Monday, 8 February 2016
Social Services Legislation Amendment (Budget Repair) Bill 2015; Second Reading
I rise to speak in opposition to the measures contained in the Social Services Legislation Amendment (Budget Repair) Bill 2015. The measures that are proposed contain a lack of consultation and display quite a lack of an evidence base, quite frankly, not to mention that the substance of the proposed changes includes a wide range of highly inequitable changes that will hurt hardworking Australians who are being punished by the Liberal government.
The bill does a range of things including reintroducing measures from the 2015 budget—specifically, changes to the proportional payment of pensions outside Australia. It also reintroduces measures contained in the 2014 budget—the hit that it was—that the government has been unable to legislate: abolition of the pensioner education supplement and abolition of the education entry payment.
It also reintroduces a measure contained in the 2014 budget, previously introduced in the No. 4 bill and reintroduced in the Social Services Legislation Amendment (Youth Employment and Other Measures) Bill 2015, which was negated at the second reading stage in the Senate on 9 September 2015. These changes are: maintain at level for three years the income-free areas for all working-age allowances other than student payments and for parenting payment single from a new start date of 1 July 2016; and maintain at level for three years the income-free areas and other means test thresholds for student payments, including the student income bank limits, from 1 January 2016.
As the shadow minister for citizenship and multiculturalism, I want to specifically focus on the changes to the proportional payment of pensions outside Australia. That is because of the impact that this measure will have on people from migrant backgrounds. I believe that this government has grossly misunderstood and underestimated the impact that this is going to have on a substantial number of people in our community and the outcry that is going to arise as a result. As shadow minister and member for Jagajaga has stated, Labor will not be supporting this bill and this most unfair measure that has already resulted, as I have said, in an outpouring of opposition from many organisations and the community in general.
I will now turn specifically to the proportional payment of pensions outside Australia. Travelling overseas in retirement is often the reward for working hard your entire life, and it is under threat from this government through this bill. Australia is a migrant country, a country enriched by the contributions of those from all over the world. Indeed, about one in four Australians were born overseas, and it is often the case that in retirement these Australians plan on visiting the place of their birth for a holiday or to see loved ones. Currently, pensioners can stay overseas for 26 weeks and receive their full pension. Following that time, the pension is reduced to a rate that depends on the number of years the pensioner has worked in Australia. Under the government's proposal, from January 2017 that 26 weeks will be reduced to six weeks, after which a pension recipient's payment will be proportionalised. After six weeks the payment will be adjusted according to the length of the pensioner's Australian working-life residence.
I find it difficult to believe that the government can even be certain about the costing of this proposal. There have been huge assumptions seemingly made about the deterrence impact of this measure. I look forward to further scrutiny of these provisions in the near future. It appears that the savings measures contained in this bill have been derived from the breach. There are questions about this that many soon-to-be-affected people are rightly asking me.
I understand travel is expensive and so when Australian pensioners who have relocated travel overseas to see elderly relatives or perhaps visit their children or grandchildren or go to their home village they want to do so for a longer period. I think that is fair enough. That is why Labor will not support this harsh measure which punishes Australians who have worked hard their entire lives and want to enjoy their retirement.
I also think this measure completely ignores the significant contribution this cohort of people have made to our society. Put simply, it is a cruel and punitive measure. This decision, in essence, creates a two-tier system. It unfairly targets Australian pensioners who have family overseas. We know nearly 40 per cent of those receiving the age pension were not born in Australia, but they have worked hard and contributed to our society and now are going to be punished because they want to visit loved ones overseas.
As the member for Cunningham would well know, particularly when you are looking at established migrant communities, these are people who have maintained strong roots in their country of birth. Travelling back there is something that they look forward to. They do not do it on a regular basis, I would say, but certainly on a reasonable basis. Particularly if you are going to be travelling to the Northern Hemisphere, you are going to want to stay for a reasonable period of time. I do not think it is unreasonable to expect that people will do this. People do. People in my family do it, and I know the member for Cunningham has many constituents who are in the same position.
I have been listening to the community and relevant stakeholder organisations about this measure. I am left wondering: who in fact did the government consult before proposing this measure? Who did they consult? Let's look, for example, at the Federation of Ethnic Communities' Council of Australia. FECCA is very well respected. It noted in its submission to the Senate Community Affairs Legislation Committee:
FECCA believes that there is a substantial equity issue with a measure that treats migrants differently to those born in Australia. All migrants contribute not only to Australia’s economy and rich cultural diversity. There is no rationale for this action to treat some citizens differently from others. FECCA strongly opposes these discriminatory measures.
We in the Labor Party agree. We believe that older Australians who have worked hard their entire lives and contributed to the social and economic success of this country deserve to be able to travel overseas in retirement for a reasonable period without being penalised by the measures proposed in this bill. It appears the Prime Minister and those opposite disagree, but I can say here that Labor will stand up for these pensioners and oppose this most unfair measure because we believe Australian pensioners should not be punished for wanting to enjoy their retirement.
In my own community and around the country many people have expressed graves concerns regarding this harsh measure. Some constituents of mine from the suburb of Prospect wrote to me recently saying:
We have only two daughters—both of whom live overseas—and it is not much fun at our age to fly long-haul flights just to share time with our children. I would like Scott Morrison to try doing this in economy seating—28 hours door to door—and then to be penalised even further.
As well as this, I recently addressed a roundtable, organised by the very hardworking member for Calwell, with some of Melbourne's Turkish community who also mentioned the negative impact this would have on their parents, grandparents and extended families. Again, I would caution those opposite. It is not just those who will be directly impacted by this measure, the pensioners, who have expressed concerns. There is a palpable sense in the community that people do not want this to happen to their parents. There is anger in the community that the government would even think about proposing this sort of measure.
On that note, I want to mention an article from The Voice of the Maltese which reads:
One of our readers who came to Australia from Malta in the early 1950s and who did not want to be named, said the changes were "unnecessary if not stupid".
The reader went on:
It's a kind of discrimination towards migrants and a special worry to the Maltese.
To digress, in the electorate of Greenway we have a very large Maltese community. Many of the people in that have been very well established for some time. The suburb of Pendle Hill, in fact, was known for a very long time as 'little Malta'. I continue quoting:
You want to go Malta because in your twilight years … you want to spend some time with your close relatives before it's too late …
I also note the submission from the Combined Pensioners and Superannuants Association of New South Wales on this most unfortunate measure:
This 77 percent reduction in the amount of time will negatively impact people who visit their country of origin to see friends and relatives for longer periods of time. Those who travel to care for friends and relatives (or to be cared for themselves) will be particularly affected.
This change will not achieve substantial savings (particularly when the savings to Medicare and aged care when someone is overseas and not using these systems are factored in) but will be detrimental to pensioners who need to spend time outside of Australia.
