Rebekha Sharkie (Mayo, Nick Xenophon Team) Share this | Link to this | Hansard source

I move:

That this House:

(1) notes that the:

(a) OECD:

(i) calculates that the average old age dependency ratio in Australia was 25 in 2017, and is projected to increase to 41 by 2050;

(ii) calculates that Australia’s expenditure on age pensions is currently 4 per cent of public spending, and is projected to be 4 per cent in 2050—this compares with 9 per cent and 10 per cent respectively for the OECD;

(iii) stated that ‘The old age income poverty rate in Australia is high at 26% compared to 13% across the OECD in 2015’; and

(iv) further stated that ‘While taking out lump sums create flexibility in retirement it can also increase the risk of falling into poverty in case retirees outlive their assets’; and

(b) Benevolent Society:

(i) released ‘The Adequacy of the Age Pension in Australia’ report in September 2016, concluding from its research that ‘The Aged Pension in Australia is inadequate’; and

(ii) concluded that ‘Home ownership constitutes the single biggest factor contributing to financial hardship among pensioners. Age pensioners who are renting, in particular those who are single, are the worst off’; and

(2) calls on the Government to:

(a) establish an independent tribunal to assess the base rate of the pension and determine the best mechanism for annual review;

(b) increase the maximum rate of Commonwealth Rent Assistance to reduce the gap between aged pensioners who are home owners and those who are renters; and

(c) establish a roundtable to review services provided to age pensioners.

It's often said that Australia has a well-targeted tax and transfer system—one of the best in the world. The age pension is quite different to working-age payments, such as Newstart, and should be treated differently, as the unique challenge that faces age pensioners is that they have little future opportunity to earn extra money. The age pension is not welfare. I would argue that it should be managed separately to Centrelink, as it is a payment for older Australians who have worked and contributed to our community. I would say that age pensioners and all older Australians in my community are continuing to contribute every day. Certainly, we have such a high rate of volunteering simply because of the older people in our community. For older Australians without assets, the age pension also has a critical role in lifting them out of poverty. This is why, in 2017, NXT negotiated an energy assistance payment of $75 for age pensioners and $62.50 for those who are part of a couple. It's also why NXT could not support cuts to the energy supplement in the face of rising energy prices. Age pensioners are particularly vulnerable to changes in government decisions.

The Benevolent Society is spearheading a 'Fix Pension Poverty' campaign to provide a fair and decent standard of living for older Australians. To quote their campaign:

1.5 million older Australians rely solely on the Age Pension. Almost a third of them are living in poverty.

They suffer substantial deprivation; going without food and heating, ignoring the need to see medical specialists and skipping medications to make ends meet.

Some are missing food in order to ensure that they can manage to visit medical professionals.

Unfortunately, big structural changes are underway in the Australian economy which are eroding the efficacy of our system's ability to keep older Australians out of poverty. Firstly, there is a great demographic change. The average Australian is getting older and older. This means that the dependency ratio burden, the proportion of people on the age pension relative to the proportion of people working, is increasing. That is making it particularly difficult, particularly in my electorate. I have the oldest electorate in South Australia and the eighth oldest electorate in the country.

Immigration is easing this challenge somewhat. Australia does not face the same steep decline in the working-age population as countries such as Japan and Germany, but the shift is well and truly underway, and it is already putting great pressure on governments to consider how we manage the age pension and how we best support people who are beyond their working lives.

This leads me to another big structural economic shift: the rapidly declining rate of home ownership in Australia. What we are seeing is that more and more people who are moving onto the pension no longer have the family home, or any home, and have been renting for much of their life. Indeed, in 2015, the difference in expenditure on housing between home owners and renters of over 65 years of age was dramatic. The average fortnightly expenditure on housing for renters was over $300, whereas home owners spent less than $40 on repairs and remaining mortgage payments. The difference is vast. Owning your home makes you $240 a fortnight better off, and that was back in 2015. Rent prices have increased.

Home ownership is the biggest source of average Australian household wealth, and we need to ensure that we continue to have high home ownership so that future Australians who are moving onto the pension will have the ability to have some sort of financial security. The coalition's changes to age pension indexation, which began in September last year, may well have simplified the job of the Department of Social Services, but they have not addressed many of the concerns about the current pension rate, which many see as inadequate.

So it is with great satisfaction that I give my support to the Benevolent Society's Fix Pension Poverty campaign, and I hope that we can make a positive difference to the lives of older Australians with it. I would encourage all members in this place: please meet with the Benevolent Society and hear what they have to say. Hear about the older Australians in your community who are going without meals so that they can have their medications and those who are going without heating so that they can cover their bills, particularly those who are renting. It is important that in this place we do all that we can to support every older Australian.

