Monday, 2 December 2019
Social Services Legislation Amendment (Payment Integrity) Bill 2019; Second Reading
I rise to speak on the Social Services Legislation Amendment (Payment Integrity) Bill 2019 and move as an amendment to the bill:
That all words after "That" be omitted with a view to substituting the following words:
(1) declines to give the bill a second reading;
(2) notes that, in every Budget, this Government has tried to cut the pension or increase the pension age to 70;
(3) further notes that the cuts to Newstart in this bill will hurt redundant workers and push them towards poverty; and
(4) criticises the Government for its cruel cuts to pensions and social security".
Labor opposes this bill, just as we have opposed the previous iterations of these same old cuts. I also note that we have another bill with 'integrity' in its name before the parliament—funny that. It's becoming a bit of a joke, because, whenever the word pops up in a bill title, the Australian public can be sure that the contents of the bill will have not a shred of integrity. Certainly, these old cuts do not.
These old cuts, as I said, were first announced by the then Treasurer and now Prime Minister in the 2016-17 MYEFO and then again in the 2017-18 budget. There was even a so-called payment integrity bill in 2017 in the last parliament, which was the last vehicle for these cuts. It was a bill which the government never brought on for debate, but here we debating a bill which the government simply should not be putting forward. It is as if the government has absolutely no legislative agenda at all, and bringing this back for the third time demonstrates that.
The bill contains more cuts to vulnerable Australians. Debating a bill which the government simply should not be putting forward is what this chamber is doing at this point. There will be more cuts to middle-aged and older Australian workers, more cuts to Newstart, more cuts to the pension and more cuts to Australians doing it tough. It has been barely six months since the election, and this tired old government is turning to its tired old tricks—more cuts.
The bill will rip over $185 million from the pockets of Australian pensioners. It will, in particular, impact older Australians who want to visit families overseas or need to spend extended time caring for relatives or grandchildren. It will disproportionately impact on migrant pensioners who have worked hard, paid their taxes, done the right thing and contributed so much to Australian communities.
Portability of the pension is a cornerstone of the Australian social security system. It is something that is very much part of the social security system in Australia that we should all be proud of. Migrant pensioners who have worked hard in Australia and who have built a life and a family here should be able to get the pension. Making people wait longer to get the pension will only force some older Australians to go without it and struggle or live in poverty. I remind the government that cuts to pensions not only impact on pensioners themselves; these cuts are felt by the families too—the sons, daughters and grandchildren.
Unfortunately, cuts to pensions are nothing new for this government. But pensioners will not be fooled. Cutting the pension is in the Liberals' very being. In every single budget as the Treasurer, the current Prime Minister tried to cut the pension and tried to raise the pension age to 70. In 2014—way back then—the Liberals said that there would be no cuts to pensions. Then, in the 2014 budget, they tried to cut pensioner indexation—a cut that would have meant pensioners would be forced to live on $80 a week less within 10 years. This unfair cut would have ripped $23 billion from the pockets of every single pensioner in Australia.
In the 2014 budget the government cut $1 billion from pensioner concessions—support designed to help pensioners with the costs of living. In 2014, they axed the $900 seniors supplement to self-funded retirees receiving the Commonwealth Seniors Health Card. In 2014, the Liberals tried to reset deeming rate thresholds, a cut that would have seen 500,000 part pensioners made worse off.
In the 2015 budget the Liberals did a deal with the Greens 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 they tried to cut the pension to around 190,000 pensioners as part of a plan to limit overseas travel for pensioners to six weeks.
In the 2016 budget they also tried to cut the pension to over 1.5 million Australians by scrapping the energy supplement for new pensioners. The government's own figures show this would have left over 563,000 Australians who are currently receiving a pension or allowance worse off. Over 10 years, in excess of 1.5 million pensioners would have been worse off. On top of this, they spent five years trying to increase the pension age to 70.
More recently, we saw the government finally adjust the deeming rates after five consecutive rate cuts. The government uses deeming rates to calculate the level of a person's pension, assuming a rate of income from savings whether or not pensioners actually earn those returns. However, since March 2015, the Reserve Bank has cut the cash rate to a record low of one per cent. For years, Labor campaigned for the government to adjust the deeming rates to more accurately reflect the rates of return that pensioners can reasonably expect to receive on secured investments. And, for years, the Liberals and Nationals had to be dragged kicking and screaming about pensioner groups and Labor. Only recently the Prime Minister and his Liberal-National government adjusted the rate to three per cent. Seniors groups know that this is simply too little too late.
The government has short-changed pensioners. It has propped up its budget on the back of hardworking pensioners. Then, of course, the Prime Minister shamelessly went on to spruik this deeming rate adjustment as an $800 pensioner bonus. This, of course, was until he was caught out by his own figures. Less than one per cent of pensioners will receive anywhere near this amount. In fact, the figures actually show that nearly half of pensioner couples will receive less than $130 per year. That's just 36c a day. After waiting more than four years for the Prime Minister to do something about the deeming rates, this latest revelation simply adds insult to injury.
Pensioners have every right to feel concerned and to feel conned, and pensioners won't forget the Morrison government is continuing to profiteer by gouging pensioners with unreasonably high pension loan interest rates. The Pension Loans Scheme allows pensioners to top up their pension by borrowing money against the value of their property and then repaying the loan at the time of the administration of their estate. The scheme currently charges pensioners an interest rate of 5.25 per cent. Since the government took office, the cash rate has fallen from 2.5 per cent to an all-time low of 0.75 per cent. But the government hasn't changed the pensioner loan interest rate at all. It is up to the Prime Minister and the Treasurer to justify how they continue to gouge pensioners by charging these unreasonably high pension loan interest rates. The Morrison government has displayed rank hypocrisy, accusing banks of profiteering by not passing on the cash rate but doing the same to pensioners.
Labor has fought each of these cuts to the pension tooth and nail, and Labor will oppose the Liberals' and Nationals' cruel cuts to the pension in this bill. To top it all off, we know this government has a fundamentally wrong idea about the pension and social security in general. The Minister for Social Services has described the pension as 'generous' and has said that giving people more money would do absolutely nothing and:
Probably all it would do is give drug dealers more money and give pubs more money.
Can I be explicit about this particular measure in relation to the age pension. It is particularly going to hit very hard people who migrated to Australia in the post-war period who take time out whilst they can to visit relatives overseas. It's going to particularly affect the Greek community, the Macedonian community, the Italian community and people who came out here to help build the Snowy Mountains Scheme.
Of course it's not limited to those groups, as the member for Cowan has said. But it will particularly affect people who, whilst they can, want to go back and visit their relatives, go back and meet their grandchildren, go back and see their children, in many cases. It will mean that they can only go for six weeks, and after six weeks this bill will bring in the taking away of the pensioner supplement. It is particularly going to affect communities that have come to Australia, have been proud Australians, have committed themselves to this country, have paid their taxes and have worked hard, and they should not be penalised in this way. It is also going to be a change for people who have become citizens of this country in that they will have to now wait 15 years instead of 10 years for the age pension. That is the insidious nature of this particular piece of legislation.
This bill is also about cuts to Newstart. This bill will force Australians who are trying, desperately, to re-enter the workforce to eat into their savings before they can access income support. Middle-aged men in their 50s and 60s who have recently been made redundant, who have worked hard all their lives, paid their taxes and done the right thing, will be forced into poverty before they can access support. Currently, people claiming Newstart, sickness allowance, youth allowance and Austudy must wait for up to 13 weeks to access the payment if they have liquid assets—for example, savings or a redundancy payout. It's over $5,500 for a single person with no dependants and $11,000 for someone with a partner or dependants. The existing waiting period at these levels is one week and increases to a maximum of 13 weeks for liquid assets of $11,500 for singles or $23,000 for those with dependants.
The government wants to extend the maximum liquid assets waiting period from 13 weeks to 26 weeks—that's half a year—for claimants with liquid assets of more than $18,000 for singles or $36,000 for couples and people with dependants. Let us be clear what this means. There is an expectation that people who have been made redundant, who are at the age of 45, 50 or 55, will find it very difficult to gain employment quickly. The statistics tell us that, absolutely, people in those age groups are taking from two to three years to find other work. And they all want to work, let me assure you.
It means that if there is an emergency in the family—like sickness, like the car needing replacement, like removal, relocating or retraining—the expectation is that there will be no support from the government. The support will come in the form of you having to use all your assets and that redundancy payment before you can even qualify for a social security payment. How is that fair? How is that right for people who have worked all their lives in an industry that's often closed—for example, the car industry in South Australia—through no fault of their own? The industry has closed or relocated. People in those positions, with a modest redundancy payment, will not be able to gain access to social security for half a year. I don't understand how people who have worked their whole lives, who have contributed their entire lives to this country and the tax system, should be forced into that terrible situation. The psychological pain that some of these people will be going through is absolutely enormous.
A liquid asset is not just cash in the bank. Liquid assets include, according to the department:
including redundancies yet to be made—
So there may be no assets at all sitting in a bank account—
… … …
They're the payments where the expectation is that you have to run those payments down before you're eligible for support from the government. This means that applicants will need to spend down more of their assets before becoming eligible to receive a payment. This is plain mean-spirited. There is no logic. There is no reasonable explanation of these changes other than money gouging. There is no rationale for increasing the liquid assets waiting period for people who lose their job or are made redundant.
This is nothing but a cash grab, taking money out of the pockets of workers at the very time when their savings matter the most. The current waiting period of up to 13 weeks is long enough. While some people will find another job in a 13-week period, it is important that those who do not are not forced to run down their savings to the point where they become vulnerable to losing their home or are unable to meet unexpected expenses. We know that for middle-aged and older Australians re-entering the workforce can be particularly difficult. They face structural barriers to finding a job, as well as workplace age discrimination. We know that middle-aged and older Australians who have recently been made redundant from industries that they have spent their whole life working in require just a bit more time to retrain to upskill.
I saw on television how things are going in South Australia in relation to the car industry. On the ABC, they were speaking to older workers who find themselves in very difficult circumstances. I draw people's attention to that show. Many of these people may need to spend time on further education. The number of Australians over the age of 55 on Newstart has skyrocketed by 45 per cent under the Liberals and Nationals. The over 55s represent the largest cohort, or over a quarter, of Newstart recipients. This is critically important to understand. I note that the member for Goldstein is leaving. It's a hard fact to understand that the profile—
It's spelt the same way. We know that middle-age and older Australians who have recently been made redundant from industries they have spent their whole lives working in require just a bit more time to retrain to upskill. They may even need to spend more time, as I said, on further education.
As I mentioned, the number of Australians over the age of 55 on Newstart has skyrocketed, and the number of people over the age of 55 are now the largest cohort, over a quarter, of Newstart recipients. A waiting period that is too long or a liquid assets threshold that is too high is actually counterproductive. It doesn't help people get back on their feet; it pushes people towards desperation. For people who lose their jobs or are made redundant, having a financial buffer is incredibly important. It means being able to support yourself while retraining, being able to keep the car on the road so that you can look for work and being able to keep paying the rent or mortgage. If a person's circumstances spiral because they run out of savings, if they lose their home or their car, if their whitegoods or fridge break down or if a family member gets sick, this just makes it harder to get back into employment.
Australians are already doing it tough as it is. The economy is weak and getting weaker. And this government has no plan to turn things around. Many Australians can't remember the last time they received a pay rise. Wages are stagnant, yet the cost of living is leaving Australians with less. It is more difficult to find a secure job with decent pay and adequate hours. Over 1.1 million Australians remain underemployed. Over 130,000 Newstart recipients, or more than one in five, actually have a job; they just don't earn enough or receive enough hours to escape the payment. The Anglicare Jobs availability snapshot 2019 shows that there are not enough jobs for the number of jobseekers, with employers receiving an average of 19 applications per vacancy advertised. We are reminded that three million, or one in eight, Australians live in poverty. One in six, or three-quarters of a million, children live in poverty. These are people in the electorates that we all represent. They are not just statistics; they are real people.
At a time when Australians are doing it really tough, when the economy is weak and getting weaker, these cuts to the pension and cuts to Newstart are not only cruel and vindictive but also reckless. Not only does the Prime Minister not have a plan for the economy, for jobs, to lift vulnerable Australians out of poverty; he is cutting support to Australians who need it the most. These cuts to the pension and to Newstart will not only be felt by older Australians and Australians doing it tough but mean they have less to spend on the basics and the essentials and less to spend at local businesses, which means local businesses will have less to spend on pay rises or on hiring more staff. Those on Newstart and the pension, but especially those on Newstart, are more likely to spend their payment. The government should be growing the economy and lifting people out of poverty, not taking money out of the pockets of pensioners and workers who have been made redundant through no fault of their own.
Under this third-term government, Australia has the slowest growth in a decade, stagnant wages, productivity in decline, record household debt, high underemployment and declining living standards. The government needs a plan to turn the economy around, not more empty political tactics. There is nothing in this bill that will create jobs or grow the economy. It is vindictive and reckless. All it will do is rip money from the pockets of pensioners and those looking for work. As I have said, just look at the litany of very good dissenting reports from when Australian Labor Party senators looked at the 2017 version of this bill. We already said:
The committee heard evidence from a wide variety of community organisations that the changes in the Bill are unfair, and would result in groups of Australians facing significant financial pressures.
Catholic Social Services Australia said that this Bill places 'the burden of budget repair on those who can least afford it, while providing tax cuts to the wealthy and businesses, [which] is wrong morally and economically.'
The Federation of Ethnic Communities Councils of Australia said:
… the extension of the residency requirements for qualification for DSP and age pension and the removal of the pension supplement after six weeks of travel overseas disproportionately impact culturally and linguistically diverse communities and are therefore discriminatory in nature—
making a very salient point—
… older migrant Australians will become more reliant upon their families to support them ... but as with any family, young people now in Australia … have to move often in order to secure employment, and they're not often in a position to take care of their older relatives, either practically or financially.
The National Social Security Rights Network said:
The Australian system is based on residence and need. It has a very strong emphasis on residence already. Most of the older migrants who have the misfortune to need to access our system within the first 10 years in Australia are covered by an assurance from their families. So there is no cost to the taxpayer because the money is recovered from the family. So it's hard to see the case for strengthening the requirements. It's particularly hard to see the need or benefit that comes from introducing income support history into the test. It's a departure from a very fundamental principle.
In relation to the assets waiting period, the Australian Council of Social Services told the committee that:
... the latest HILDA data shows that a full 25 per cent of people who are unemployed are already being deprived of two or more essential items. In addition, the evidence shows that about 12 per cent of people at the moment could not raise $500 in the event of an emergency.
Catholic Social Services of Australia also made the point—the very important point—that:
Even with savings of $36,000 ... for a person with dependants it would not take long to expend these savings. For example, using the Household Expenditure Measure, a person with two dependants in the ACT, renting and having a basic lifestyle, would need a minimum of $21,792 over a six-month period. This assumes there are no contingencies such as medical bills—
and the sorts of things Labor is very much concerned about. They went on to say:
This leaves this household financially vulnerably with a small buffer to manage contingencies whilst on income support.
I'll finish up my contribution by once again reiterating that Labor moves the amendments circulated in my name that go to declining to give the bill a second reading; notes that this is a recurring theme from the government; notes that cuts to Newstart in this bill will hurt redundant workers and push them towards poverty; and, finally, criticises the government for its cruel cuts to pensions and social security. As I said, Labor opposes this bill.
I rise to speak about the Social Services Legislation Amendment (Payment Integrity) Bill 2019. This government is committed to ensuring that our welfare system is delivering support to Australians who need it most and that payments are fair and sustainable for Australians for many, many years to come. This bill will reintroduce three measures that are just residency requirements for a number of payments, including the age pension and disability support pension, as well as adjustments to the liquid assets waiting period on a number of welfare payments.
In adjusting the residency requirements for migrants at retirement age, the government is bringing this requirement closer into line with other OECD nations and meeting community expectations that migrants could not expect immediate financial support from the Australian taxpayer, particularly if they arrive close to retirement age. Currently, to receive the age pension or disability support pension, an individual must be able to demonstrate 10 years of residency, of which five must be continuous. This new measure will require that applicants for these payments demonstrate at least five years of residency to have taken place during their working life or at least five years of their residency not receiving income supports. If an applicant cannot demonstrate this requirement, they will need to have 15 years of continuous residency. This will impact upon less than one per cent of people claiming the aged pension or disability support pension. I note exemptions are in place for a number of groups, including humanitarian arrivals and individuals who are incapacitated after their arrival in Australia.
This bill will also suspend payment of the pension supplement for pensioners who spend an extended period of time overseas. The pension supplement aims to minimise the impact of GST on pensioners across the cost of telephone bills, utilities and pharmaceuticals. Currently this payment is reduced after a six-week absence. This measure will result in payment of the pension supplement being suspended entirely after six weeks. This is because pensioners who spend extended periods of time overseas are unlikely to be impacted by the cost of GST during their absence. This is a minor adjustment to payments—currently $23.80 per fortnight for singles and $39.20 per fortnight combined for couples. Importantly, this will not impact the base rate of pensions being paid. Affected welfare recipients will still receive their core income support payment.
The final component of this bill is extending the waiting period for applicants where liquid assets are reported during the application period. This will impact applicants for a number of payments, including youth allowance, Austudy and Newstart allowance. While we want to support Australians who are doing it tough, it is fair to expect an individual to support themselves for a period of time after the loss of their job or income if they have the financial resources to do so. The vast majority of applicants for income support payments do not have sufficient liquid assets to support themselves for an extended period and so do not face any waiting period following their application. Under this measure, the current liquid assets waiting period will be extended from 13 weeks to 26 weeks. A significant proportion of claimants who serve the current maximum liquid assets waiting period of 13 weeks have liquid assets that far exceed the point at which the maximum liquid assets waiting period applies, with 18.3 per cent of people serving the maximum 13-week liquid asset waiting period having liquid asset reserves above $100,000. Different thresholds for the waiting period apply, depending upon the applicant's circumstances, but, as an example, it is currently $5,500 before you serve any liquid asset waiting period, and that's for a single person with no dependent children.
It is estimated that these measures will return over $290 million to the budget bottom line. They are sensible adjustments to the welfare system. We on this side of the House understand our duty to the Australian taxpayers to ensure that their taxes are spent responsibly and fairly and that welfare is available to those who need it most. I strongly support these measures as a means of safeguarding our welfare system.
The Social Services Legislation Amendment (Payment Integrity) Bill 2019 is another example of misuse of the word 'integrity' by this government. We were very pleased to see last week the defeat of the 'ensuring integrity' bill in the other place, which was nothing but a disgraceful attack on working people and the unions that represent them. As I said, we were very pleased to see that bill defeated, and it's really a credit to the unions and the working people who campaigned against that, and that's a win for them.
Don't even get me started on the Prime Minister's current trouble with his Minister for Energy and Emissions Reduction. But it's clear that this is a government that does not understand the meaning of 'integrity'. In fact, they use that word, such as in this case, to pretend that they are addressing problems that are not actually there. And we can be sure when we see the word 'integrity' in the name of one of their bills that it's just a cover for another of their ideological crusades. Calling this bill the 'payment integrity' bill implies that it is somehow addressing an issue with the payment system, that somehow people are rorting their entitlement to payments, that the system is out of control and that people are somehow getting something they don't deserve, something they shouldn't be entitled to. Again, it is just the ideology of those in the government. They are looking to make cuts to the most-vulnerable in our society by making out that they are not entitled to a social safety net, to a social security system that has been a huge part of ensuring that our country has been relatively egalitarian.
This bill does three things. First of all, it increases the residency requirements for pensioners from 10 to 15 years. So, they want people to wait 15 years to access the age or disability pension if they've been born overseas. The bill wants to stop the payment of the age pension supplement to pensioners if they're overseas for more than six weeks, perhaps going to meet their grandchildren or perhaps going to see family one last time while they're still well enough to do so. It also extends the liquid assets waiting period that applies to Newstart, youth allowance and other allowances. This is making sure that people are in dire poverty before they even begin to receive these inadequate payments. Labor opposed this when it was introduced in the last parliament, and we're proudly opposing it again. This is the third time this bill has been brought back, because this is a government that has no agenda other than demonising unions and people who receive social security. It is just dredging up the worst parts of the 2014 budget.
First of all I want to talk about pensioners, because the government always pretend to be the friend of pensioners, but the fact is that they have tried to cut the pension and increase the pension age to 70 in every budget, including in three budgets where the current Prime Minister had the job of Treasurer. They were happy to run scare campaigns in the last election to make pensioners believe that our policies on franking credits would affect them, when they did not. They were happy to perpetuate untruths about policies that they knew were untrue.
Mr Tim Wilson interjecting—
I point towards interjections from the member for Goldstein when our shadow minister, the member for Barton, was speaking before, just in case the Hansard didn't pick them up. When she was speaking about pensioners travelling overseas to meet their grandchildren for the first time, he said, 'So they can pass the buck to their grandchildren, because they have no sense of responsibility,' or perhaps it was 'we have no sense of responsibility'. Either way, that is what these people are about. They believe that people who have worked their entire lives and paid their taxes shouldn't be entitled to a meagre pension in their retirement and to go and meet their families, to care for their loved ones, overseas. I don't know if he would have the guts to say that in his electorate, but that's what he says under his breath in this place. I think everyone needs to know what is at the heart of this government.