We have specific concerns about people on low incomes, particularly those born overseas, reliant on the full pension who may need to travel to fulfil family or other responsibilities for extended periods (including the provision of care, or to obtain care and support for themselves that is not available in Australia).
It is for these many reasons that Labor oppose this measure and the bill as a whole. We will always put people first; unlike the government, who see—and will continue to see—Australian pensioners as nothing more than a burden. It is a shameful cash grab by this out-of-touch Prime Minister, from some the most vulnerable in our community—people who, as I have said, have worked hard their whole lives and deserve to enjoy their retirement.
In closing, I want to mention something that was recently pointed out to me by a local constituent at one of my mobile offices. It was about older people from migrant communities and older people in general people, but this person was speaking as someone who has lived in Australia for a very long time. The economic contribution that older people make in this country to our society continues to be underestimated and even ignored by this government. The contribution that they make in areas such as child care and the fact that they often become the caregivers for their grandchildren, as well as go then to shops and purchase local services, mean that two parents can often be out working and making an economic contribution. I say that those older Australians are making not only a social contribution but a very valuable economic contribution to our society. To see so many of them discriminated against and being potentially penalised in such a downright mean manner according to the measures proposed in this bill is, I believe, an absolute disgrace. We are going to see communities up in arms about this. The government has grossly underestimated the opposition to this, and Labor will oppose this bill.
I would like to commence my contribution to the debate on the Social Services Legislation Amendment (Budget Repair) Bill 2015 where the member for Greenway ended hers, and that is by saying that I have been approached by older people in my community on many occasions—and on an increasing number of occasions in recent times—because they have become very distressed about the way that the government has treated them. They have made the same statement to me—that they have made an enormous economic contribution to Australia throughout their working life; they have paid their taxes; they have always worked; they now support their family and provide child care, as the member for Greenway was talking about; and they still engage in the community, work as volunteers and do so many different things to support not only their family but the community and our Australian society. They have felt very marginalised by the Abbott-Turnbull government.
An ongoing theme through all the amendments to the social security legislation is that the government has been targeting the most vulnerable people in our community and particularly older people. If I have one message to those on the other side of this House, it is: value the older people in your communities, value the contribution they have made in the past and value what they are still contributing to our society. When you as members of a government and when the Prime Minister as head of that government and the Treasurer are looking for savings, do not immediately go to pensioners and older Australians to bring about those savings. Look wider. Maybe you need to look a little bit at some of the superannuation loopholes that exist and some of the loopholes that multinational companies are exploiting, rather than targeting pensioners. I need to put on the record too that every single change which the government makes within the area of pensions and every single change that it makes which impacts on the lives of older Australians actually creates feelings of insecurity, uncertainty and vulnerability. Those older Australians really feel marginalised by this government.
In the last election, many older Australians supported the Abbott-Turnbull government, but they have become extremely disillusioned by the actions of this government and the changes it has made. I would be happy if they were not disillusioned and they still could enjoy the things that they were enjoying before the last election. But, unfortunately, the Abbott-Turnbull government has waged a vendetta against older Australians, and I am terribly, terribly disappointed about it.
If I could turn to the legislation that we have before us today, there are three main aspects of it. I will start with the aspect that the member for Greenway was talking about—that is, the fact that the government is looking at reducing the time that certain pensioners can stay overseas and still receive their full pension from 26 weeks to six weeks. This has created a lot of concern in my electorate. A lot of people in the Shortland electorate were either born overseas or have families overseas. I have been approached by a significant number of pensioners who have raised this issue with me, particularly in relation to the area of caring. I very recently had a constituent come to see me to talk about how she has an ailing parent overseas and her fear that the changes to the legislation will impact her pension, which she totally relies on for financial support. She is very, very concerned about this. Once again, this measure is creating anxiety, uncertainty and fear, and I know in electorates like that of the member for Greenway that this would be magnified by hundredfolds.
The cuts in this bill originated with former Prime Minister Tony Abbott; they were in his unfair budget, which we have all heard so much about. People thought the current Prime Minister would actually change things, be a little more receptive and understand that people rely on the government to create certainty and for financial support. They thought that he would understand, but they have been extremely disappointed. When I am out at the shopping centres, as I have been, I have had people come up to me and point out that they thought Prime Minister Turnbull would be different from Prime Minister Abbott. They thought he would be more compassionate. They thought he would understand the difficulties that pensioners and families were confronted with each and every day. The message that they have given me is that the government and the Prime Minister have changed but every key policy is still exactly the same—and that is what they do not like.
They do not like the fact that the government is targeting the most vulnerable people in the community, particularly the measure that goes to the heart of reducing the time that people can spend overseas and still receive their full pension. It is having an enormous impact on communities throughout Australia, and the government needs to understand this. The government needs to understand the personal and cultural implications of this measure rather than just pushing ahead with it and seeing social security and vulnerable people as a quick fix when it comes to plugging up their budget deficit—which, I might add, has tripled since they came to power; it increases each and every day. We find with this government that there is a lot of talk about budget black holes, but that hole is getting so deep that we cannot see the bottom of it. The only way that the government is looking to address the budget deficit is by attacking the most vulnerable people in our community. Quite frankly, as a member of parliament who represents a lot of older people, I find that totally unacceptable. I believe that in the Shortland electorate, which has the 9th oldest demographic in the country, people have been very disturbed by the way that the government has been targeting older people.
I now want to touch on the abolition of the pensioner education supplement. This supplement is between $31 and $61 a fortnight and is determined by the type of course and the level of study that a person undertakes. It helps in particular people on disability support pensions and carers payment who are studying. I would like to put this in perspective: I previously worked as a rehabilitation counsellor, with people who had disabilities and who were keen to retrain in an area in which they could work and which would be within their physical capabilities. These were generally people who had worked in a more manual or physical occupation before injuring themselves. This sort of supplement helps them when they are studying: it makes it much more affordable. If the government pushes this measure through it will mean that 41,30 people will lose this supplement. There is no surprise to this, I suppose, in that three-quarters of the recipients are women and this government's policies in the area of women has not been the best. The number of women on the frontbench and the number of women involved in key decision areas has not improved under this government. We know that, yet again, this measure will impact women.
The other measure in the bill is the abolition of the education entry payment. Around 87,000 people received this payment back in 2013-14. It is a payment of $2,008 a year for the purpose of assisting people with study costs. When you are on a pension or any form of income support, you struggle to get the dollars to be able to study. We should be assisting people in every way we possibly can, but this government is more inclined to put in place barriers and disincentives for people wanting to undertake studies that will then lead them to entering the workforce. We hear a lot of talk from those on the other side about the best form of welfare being work. We all agree with that. I agree with that 100 per cent. But, along the way, before you can actually access work, there is a pathway to work and that pathway involves study and training. Unfortunately, this government is not prepared to help people traverse that pathway.
I would have to say that I am really disappointed that we have a government that has no compassion and that lacks the understanding of the impact of its most basic decisions has on the lives of people. I cannot support this legislation; I cannot support legislation that will stop pensioners visiting and caring for their families for more than 26 weeks; I cannot support legislation that will lead to the abolition of the pension education supplement, which is so vital for those people who are undertaking studies; and I certainly cannot support legislation that is going to abolish the education entry payment. This government stands condemned for its lack of compassion and understanding.
I am speaking in opposition to this bill because it is cruel and unfair. It seeks to take benefits from some of the weakest and most vulnerable people in our community—pensioners—under the guise of repairing the budget. It seeks to remove from pensioners benefits and incentives which support their education and enable their participation in society, to keep pace with technological change and to be able to live fulfilling lives. This is lazy politics from the government. It is attacking and targeting some of the weakest and most vulnerable people in our community—people who they see as easy targets when it comes to reining in spending. These reforms are unjustified and unfair. I am intending to stand up for pensioners in the community I represent; I intend to say no and vote against these reforms.
The bill seeks to reduce access to a number of important payments that support pensioners and provide them with access to greater education and the opportunity to participate in society. The first change is to proportional payments of pensions outside Australia; the government will reduce the period from 26 weeks to six weeks that some recipients of the age and other pensions can be paid their full basic, means tested pension rate whilst they are absent from Australia. The second element of the bill is the abolition of pensioner education supplement. This is a payment of between $31 and $61 a fortnight, depending on the level of study, for the disability support pensioners and carers payments for people who are studying. The measure will see 41,130 recipients lose this supplement, and more than three-quarters of those recipients are women. So women will be disproportionately affected by this change. The third element is the abolition of the education entry payment. This is a payment goes to recipients of Newstart, parenting payment, partner or widow allowance. In 2013-14 there were around 87,000 recipients of the payment, which is $208 a year to assist people with study costs. Again, it is an unjustified change. The final element of this bill is to reintroduce measures from the 2014-15 budget but amend the starting date and maintain that level for three years the income free areas for all working age allowances and for parenting payment single for a new start date of 1 July 2016. The same applies to the income free areas and other means tested thresholds for student payments, including student income bank limits, from 1 January 2016.
As I said in my opening remarks, these reforms target some of the weakest and most vulnerable in our community—people who are on low incomes and who survive from week to week. They rely on such payments to continue to be in education and to participate in society. It is really weak that the government sees these people as easy targets. When the government talks about budget repair, it always goes after the weakest and most vulnerable in our community. That is what it is seeking to do again through this bill. I understand the need for fiscal consolidation. I understand, given the position of the budget at the moment—the weakening of the economy and the worsening of the terms of trade—that if we are going to continue to fund programs we need to raise more revenue and we need to cut expenditure. I am acutely aware of that, as are my colleagues on this side of the House. That is why Labor has agreed, over the course of the last year or so, to $20 billion worth of savings in the budget.
In achieving fiscal consolidation, the important thing is how you go about it—the approach to take in doing that and who you target in our community to raise more revenue or to cut expenditure. When it comes to the Liberals, their philosophy unfortunately is to attack the weakest and most vulnerable in our community—to attack the poorest, the people they see as the easiest target in our community. In doing so they are ignoring some of the real deficiencies that exist in our budget position. If some of these deficiencies are not tackled, they will balloon in the coming years and swallow some of the current social security expenditure. In doing this they are ignoring the real and unjustifiable tax concessions that exist for many in our community, particularly those with large superannuation balances and multinational companies which shift profits overseas before they pay tax here in Australia on their domestic operations. The Liberals do not require those who have the capacity to pay more to pay more—to pay additional revenue and ensure they are paying their fair share. These are the people the government tends to let off the hook. They say, 'No, there isn't a problem with those sorts of issues.'
There are some areas where we can raise more revenue through the budget that would not harm growth, would not be unfair and would certainly be justified in terms of people paying their fair share of tax in this country. The first is multinational companies. In figures recently released we see what some of the largest companies operating in Australia are paying in tax. In December last year, under new legislation that was introduced by the Labor government to improve tax transparency in this country, bigger companies were forced to publish and publicly reveal the amount of revenue they make in Australia and the effective rate of tax they pay. Some of the figures are quite startling, and they highlight the imbalance that exists in our taxation system. For instance, Google made $357 million in revenue in Australia last year and paid $9.2 million in tax, an effective tax rate of 2½ per cent. Apple—this is the big one—made $6.1 billion from their domestic operations in Australia last year and paid a minuscule $74 million in tax, an effective tax rate of 1.2 per cent.
Go and ask the average Australian, a tradesman who battles away from week to week to earn an income, whether they would like to pay 1.2 per cent in tax. Go and ask a PAYE income owner, an employee who works for a company, whether they would like to pay 1.2 per in cent tax. Go and ask the subcontractors, the small business men and women in this country, whether they would like to pay 1.2 per cent in tax. I know what the answer would be.
Microsoft made $567 million in revenue in Australia last year and paid $31 million in tax, an effective tax rate of 5.4 per cent. Although that is much better than those other two, in comparison to other Australians it is minuscule and it does not represent those organisations paying their fair share. What we see occurring is that a lot of those companies will shift to overseas the money they make as profits from domestic operations here in Australia in the form of loans to jurisdictions where company tax rates are not as high as they are in Australia and effectively avoid paying their fair share of tax in this country.
A person who may have a superannuation balance of more than $1 million can earn an effective income from that balance simply through the interest payments and earnings on the investments in that super. It is not unusual for someone who has a superannuation balance of more than $1 million to earn an income of $50,000 or $60,000 a year simply from that balance—not by drawing down on that balance but through the interest and income they can earn on that balance through share portfolios and the like. They pay no tax whatsoever on the income they receive from that superannuation balance. This has been identified by experts in many fields, by economists, as unsustainable in the future. Those superannuation tax concessions on high-end balances are growing, and they will eventually swallow the whole social security payment system in this country if nothing is done about it. Again, all we have got from the government is silence on this issue because they have plenty of mates who have very large superannuation balances they do not what the government to touch and ensure people pay their fair share of tax. In contrast, one of the first policies the Shorten Labor opposition released was to raise more revenue from people with more a superannuation balance of more than $1 million.
You can see the difference in philosophies when it comes to tackling the issue of fiscal consolidation. The Liberal and National parties have the trickle-down economics approach, the outdated philosophy that, if you reduce taxes for businesses, businesses will earn more profits and employ more people and the economy will grow. It sounds good in theory but throughout history it has been proven to be wrong and it does not work. We have seen classic examples of that in recent years. At the end of the day, not all those businesses reinvest those profits. In fact, a lot of them will pocket the profits and not reinvest them in the particular business they have set up and the country in which they are operating. So we get this uneven growth situation in our economy. This reduces the spending power of the majority of people in our economy. The largest group who spend in our economy are being unfairly attacked by this government with reforms such as the proposal to broaden the base of the GST and increase it to 15 per cent. These are people who work and pay taxes in our economy, and this government wants to attack them rather than tackle the big issue of unsustainable tax concessions in our community.