Maria Vamvakinou (Calwell, Australian Labor Party) Share this | Link to this | Hansard source

I'd like a seconder for the motion, please.

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

I'm happy to second it, Deputy Speaker. I'm very pleased to speak on the motion moved by the member for Mayo. It's a wonderful opportunity to reflect on the adequacy of the pension and the degree to which the Turnbull government has cruelly deserted Australian pensioners. In every single budget that this Liberal and National Party government has handed down, the Liberals and the Nationals have tried to cut the pension. Let's have a look at the very recent history under this government.

In the 2014 budget, they tried to cut pension indexation, a cut that would have meant that pensioners would have been forced to live on $80 a week less within 10 years. This unfair cut would have ripped $23 billion from the pockets of pensioners in Australia. The Prime Minister and every one of his Liberal-National Party colleagues voted to index the pension to CPI only. If this out-of-touch Prime Minister had had his way, the pension would have dropped from 28 per cent of average weekly earnings today to just 16 per cent by 2055 because of the Turnbull government's decisions.

In the very same budget, the LNP cut $1 billion from pensioner concessions, support designed to help pensioners cope with rising cost-of-living pressures. They also axed the $900 seniors supplement to self-funded retirees who receive the Commonwealth seniors health card. In the 2014 budget, these mean-spirited Liberals tried to reset deeming-rate thresholds, a cut that would have seen 500,000 part-pensioners made worse off. In 2015, the Liberals and Nationals did a deal with the Greens political party to cut the pension to around 370,000 pensioners by as much as $12,000 a year by changing the pension assets test. In the 2016 budget, the Liberals and Nationals tried to cut the pension to around 190,000 pensioners as part of a plan to limit overseas travel to pensioners to six weeks.

So what plans are still on this out-of-touch Turnbull government's books? The Liberals and Nationals still want to make pensioners born overseas wait longer to get the age pension by increasing the residency requirements from 10 years up to 15 years. They still want to increase the pension age to 70, meaning Australia would have an older pension age than the United States, the United Kingdom, Canada and New Zealand. In the first four years of this policy, around 375,000 Australians will have to wait longer before they can access the pension. That would be a $3.6 billion hit to the retirement incomes of Australians. The Liberals and Nationals still want to axe the energy supplement to two million Australians, including around 400,000 age pensioners—a cut of $14.10 per fortnight to single pensioners or $365 a year, and couples would be $21.20 a fortnight, or $550 a year, worse off. This out-of-touch Prime Minister also wants to completely take away the pension supplement from pensioners who go overseas for more than six weeks. This will see around $120 million ripped from the pockets of pensioners, and they still refuse to adjust deeming rates for pensioners. It's been nearly three years since the out-of-touch Turnbull government last lowered deeming rates, and pensioners are paying the price, with current deeming rates now significantly higher than real rates of return. Interest rates have fallen from 2.25 per cent in February 2015 to 1.5 per cent today, yet Prime Minister Turnbull has done nothing.

Why is all of this relevant to the member for Mayo's motion? It is because this motion proposes to establish a tribunal to govern future increases to the pension. Currently, the pension's indexed twice a year, in March and September. It is indexed to the higher of three indices: the consumer price index; the pensioner and beneficiary living cost index, which is like the CPI for older Australians; and male total average weekly earnings. Unlike income support payments like Newstart, the pension is linked to wages. This is very important. Linking wages growth in the broader economy to the adequacy of the age pension is hugely important. It enables the pension to keep up with broader living standards.

Labor understands the need for the rate of the pension to reflect community standards and to ensure that pensioners have an adequate standard of living—that they can afford to have a shower, that they can afford to eat and survive. We understand that older Australians should be able to enjoy certainty, security and a decent standard of living in retirement. That's why the Labor government in 2009 increased the base rate of the pension by $30 a week. It was and still is the largest increase to the pension in its history. Increasing the pension is a proud Labor reform. Labor's pension increase was responsible for helping one million older Australians out of poverty. Labor has runs on the board in this area and Labor will always stand for up pensioners. When we roll out a tax policy that has a small impact, I notice that the Prime Minister jumps on board and says, 'No, we care for pensioners.' Labor has runs on the board. Let's look what the Prime Minister actually does rather than the words coming out of his mouth.

Maria Vamvakinou (Calwell, Australian Labor Party) Share this | Link to this | Hansard source

There being no further speakers, debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting.