill will disproportionately affect regional households, including many in my electorate.

I call on those opposite to come out of hiding and speak on this bill and be at least willing to stand up—those first-time MPs from the marginal seats of Hindmarsh, Lindsay and Reid. At least be bold enough to speak to these changes, or come and join us on this side of the House, speaking out against these cruel measures that attack the most vulnerable in our community.

8:50 pm

Photo of Natasha GriggsNatasha Griggs (Solomon, Country Liberal Party) Share this | | Hansard source

There they go again: more Labor scaremongering. The depths that they will go to do not amaze me. I rise to speak on the sensible budget measures introduced by this government to return to a sustainable welfare system. There is no denying that this budget is a tough budget, but this is a budget that Australia needs to return to sensible levels of government spending and to one day be able to return to surplus. This budget calls on all Australians and all businesses to contribute to, to join or to grow the workforce, to boost productivity and to help build a stronger economy with more investment. Unfortunately, due to the previous Labor government's unprecedented spending spree, all Australians now have to pay for their total and utter incompetence. The Abbott government will work with all Australians to ensure that, when we tighten our belt on the government's spending, we only do it where we can afford to and where it is appropriate. This means supporting our most vulnerable and taking significant steps towards ensuring that the government can live within its means. This government will ensure there is a safety net for those Australians who need it. We will never, ever leave an Australian on their own whilst they genuinely need government support. We will always ensure that those who need extra assistance will get it in their time of need.

Currently Australian taxpayers are paying $1 billion a month in interest on top of the Labor government's debt. It is clear that we have to address this issue. That is what the Australian public elected us to do. It is the government's responsibility to clean up Labor's debt and deficit mess, and that is exactly what we are going to do. This government has reduced the Labor deficits by $43.8 billion through to 2017-18. Australia cannot continue to live beyond its means. Gross government debt is forecast to be $389 million in 2023-24. Compare that with the $667 billion that Labor left, including providing for future tax relief to address bracket creep.

Whilst we are cleaning up Labor's mess we are taking care with the social services budget to ensure that those who need assistance still receive everything they need. The 2014-15 budget includes $146 billion in social security spending. That is approximately 35 per cent of budget expenditure. Those on the other side will have you believe though that we are not doing anything of the kind. These bills introduce a package of measures to give effect to the government's budget spending and savings in the Social Services portfolio. The aim of these measures is to create a sustainable welfare system for all Australians in need. We also aim to increase everyone's ability to contribute to the economy. Everyone who can contribute should contribute. These bills include, as I said, 35 per cent of budget expenditure on social services, including pensions, family payments, unemployment benefits, student benefits, disability payments and childcare support.

With our population ageing, government spending has been growing faster than the economy, especially in the area of age pensions. In 2013-14 spending on the age pension alone will reach $40 billion. This just is not sustainable without making some sensible changes. This is the responsible thing to do to ensure we can actually still afford to pay an age pension in the future. By mid century it is predicted that there will be relatively fewer Australians participating in the workforce and paying tax to support those on the age pension. Without policy reform the cost of the age pension is projected to increase by 70 per cent over the next decade from almost $40 billion a year currently to $68 billion a year.

Let us make one thing clear: the government has not made any cuts to the age pension. Those on the other side will have you believe something else, but let me reiterate: the government has not made any cuts to the age pension. The age pension will continue to go up twice a year, as it does every year, to keep up with the cost of living. But we are making structural changes. This will ensure the long-term sustainability of the age pension.

Another change is increasing the pension age. Because Australians are living longer and healthier lives, reforms were announced in the 2014 budget to ensure the age pension system is sustainable and able to meet the future demands. That is the priority of this government to ensure that the age pension system will actually continue in the future. The increasing costs are due in part to changes in our demographics as well as Australians having a far greater life expectancy than they have ever had before. Between 2010 and 2050 the number of people aged from 65 to 84 will more than double and those aged 85 and over will quadruple. Back in 1909, when the pension was introduced with the eligibility age of 65, Australian men were living till 55 and Australian women were living to 59. Those were the averages. Since 1909 Australians' life expectancy has risen by about 25 years yet our pension age has stayed the same.

Like other governments around the world, this government will raise the age pension age. The previous Labor government scheduled the age pension age to increase to 67 in 2023. Our change will raise the eligibility age in 2035 to 70. These changes are inevitable with an ageing population and are necessary to keep our age pension system sustainable. I will repeat, given that the Labor Party are getting so confused with this simple point: this budget does not deliver any cuts to the age pension. It will continue to increase twice each year to keep up with the cost of living.

We are also making structural changes to the disability support pension. Currently I am fully supportive of, and am involved in, the disability sector in my electorate of Solomon. From 1 July 2014 changes to the disability pension will help support young people with a disability to enter the workforce if they are able to do so. The government recognises that people with a disability who are able to participate in the workforce will have better long-term outcomes if they can engage in the workforce. I have seen these endless benefits firsthand with my engagement with the disability sector.

Being able to earn an income brings an enormous sense of independence, gives confidence, promotes self-worth and gives practical skills to use in everyday life. The social, economic and health benefits of workforce participation cannot be understated. Compulsory workforce activities, such as work experience, education, training and job searching, will help certain disability support pension recipients aged under 35 find and keep a job. However, this government, as always, has kept a clear safety net in place for when this new measure would be unsuitable. People with a manifest disability or with a work capacity of zero—