It has been proven that Australia's pension and welfare system operates well. It is targeted, it is means tested and it is efficient in terms of a tax transfer system. This has been identified in numerous reports by the OECD, the World Bank and the like. Australia operates an efficient and effective tax transfer system when it comes to pensions, disability support and the like. Yet we have the Liberals, with the philosophy of trickle-down economics, wanting to target those most vulnerable people in our community in terms of fiscal consolidation, and it has come up again in this bill. It was the whole focus of the government's first budget, which was a disaster when they attempted to increase the Medicare co-payment—again targeting some of the weak in our community—and their second budget, which has fallen flat and they have been unable to get through the parliament.
In conclusion, I am speaking in opposition to this bill. It attacks the most vulnerable, low-income pensioners in our community, who are seeking to better themselves by accessing education and participating in our society. Coupled with a GST, a lack of action on superannuation tax concessions and multinational tax shifting overseas, this represents this government's ideological attack on the weakest in our community and it, therefore, should be voted down.
I also rise today to join with my Labor colleagues in expressing my opposition to the Social Services Legislation Amendment (Budget Repair) Bill 2015 because the proposed budget repair measures contained in this bill target the most vulnerable people in our community by continuing this government's assault on the lives and wellbeing of the thousands of age pensioners and other welfare recipients who live in my electorate of Calwell. This bill reintroduces measures from the 2015 budget—changes to the proportional payment of pensions outside of Australia—and it also reintroduces measures in the 2014 budget, measures that the opposition will continue to oppose because they are unfair and heavy handed.
In my speech today I want to make some comments in relation to the 2015 budget measures that seek to reduce the payment of the age pension outside of Australia. This is a highly contentious issue and it has drawn widespread criticism and outrage from my constituents and from the broader migrant community, welfare agencies and non-English-speaking media for it unfairness and its implications. I want to join with the Federation of Ethnic Communities Councils, the Australian Council of Social Service, the Refugee Council of Australia and, more importantly, the many local pensioner groups and other welfare recipients in my electorate who have come out strongly in their opposition to this bill.
If this bill is passed, thousands of age pensioners in my electorate and across this country who have had fewer than 35 years living and working in Australia will have their benefits reduced if they travel overseas for more than six weeks in a year, according to the length of their Australian working life residence. Because these measures do not affect those who are born in Australia who have worked and lived in Australia for over 35 years this bill creates a discriminatory pension system that will disadvantage a very large number of Australian age pensioners for no substantive reason other than the estimated budget saving of $168.4 million over four years.
At issue here is the practice of many Australian age pensioners to travel, usually to their country of birth, for holidaying and visiting family. Presently they are able to remain overseas for a period of 26 weeks before their pension is affected. I must say that this dramatic reduction of 20 weeks has sent shock waves through our age pension community, and rightfully so. Forty per cent of those receiving the age pension were born overseas but they are Australians living in Australia who continue to maintain strong and important ties with their country of birth. A tie to ancestral homes is a human condition, which has always been encouraged and practised in this migrant multicultural country of ours. Seven million Australians were born overseas, so travel to one's country of birth to visit family is a very Australian thing to do.
If passed, the measures proposed in this bill will severely impact on the ability of Australian age pensioners to continue to travel to their country of birth because the dramatically reduced timeframe is, as many of my age pensioners have already told me, 'too short'. To further quote them: 'It is a very long trip. At our age we need time to recover and we want more time to spend with family and friends.' My age pensioners are appalled at this proposal and offended because they cannot understand why and with what logic the government wants to restrict in such a draconian, mean and discriminatory way their capacity and freedom to visit without censure.
I know my local age pension communities very well. I have all too often heard their stories of migrating to Australia, the difficulties they experienced and the lifelong pain of separation from family. They can never forget their country of birth, but they love this country and are proud Australians. Indeed, they have worked here for a large part of their working life. They are grateful for the opportunities that Australia has given them. They have raised their children here and it is their grandchildren who bring them joy and finally anchor them here in their home country Australia. But for all of them growing old brings many challenges, fears and increasing desires to reconnect with their country of birth, their past and the families and friends they left behind when they migrated to Australia.
The age pensioners in my electorate are migrants from Ireland, Britain, Turkey, Greece, Italy, Malta, Serbia, Croatia and India, just to name a few. They have strong extended family values and as a result have maintained strong emotional ties to family and friends in their country of birth. They have maintained their faith, language and cultural practices. In fact, it is widely acknowledged that in their senior years people have a tendency to revert to their mother tongue and their memories and connections to their country of birth. It is a very common part of the ageing process and, of course, we see this a lot in people who are suffering from dementia.
Everyone in this House who has an ageing community will know that quality of life affects the wellbeing of elderly people. Financial concerns, loss of their life partner, adult children who have their own families and busy lives, and a society that is not necessarily an easy and inclusive place for the migrant elderly in particular inevitably lead to isolation, depression and loneliness becoming common features of the ageing process. Being able to connect with loved ones and socialise with like-minded people who speak your language and understand you is important to mental health and wellbeing and this is the reason many of my constituents travel to their place of birth, where they often find the comfort, support and respite they need.
In most cases this is the only option they have for seeing their families because their family members cannot travel to Australia, often because our visa system is difficult and expensive. It is also the most convenient time for Australian age pensioners to travel because, having retired, they no longer have the tyranny of clocking on and clocking off. So they are grateful for the opportunity to travel, usually during Australia's winter months, to the Northern Hemisphere summer.
This travel is very much looked forward to. They enjoy seeing their family members and spending time in the villages where they were born. Often, it is to attend happy family occasions but, sadly, it also involves visiting sick and dying relatives and spending time providing emotional and moral support as well as receiving it. Receiving their age pension whilst overseas is key to enabling this travel.
The age pension is a modest amount of money. It adds up to about $20,498 for singles and between $30,903 and $33,982 for couples. I know, for a fact, that those aged pensioners who travel will skimp and save and chase the cheapest off-season fares in order to afford these holidays. Being able to stay overseas at the current 26 weeks gives them value for money and, by no stretch of the imagination, does it imply or assume that because they can travel they must be rich enough not to be eligible for the age pension.
The government has estimated the budget measures in this bill will save $168.4 million, over four years, if implemented on 1 January 2017. My constituents would like to know where the government bases these projected savings. Are they contingent on pensioners breaching by exceeding the six-week period whilst overseas? If so, this is, definitely, an unstable basis upon which to pursue budget repair. My constituents' views are that those affected by this budget measure will simply not travel, and what does the government gain, anyway? It looks to them like the government is trying to squeeze blood out of a stone.