It is Labor that actually delivered the greatest increase to the pension in its history, under the Gillard government, and Labor is proud to always stand up for pensioners. I want to run through some of the cuts that this government have made or tried to make to the pension in the six years they've been in power. In the 2014 budget they tried to cut pension indexation, a cut that would have meant that pensioners would be forced to live on $80 a week less within 10 years, a cut that would have ripped $23 billion from the pockets of Australian pensioners and affected every single one of them. They cut $1 billion from pension concessions, support designed to help pensioners with the cost of living. They axed the $900 seniors supplement to self-funded retirees receiving the Commonwealth Seniors Health Card. They tried to reset deeming rates thresholds, a cut that would have seen 500,000 part-pensioners made worse off. In 2015 they did a deal with the Greens 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 they tried to cut the pension to around 190,000 pensioners, as part of a plan to limit overseas travel for pensioners to six weeks. They also tried to cut the pension for over 1.5 million Australians by scrapping the energy supplement for new pensioners. Their own figures show that this would have left over 563,000 Australians who are currently receiving a pension or allowance worse off. On top of this, they have spent five years trying to increase the pension age to 70.
Labor is proud to fight these cuts, and we will continue to do so. This bill will rip $185 million from the pockets of Australian pensioners. It will do this first by making people who were not born here wait longer to receive a pension. Currently people who were not born in Australia have to wait 10 years to receive an age or disability pension. This bill wants to extend that to 15 years. It adds a new self-sufficiency test, which will mean that people can still wait only 10 years if they have not received any income support payments such as Newstart. So we have another example of this government demonising people who are receiving payments that are designed to keep people out of poverty and keep our economy going, because they don't believe that people should receive these things. This change has no policy rationale except to make a saving from recently arrived migrants of pension age. And, of course, it disproportionately affects people from culturally and linguistically diverse communities. The Federation of Ethnic Communities Councils of Australia have called this out and called on the parliament to vote against these changes.
The second schedule will cease the pension supplement after six weeks overseas. The pension supplement is an additional payment of around $620 a year for a single pensioner and just over $1,000 for couple pensioners, and this is paid fortnightly as part of their pension. Currently, when pensioners are overseas for more than six weeks, it is reduced, but this bill seeks to remove it entirely. There are no grandfathering arrangements, so people who are overseas would have it cut immediately. These are pensioners who are most likely still maintaining their homes here in Australia, paying their rents and paying their utilities, and, as the member for Barton was saying, they're going overseas to meet their grandchildren and going to see their own children and their families. They have worked their whole lives, saving up and planning to make perhaps the trip of a lifetime, something that many of us take for granted. People should be able to do that with the security that they will be getting the same income. It is a meagre pension as it is and they have expenses that they need to meet. This is another bill that will disproportionately impact culturally and linguistically diverse communities as well.
The third schedule of this bill will increase the liquid assets waiting period to six months, doubling the time that people need to wait before they can access payments like Newstart or youth allowance if they have a minor amount of savings in the bank. Currently, people claiming Newstart, sickness allowance, youth allowance or Austudy must wait up to 13 weeks to access payments if they have savings or a redundancy payout of over $5,500 if they are single; and, if they have a partner or dependants, it is $11,000. This measure would increase that to six months for people with liquid assets of more than $18,000 for singles, or $36,000 for couples and people with dependants. This means that people are driven into poverty before they even begin to receive these payments—payments that everyone except this government agrees are too low.
The Department of Social Services estimates that around 13,800 claimants will be affected by this extension, and, of those, around 11,000 will have to wait the full six months. Everything we know about financial resilience says how important it is to have a buffer for when people face crises such as the car breaking down, or needing a new fridge or needing to pay a rental bond to keep a roof over your head. We're not talking about huge wealth here. Of course social security should be targeted, and of course that includes your wealth or your savings, but this drives people into poverty, which will only deepen when they have to survive on Newstart, when they have to try and survive on less than $40 a day. Why does this government want people to be destitute? Why isn't it using this system to avoid poverty and inequality in our society?