I recently met with members of the Australian Turkish Business Council, in my electorate, and they raised this issue with me. They too cannot see where the savings are going to come from. They explained to me that their parents would likely refrain from travelling and would end up costing the Australian government more. They would be here for the Australian winter and would be more likely to use the health services, because they would 'be at the doctor's all the time'. They all agreed that this is a mean and illogical measure.
These are small-business owners, successful and hard-working Australians of Turkish background who, like their parents before them, are making a contribution to the Australian economy. They do not appreciate government measures that essentially discriminate against their elderly migrant parents and that make judgement about their loyalty to Australia and the value of their citizenship.
In an article in the English language newspaper Neos Kosmos, on Saturday, 30 January, a spokesperson for the social services minister said:
The government believes a person's retirement costs should be fairly distributed between the countries a person has spent most of their working life.
It is the expectation that where a person has spent a proportion of their working life overseas, they will be eligible to receive a pension from that country.
Whilst this may be true for some migrants it is not the reality for many migrants from countries that do not have comparable pension policies. Where the 30-odd social security agreements are already in place, Australian age pension rates are already proportional to country-of-birth pension contributions. The truth is that Australian aged pensioners are not going back to their country of birth to live there permanently, they are going there temporarily—on a holiday—and this drastic reduction is just mean and petty. My constituents are rightfully outraged, and I stand with them by voting against this bill.
In its submission to the Senate Community Affairs Legislation Committee, the Federation Ethnic Communities' Councils of Australia said these measures are:
… a large group of people having a significantly lower level of rights than another part of the population, are inequitable and do not contribute to social cohesion within Australian society.
I agree with this assertion—and so do my constituents—and advise the government that in its search to address budget repair it should turn its attention to major tax evaders, including large corporations. The government should resist the temptation for easy options, such as attacking some of the most vulnerable groups in society.
This is not good policy and I am pleased to say that the federal Labor opposition will oppose it. Labor does not support such punitive and deeply unfair, imbalanced and discriminatory measures. I certainly do not commend this bill to the House.
I, like all my colleagues on this side of the House, absolutely oppose this Social Services Legislation Amendment (Budget Repair) Bill 2015 and am pleased to speak against it. I speak on behalf of many people in my community who came to Australia and made a home in recent decades. They have contributed in extraordinary ways to this country. When they retire they seek to return home for periods of time to visit family, see their homeland, perhaps visit the graves of relatives, spend time with grandchildren and see people they have not seen in a long while. It is something we should expect in a country as diverse as ours.
Once again, we see this government talk about budget repair. It is a government that has doubled the deficit since it took office 2½ years ago. It talks about budget repair by ripping away at the most vulnerable in our community. Whether it is aged pensioners, people on disability pensions or young people they are in the sights of this government. It will try to fix a government problem by transferring the problem to the budgets of some of the most vulnerable people in this community.
This bill has four dreadful measures. One is from the 2015 budget and three are rising, again—like bad smells—from the 2014 budget. All demonstrate the appalling unfairness of this government. Regardless of who is the leader of this government, after 2½ years of them we have seen, time and time again, attempts to rip away at the welfare of the most vulnerable people in this community.
The first measure was introduced by the previous Prime Minister and is back, again—well and truly owned by current Prime Minister Turnbull. It is a dreadful measure. It changes the proportional payment of pensions to people who are visiting overseas. Pensioners who have spent fewer than 35 years of their working lives in Australia will have their pensions reduced after just six weeks overseas. Currently, there is a provision in the law where, if you are overseas for more than 26 weeks, there are reductions in the pension paid to you. This bill reduces that to just six weeks, which will affect people in their retirement, people who have been looking forward to their retirement, people who have been working hard for decades and have been unable to make trips overseas, perhaps because of the cost or because of their working lives—people who have been looking forward to visiting their first home, where part of their heart remains.
We all know that so many of our migrants that come to Australia love Australia and they live here as the most extraordinary Australians. But there is a part in their heart that will always be in their first country. One of the things that makes Australia great is our connection to the world. So many pensioners—my Maltese Australians, my Turkish Australians, my Lebanese Australians, my Greek and Italian Australians and all those who have come since then from Latin America, from Asia and from Africa—expect that, once they retire and their working lives are over and they have more time, they will be able to return home for a period of time.
This clause in the bill will cause grief in my community. In a community like Parramatta where you have so many people who came to Australia and made it home, this will cause nothing less than grief. I have spoken to so many people who were looking forward to those retirement years when they could return to their first home for a period of time. We all know that when you get older economy air flights are not that comfortable, so it is quite usual for people returning home in their retirement years to spend long periods of time out of this country when they are visiting overseas. Six weeks is a short period for a retired person to visit a country that they have not seen for decades. It is ironic of this government that, if you can afford to go many times for six weeks at a time, you are not affected by this. But if you cannot afford to go many times, if you are going to have to save up and go once for a longer period of time, you are well and truly affected by this bill. So those that are least able to afford these incredibly important trips home in their retirement years will be most affected.
It is as if this government not only do not get fairness but they do not actually know who we are. We are a country that has been built on migration. Forty per cent of pensioners were born overseas, 60 per cent of us have one parent who was born overseas, 25 per cent of the population generally were born overseas and we are a richer country for it. We are richer country because of this diversity. In the years of the late sixties and early seventies, when John Gorton, Gough Whitlam and Malcolm Fraser opened the doors and allowed the world in, we became a richer nation. There is not a language that we do not speak in my community—not one. Conflict aside, there is not a place in the world that Australians cannot walk and know it. There is not a place we cannot trade, because we have the world in us. It makes us strong. Our migrant communities that came here from other parts of the world and brought the richness of their culture and their language and their traditions—not to mention their food and their music and their fashion—are all alive and well in Parramatta. They brought things to this country that are valuable. Communities like the Maltese community worked in the factories. They were an incredible part of the workforce down at James Hardie in my electorate—and paid the health costs of that. These have been extraordinary communities that have quite often taken low skilled work in factories and held parts of this country together for decades. Now, unless they have worked here for 35 years or more, they will be impacted if they decide to visit their families for more than six weeks at a time. I urge those on the other side of this House to understand the grief this will cause and go back to your party rooms and seriously talk to your colleagues about reversing this decision. It is incredibly harsh, and it is a recipe for heartache and, in many cases, grief.
The second measure is the abolition of the education entry payment. It is also an appalling measure. The education entry payment is a payment that goes to recipients of Newstart, the parenting payment or the partner or widow allowance, and there are currently 87,000 people in receipt of this payment. It was $208 a year, intended for the purpose of assisting people with study costs. This goes back to the 2014 budget. It was originally introduced in the 2014 budget measures bill. There was no vote in the Senate. It was discharged from the Notice Paper. It was then reintroduced as the Social Services and Other Legislation Amendment (2014 Budget Measures No. 1) Bill 2014, and there was no vote in the Senate. Now it has been reintroduced once again, so this is the third attempt by this government to put this amending legislation through the House to abolish the education entry payment.
I notice the minister's remarks that it is not a problem abolishing this because students can get help through VET FEE-HELP. Once again we have a government that loves debt—if it belongs to somebody else—and that is imposing measures on the young people of Australia, in particular, that will see them start their professional lives with thousands of dollars, sometimes tens of thousands of dollars, of debt through the vocational education system and $100,000 debts or more if they are in the university system, if this government has its way. It is an appalling measure that should be rejected at every turn.
There is a third measure that I want to talk about: the abolition of the pensioner education supplement, which is a payment of between $31 and $61 a fortnight, depending on levels of study. It helps pensioners, mainly disability pensioners and carers, who are studying. There are 41,130 recipients who will lose their supplement if this bill passes. Three-quarters of those are women and 30 per cent are under the age of 25. This is a small supplement of between $31 and $61 a fortnight to help people, a large number of whom are on the disability pension, return to study. It is an incredibly important contribution to people who are trying to improve their lives, get back into the workforce or improve the capability in the workforce.
That is three appalling measures that are in this budget, all of which will tear away at some of the most vulnerable in the community. I strongly urge the members of parliament on the other side of this House to reconsider this bill and withdraw it for a third time.
I am pleased to follow the member for Parramatta and, previous to her, the member for Calwell in speaking against this proposed legislation, the Social Services Legislation Amendment (Budget Repair) Bill 2015. Members on this side have made clear, speech after speech, why this bill should not be supported. If Australian people want to understand the underlying values of the Turnbull government and who the government really represent, they need look no further than the proposed legislation that comes before the parliament and the policies that the Turnbull government are pursuing—policies which, inevitably, prop up the top end of town at the expense of lower income Australians; policies which continue the Abbott government's very first unfair budget, which was indeed rejected by the Australian people and which they brought in to fix the budget blow-out, which, as the member for Parramatta pointed out only moments ago, has now doubled to nearly $38 billion. They want to fix their budget mess on the back of low- and middle-income Australians.
That is what is wrong with this bill and that is what this bill seeks to do. It is unfair, it is discriminatory, it is offensive and, quite frankly, I believe it borders on being racist. This bill seeks to cut $579 million over the next four years in payments to pensioners by cutting the pensioner education supplement and the education entry payment, by freezing for three years the income-free areas and means-test thresholds for student payments and also by restricting to six weeks the period that a pensioner may be overseas before their pension is cut. The last measure in particular will affect recipients of the age pension, the wife pension, the widow B pension and the disability support pension. The proposal to limit to six weeks the length of time that a person in receipt of a pension may remain overseas before their pension is cut is particularly unfair because it applies only to those pensioners who have lived in Australia for less than 35 years. It effectively—perhaps not in every single case but effectively—targets overseas-born pensioners. It is discriminatory and it creates a two-class pension system in this country.
The criteria for eligibility for the Australian pension are clear. If the criteria are for some reason flawed or not being properly assessed or are in any way being rorted, that is a legitimate cause for review. However, if a person meets all of the necessary requirements for the aged, disability or widow pension and the pension is then approved, they should not be told how they should spend their pension or how they should live their life. If the argument is that the government wants its pension payments spent here in Australia because it supports the Australian economy, the government should lead by example and ensure that all government procurement is made in Australia, where the products or services can be sourced within Australia and are fit for purpose. Yet the government does not do that, but it expects, I suspect, everyone else and, in particular, pensioners to spend their money here.
The pensioners most likely to be overseas for more than six weeks at a time, as the member for Calwell so well articulated, are those who were born overseas and still have family members living in their country of birth. A typical scenario would be where the Australian pensioner, having migrated to Australia, spent their working life working hard, settling into this country, caring for and raising their family, and not being able to take holidays or go back to their homeland because of other essential responsibilities that they were also committed to. They were not able to go back and see friends and relatives, perhaps parents, they had left when they left their country of birth. They had not seen them for many years and it was always their plan, on retirement, to do that. They planned well ahead on the basis that, on retirement, they could not only go overseas but spend an extended period of time in order to reunite with relatives and friends whom they had not seen for many years—they wanted to spend quality time with them. Because they did have relatives and friends overseas, the trip would be affordable to them because they probably would not have to pay accommodation costs when they visited because they would stay with those relatives. So the pension that they are entitled to would sustain them during the extended period of time that they were there.
Bear in mind that these people are already pensioners themselves and have been out here for 35 years at least; they are themselves in an older age category. If they are fortunate enough to have brothers and sisters, perhaps even parents, still alive in those countries, it is very likely that their relatives are going to be in poor health. Therefore, it may well be that they want to spend an extended period of time with someone who is in a very poor state of health. It is also very likely that this is the once-in-a-lifetime trip that they will make back to their homeland and it is very likely that, after they return to Australia, they may never again see the people they have not seen for years and wish to reunite with. For all of those reasons, it is quite understandable that these are the people who are likely to be going overseas and spending more than six weeks at a time away when they do. Just as importantly, as the member for Calwell pointed out in her remarks, they cannot afford airfares backwards and forwards every six weeks.
It is for those reasons that this proposed legislation, I believe, is totally unfair. To say to someone that, if you go overseas and spend more than six weeks overseas, you may lose part or all of your pension is discriminatory. The government does not control the spending patterns or the life choices of any other pensioner group in this country. In fact there are other people who are on government pensions of one kind or another who are excluded from these conditions, and rightly so. But to say to one particular group, 'You will be included in these conditions', is totally unfair. Even welfare recipients who are placed on income management schemes do not have their total welfare payment cut.
The unfairness of this legislation also applies particularly and specifically to people on a disability pension, for they too may have their disability pension cut if they go overseas. A person with a disability is already very restricted in what they can do with their life because of their disability. Placing further restrictions on them by restricting their travel just to save a few dollars is mean and penny-pinching. The same can be said about the proposal to cut the pensioner education supplement, a supplement of between $31 and $61 a fortnight. This measure, I understand, will see some 41,130 recipients lose their supplements; and I understand that more than three-quarters of those that will lose their supplements are women.
The abolition of the education entry payment will also see about 87,000 people on Newstart, parenting payment, or partner or widow allowance lose the payment of $208 a year. In my view this is short-sightedness in the extreme. The recipients of education entry payments or education supplements are already struggling to make ends meet; that is probably why they are on a pension or support payment of one kind or another. They are doing their best to change their lives and improve their lives; but, instead of encouraging them to do so, the Turnbull government wants to make their life tougher by saying, 'We are going to take away this little bit of support that we were giving you that would perhaps have assisted you to get a better education, which in turn would ultimately lead to you having a better chance of getting back into the workforce and getting off the pension'. That is why I believe it is short-sighted. What it probably will mean is that those people who had some hope of getting back into the workforce will now remain on government assistance for longer periods of time. Nor does it do anything to create any form of encouragement for those people to improve their own lives.