The majority of people impacted by these changes will be older Australians, because this is the current cohort who most commonly serve the liquid assets waiting period, and it will particularly impact people who have lost their jobs and received redundancy payouts. Catholic Social Services Australia provided the Senate committee, when it reviewed this bill in 2017, with some calculations to step through the impact of this. Even for a person with dependants and with savings of $36,000, it would not take very long to expend these savings. For example, using the household expenditure measure, a person with two dependants—perhaps a single parent—in the ACT, renting and having a basic lifestyle, would need a minimum of $21,792 to survive over a six-month period. This assumes there are no contingencies such as medical bills, costs for retraining or vehicle repairs and maintenance. After six months, over 60 per cent of these savings would have been spent on basic household expenditure. So you can see that it leaves very little for these people to survive on.
The thing about Newstart allowance is that it is designed to be a short-term allowance while people are between jobs, to support them to get another job. Even the Business Council of Australia acknowledges that this payment is now so low that it is actually preventing people from getting jobs, and the poverty that people are driven into by this inadequate allowance is worsened when they are on it for long periods of time.
Under this government, which refuses to do anything about our currently floundering economy, people are on Newstart for increasing amounts of time. Currently, people under 25 spend, on average, 45 weeks or just less than a year on Newstart, but by the age of 50 that has blown out to 188 weeks or almost four years that people are supposed to survive on $40 a day. You can see how having a small amount of money in the bank to cope with the things that come up in day-to-day life is very important to keep these people out of crisis—out of homelessness. These are real issues, and this government wants to make it even harder for these people.
Another issue is youth allowance. This payment will remove any incentive for young people to save up before they might have to move away to study in order to support themselves. Youth allowance is based on the Newstart rate. Recently, when our shadow minister the member for Barton visited Canberra, we talked with a group of students about how difficult it is for them to continue with their study when they have to work so much to meet the huge rents in Canberra and that we see in capital cities around the country. They talked about feeling excluded when they couldn't afford to go to events at the university or focus on their studies.
We have high dropout rates at the moment from TAFE and university, and the reason is the costs of living as a student. This is the greatest challenge to equal access to university, higher education, and TAFE in this country. Think about moving from a regional area, perhaps, to a capital city where you've got increasingly high rents. People can't do it on these payments. A survey released by the National Union of Students this week shows that 90 per cent of recipients are skipping meals and most have $14 a day left, after paying rent, for the rest of their expenses.
This bill is another example of how out of touch with these issues this government is. Don't they talk to people in their electorates about these challenges—or maybe just to people not receiving social security? It is wrong that in a wealthy country like ours we are not supporting those in our society with a basic social safety net. In fact, every day, this government is demonising them and wanting to make life harder for them. St Vincent de Paul have said of the measures that they are morally, socially and economically indefensible. I agree. Labor is proud to oppose this bill.
We've heard, from the previous two speakers, the perfect rendition of a Labor mantra. There is no tax dollar earned by the hard work of Australians that they don't consider theirs for their own agenda. There is no respect for taxpayers, there is no respect for people who have worked hard to save and be independent, on their own two feet—only hip pockets to be raided for their own interests. It's no surprise that the member for Canberra got up and opposed this bill. After all, the whole basis of the Canberra economy is, literally, government: the raiding of taxpayers' hip pockets for the benefit of the few.
This is a fundamental issue at the heart of this legislation. Those members of the opposition simply do not understand the consequences of what they advocate for. They simply don't understand that hard work should be encouraged and respected and that Australians' hip pockets are not simply theirs for financial gain. We saw this at the election. They stand here talking about the consequences of modest shifts in the welfare system to make it sustainable, while at the same time they went to the last election demanding $387 billion of taxes, including the $57 billion tax specifically on Australian retirees—specifically designed so that people would have lost one-third of their income on 1 July this year, had there been a change of government. Do you know what their response to the Australians was? It was nothing but contempt. To be fair, they said: 'Don't vote for us.' And I think they were right not to do so. But they called it a gift, their hard-earned money, their reward for effort, their tax refund raided by the Labor Party.
Labor had the temerity and the gumption to come into this place and lecture a government that wants to be prudent and responsible in spending money, that wants to make sure that we can have a pension system that's sustainable for the future, to have a pension system that is able to deliver for those who need it today and into the future. The objective of this bill is very straightforward. It is what we need to do to keep—