Just as importantly it says a lot about the importance that this government places on education. We know that this government has cut some $30 billion from education and we know that this government's rhetoric is that money does not make any difference to the education outcomes of people. But to see the government also taking away some education support payments from people who in their older years of life were perhaps wanting to get back into the workforce just highlights how this government simply does not understand that lifting education levels in the country lifts productivity for the nation and lifts general opportunities for people who have now got a job and previously did not.
What is just as clear is that this government is obsessed with cutting payments to pensioners in this country. I have spoken on other occasions in this place about the $1.3 billion that was cut from pensioner concession payments to the states. Yes, most of the states picked up the payments in lieu of the federal government, but the cuts came from the federal government. It was a clear decision by them to hit one particular sector of the community. Then they wanted to change the indexation arrangements for pensioners in this country, which would have cost pensioners about $80 a week. They also changed the pension asset test, cutting the pension of 330,000 pensioners around this country in order to save another $2.4 billion. It is their policy to increase the pension age to 70 years of age. Then we had the farce in respect of the Medicare co-payments—'maybe $7, maybe $5'—freezing doctors' MBS payments and on it went.
Every one of those actions was aimed at reducing health expenditure on older people in this country, because they are the ones who would most likely be hit the hardest by those changes. It was just before Christmas that we had the announcement that $650 million would be cut from pathology and diagnostic services in this country. Again, who was going to be hit hard by those changes? People on low and middle incomes, many of whom are the very pensioners we are talking about in this legislation.
The last issue is the one that has been getting considerable commentary in recent weeks, and that is in respect of raising the GST. I notice that the government appears to be backpedalling on that, claiming that they never made any commitments, but it is clear to this side of parliament that it was always their intention to increase the GST, and they may still do so—perhaps after the election; they do not want to talk about it before then because they know that it hits lower and middle income householders the most and they know that it will be opposed by people across the country. They are simply looking to protect their own seats with respect to the next election. But we know it is on their agenda and if they get the opportunity at some stage in the future they will increase the GST. Again who gets hit the hardest when the GST is increased? People on low and middle incomes. The research and statistics bear that out time and time again. It is always the low and middle income people who get hit hardest by the policies of this government. This legislation is just another typical example of that. It hits people who are vulnerable—and all to save a relatively small amount of money. Saving that relatively small amount of money is going to make life so much tougher for people who are already doing it tough.
That is why this side of politics has made it clear that we will not support this legislation. Just as, with the assistance of senators, we have been able to block some of these unfair and unjust moves in the past, I hope that the Senate equally opposes this legislation so that it does not get up and so that people are at least not treated so unfairly and so unjustly by this government.
I thank all the members for their contributions to the second reading debate on the Social Services Legislation Amendment (Budget Repair) Bill 2015. In closing that second reading debate, I will just take a brief moment to make a couple of comments, but particularly on the issue that seems to have gathered the most attention in that debate, which is the change to the proportionalisation rules that relate to the age pension.
The bill introduces four measures, and the first of those measures is a measure that was announced in the 2015 budget, and that is the measure that I have just spoken of: the measure that reduces the length of time that recipients of the age pension—and also a small number of other payments with unlimited portability—can continue to be paid overseas at their basic means-tested rate. In putting it in the context of the issue of fairness—and I note many of the comments that have been made by members opposite—there are some important issues of context that have to be taken into account here. One is that, obviously, we face very difficult budgetary circumstances. I have stewardship of a portfolio that represents more than a third of the Commonwealth budget—indeed, it is the third of the Commonwealth budget that is growing faster than any other part of the Commonwealth budget—and the reality is that, if we cannot find savings measures inside the social services budget, it will simply be impossible to return to surplus. So there is an imperative for any rational government that considers it an important thing to return to surplus—and I am not aware of any divergence of views across the House that it is an important thing to return to surplus. It is just a matter of economic reality that some savings have to be found inside the social services budget. That is not always an easy task. However, with an eye to trying to do that in as fair and equitable a way as possible, and with a comparison to international standards as to what is considered fair and reasonable in all the circumstances, we have made some decisions.
I think that this first measure is an example of how there are some international comparisons that are relevant. It is the case at the moment that, if you are able to avail yourself of a means-tested pension in Australia—the old age pension, that is—and you travel overseas, you can be paid a part of that pension abroad indefinitely, in effect. But there is a proportionalisation that applies to that indefinite payment. Pausing on that for a moment, Australia is one of the few nations in the world that is generous to the extent that we allow for the maintenance of a system that pays a non-contributory pension—which is what the old age pension is in Australia—abroad indefinitely, at, of course, a proportionalised rate.
This is, clearly, a savings measure. It is designed to drive sustainability into the expenses associated with the pension, and the net savings with respect to this measure are in the vicinity of $168 million.
Essentially, what has been known as the 26-week rule will be amended to a six-week rule. That rule is that, if you are a recipient of the age pension—and there are a small number of disability support pensioners who this will also apply to: those where the continuing inability to work which is assessed on the Australian standard is something that occurred whilst overseas; and there are a small number of wife pension and some widow B pension recipients who will also be subject to this change from the 26-week rule down to the six-week rule—the notion is that, at some point in time, if you are overseas and receiving an Australian pension, the amount of the pension that you receive should reflect that proportion of your working-life residence in Australia. Working-life residence is the period of time that a person has resided in Australia between the age of 16 and the pension age. So, from 1 January 2017, the rate of these pensions will be proportionalised at six weeks rather than the current 26 weeks, according to the pensioner's working-life residence. So, for instance, until the issue of this legislation, it would have been the case—and is the case today—that you would be able to stay outside of Australia for 26 weeks and receive precisely the same pension that you would have been receiving in Australia, but, after that 26-week point, proportionality would be taken into account. So if you were resident in Australia at 25 of the relevant 35 weeks, you would be paid 25 35ths of the pension that you would have otherwise received in Australia. That same method of proportionalisation will apply. It is simply that it will commence earlier—that is, after six weeks overseas rather than 26 weeks overseas. So, for instance, that will mean that a pensioner with 35 years or more of Australian work-life residence and those already exempt from the proportional payment rules will not be affected by this rule. So if you are a pensioner with more than 35 years of working-life residence in Australia then these rules will not affect you in any way, because the proportionalisation will be at 35 35ths. Pensioners overseas on the implementation date will stay under the current 26-week rule until they return to Australia, and it is subsequent trips overseas that will be under the new six-week rule.
This measure, as I have noted, does not affect the length of the portability period. The payments affected by this measure continue to be payable overseas indefinitely. Only the amount that the pensioner may receive after six weeks' absence may change. So it is the six weeks that is the key issue here. The term 'portability' simply refers to the continuation of Australian income support payments during a recipient's overseas absence. Portability policy acknowledges that travel is an integral part of modern living, but it also acknowledges that the age pension in Australia is a non-contributory scheme and that it is meant to reflect the fact that a large proportion of a person's working life has been spent in Australia rather than in another country.
On this point, it is important, I think, with respect to these issues of fairness and equity that members opposite raised, to understand that there is a very important and fundamental difference between ours and many overseas based pension schemes—and I use that word loosely because many overseas pension schemes are in fact insurance based contributory schemes, and the Australian social security system has not had one of those. The Australian income support system is residence based. It is funded from general taxation revenue. The rate of benefits paid in Australia depends on need, assessed through income and assets tests, rather than the length or amount of an individual's contribution. So it is not a system, as is the case in many other countries, where people, over the course of their working life, pay into the pot and then draw down from the pot at the end of their working life by virtue of there being an insurance based pension scheme. Ours is not contributory in that sense. It reflects time worked in Australia, and this is why we are making this rule change to six weeks.
The measure in the bill contributes to ensuring that countries share the cost of social support in retirement—and I think that is an issue that is going to become increasingly important as the international labour market becomes more fluid. This change has been made because of the budgetary circumstances that the government finds itself in and the need to return to surplus, and the need, thereby, to find some form of savings inside the social services portfolio. But there is also a fair principle at the base of this change, and that is that a person's retirement costs should be fairly distributed between the country a person has spent most of their working life in, and, where the person has divided their working life between two or more countries, each of those countries should share responsibility for the retirement costs of that person. So it is the expectation that, where a person has spent a significant proportion of their working life overseas, they will be also eligible to receive a pension from that country. Indeed, Australia now has 30 international social security agreements around the world to support people living and working in more than one country, and they have been hard-won agreements over many years. Generally the agreements that I am speaking of—those 30 international social security agreements—allow Australian residents to maximise their income by helping them to claim payments from other countries where they have spent part of their working life as well as claim a pension or part-pension in the Australian jurisdiction where they have also spent part of their working life.
It is very important to note that Australia is one of the few countries in the world which pays a non-contributory pension abroad indefinitely. So, when we talk about fairness and equity, of all the nations on earth we are one of the very few whose generosity extends to a non-contributory pension scheme that is still applied to you when you travel abroad indefinitely. Indeed, Canada and New Zealand are the only other examples of countries that do this and they require you to have worked in Canada or New Zealand for 40 and 45 years respectively to receive a full rate of pension. The measure presently before the House acknowledges the residence based nature of the Australian social security system.
The bill also takes the opportunity to reintroduce some other measures from the 2014 budget. I will briefly move on to those. Two of the reintroduced measures are to cease the pensioner education supplement and the education entry payment. The pensioner education supplement was introduced in 1987 to assist, in essence, single parents with the ongoing costs of education. At the time, this was in recognition of the notable difficulties that single parents experienced when obtaining employment after being in receipt of what was then the sole parent pension for up to 16 years. Since then, eligibility has been selectively extended. I must note here that, despite its name, the pensioner education supplement is not available to people receiving the age pension. Having read many of the contributions of members opposite, it appears to me to be either the inference or the understanding of some of the individuals who spoke that the pensioner education supplement is a supplement paid to age pensioners. That is not correct. The most common payment type whose recipient also receives the pensioner education supplement—that is, people who receive the supplement—are generally on parenting payment single. That represents nearly half, about 45 per cent. Others are on the disability support pension and some are on the carer payment.
The education entry payment is an annual lump sum payment which was introduced in 1993 to help remove financial barriers to education by providing assistance to certain long-term payment recipients with the up-front costs of study when they begin approved education. In 2014-15 there were around 83,000 recipients who received that payment and it was worth about $208 a year. When both of those payments were reduced, they obviously had the very worthy aim of trying to assist long-term income support recipients who had been out of the workforce for a considerable period of time. However, since the introduction of the payments, there have been several policies introduced which are designed to reduce the length of time that income support recipients, including single parents, who have the capacity to work can and should remain out of the workforce. Those policy changes, including varied eligibility and participation requirements for parenting payment, recognise that, as children age, their parents' capacity to work increases.
There have also been a number of changes to assessment and eligibility criteria for payments for people with reduced capacity to work that require that these people work or look for work in line with their capacity. The individuals are assisted into the workforce through services such as jobactive, which can help job seekers develop skills that they need to find and remain in work. The point is that, as policies have changed around the mutual obligation to search for work, the people who were subject to the mutual obligation were able to avail themselves of the assistance of workforce services, such as jobactive, which help job seekers develop the skills they need to find or remain in work. So it is the case that, whilst the supplements were meant to achieve a desirable end, there are now other ways that type of assistance into the workforce can be garnered and given to individuals who previously would have been the recipients of those payments.
Ceasing the two supplements will also have the benefit of, in part, simplifying the system of welfare that exists in Australia. All members present would be well aware of the recommendations of the McClure review which were to the effect that, when you maintain a system of over 20 basic payment types and 55 different subcategories, supplements and add-ons that have been layered by government after government onto the welfare system, it produces a complicated and unwieldy set of supplements and add-ons that any government rationally has to try to look at reducing.
Finally, the bill also reintroduces elements of the 2014 budget measure maintaining eligibility thresholds for Australian government payments for three years. One of those elements is to maintain at level for three years the income-free areas for all working age allowances other than student payments and parenting payment single from the new start date of 1 July 2016. A further element is to maintain at level for three years the income-free areas and other means test thresholds for student payments, including the student income bank limits. Those amounts were not to be indexed on 1 January 2016, 1 January 2017 and 1 January 2018. The start date for the implementation of pauses to these payments for the first year has indeed passed. These thresholds were indexed, according to normal arrangements, on 1 January 2016. This resulted in a loss of approximately $7.4 million in expected savings from the original total estimated savings of $93.8 million over the forward estimates. This brings into play an important point: the freezing of this type of indexation on income-free areas is a lever that has been used by successive governments. It was a lever that was used by the previous government with respect to a range of welfare payments. I note that it was not a matter that was the subject of pointed comment in many of the contributions from members opposite, and I would hazard a guess that that is because this is precisely a lever that members opposite used, in any reasonable observation in a fair way, to restrain savings and to restrain expenditure growth in the welfare budget when they were in office.
The changes help achieve the long-term sustainability of the payment system whilst ensuring that Australia has a targeted, means tested income support system that provides financial assistance to those most in need. Under the current rules, income-free areas and means test thresholds are indexed annually in line with movements in the consumer price index. Not indexing the value of these free areas and thresholds for three years will mean that increases to payments that would otherwise have occurred on the relevant indexation dates will not occur. It is estimated that, if this bill were to pass, the indexation of the thresholds would recommence in 2019.
Finally, it is important to consider these measures in the context of the broader financial situation, as I have mentioned, that the coalition government inherited. Unfortunately, the situation is one of debt and deficit. With it involving over a third of the Commonwealth budget—in fact, 35 per cent of the Commonwealth budget—welfare bills must be restrained. I thank members opposite for their contributions. I close the second reading debate with those brief comments.