Wednesday, 30 March 2022
Social Services and Other Legislation Amendment (Pension Loans Scheme Enhancements) Bill 2021; Second Reading
I rise in support of the Social Services and Other Legislation Amendment (Pension Loans Scheme Enhancements) Bill 2021 and I wish to take the opportunity to speak on the importance of this legislation to my electorate of Mayo. I've often said in this place that my electorate, the electorate of Mayo, has the oldest median age out of all the electorates in South Australia, one of the oldest in the nation. We have many retirees, both self-funded pensioners and part pensioners. Our retirees have worked tirelessly to prepare themselves for retirement, but for many the increased cost of living has made retirement challenging. This is a time when retirees should be living in comfort and not wondering how they can make ends meet.
This bill will provide Australians over the age of 65 with more flexibility to unlock equity in their homes to generate additional retirement income, through fortnightly loan amounts and lump-sum advances. No negative equity guarantee provides certainty that upon settling the debt individuals will not repay more than the equity in the property used to secure their loan, combined with the reduction in interest rates from 4.5 per cent to 3.9 per cent from January this year.
While I can appreciate that many in the sector, including National Seniors, are appreciative of the 3.9 per cent interest rate, I still believe that is far too high when we look at the official interest rates in this nation. It's my hope that more single homeowners should be able to achieve a high standard of living by tapping into their home equity. These changes to the pension loan scheme and guarantee will make retirement living more sustainable. However, there is much more that we need to do as a nation to improve the standards of living for those who are no longer of working age. For example, our aged citizens are required to navigate the impersonal telephone system, where a call to Services Australia is met with a recorded directory assistant. This telephone lottery requires the caller to listen to a number of options and then follow a convoluted path of numerous menus in the hope that a category will address their question. Invariably, the menu doesn't cover the question, nor is it clear to the caller, and it creates stress and frustration. Our seniors worked during a period when personal service was fundamental to good government and business practice and they deserve this experience in retirement. Confusing telephone systems, automated telephone systems and this continual force of older people to the internet and websites that take the user on a circular journey is just not good enough. A retiree should be able to call and have a real person answer the phone and get an actual answer. They deserve a service which is designed to meet their needs, not the faceless, unfriendly and anonymous delivery system that is currently provided. Whether you are looking for My Aged Care or Centrelink, it is all the same. It is frustrating and, for many, they don't call again.
We also need to overhaul the earning capacity restrictions for pensioners with a view to creating more flexibility and increasing the cap on how much they can earn so that pensioners are not penalised for working a few extra hours. Each day, thousands of senior Australians make their way across the country, often visiting regions that are desperate for workers yet many are not able to work, as doing so will reduce their pension entitlements significantly and the process of dealing with sporadic employment through the Centrelink system is cumbersome. It is a real disincentive and an enormous loss to the productivity of our regions everywhere. There are many pensioners who wish to remain in part-time employment or work additional hours but, because of the corresponding reduction in pension, it is simply not worth their while. Essentially, it is akin to being taxed at 50 per cent. Similarly, we have pensioner couples where a partner is unable to work due to illness or disability and current criteria do not allow for work earnings to be shared across both parties.
This bill provides a framework to enable retired and semi-retired Australians to improve their living standards by accessing equity in property. As not all retirees have equity in property, we need to look at another suite of options, including ones I have mentioned here, to allow pension-age Australians to live their lives with dignity. I have to say, we are looking at this and asking pensioners to use up the equity in their home but what we are not doing is looking at the actual pension amount and that is what we need to be doing. We also need to look at lifting the Commonwealth rent assistant amount for pensioners. There are too many, particularly older women, living alone on the pension, renting the property that they are in. They don't have any capacity for home ownership, their rent is increasing significantly, particularly this year, and there is nowhere else to live because vacancy rates are at zero in some parts of Australia. Particularly in my electorate, they are incredibly low. I think we can be doing far more for older Australians in this place.
I also rise to speak on the Social Services and Other Legislation Amendment (Pension Loans Scheme Enhancements) Bill 2021. It is an important scheme, the Pension Loans Scheme. It allows older people in our community who are asset rich but income poor to have a source of income. But like everything under this government, it has been botched, and now we are dealing with a bill that attempts to fix a couple of problems in the dying embers of this parliament just so the Morrison government can say, 'Look at us. We have done something for pensioners.'
You may know, Deputy Speaker Andrews, that the Pension Loans Scheme, the PLS, is a legacy of the Hawke government. I'm not sure if you were here that early, Deputy Speaker. I know you've been in this place a long time. It's a legacy of the Hawke government. Its purpose was to enhance the living standards of senior Australians who were unable to access the age pension because they were unable to meet the income test. The scheme, however, has very low take-up rates.
There are many barriers preventing Australians from accessing the program. Equality of access, complexity of financial products, unintended consequences of safeguards against excessive debt, interest rates and cultural issues come into play. The government made some modest changes in the 2018-19 budget, which expanded the eligibility to full-rate pensioners and self-funded retirees, increasing the maximum fortnightly payment rate under the Pension Loans Scheme from 100 per cent to 150 per cent of the full pension and reducing the interest rate from 5.25 per cent to 4.5 per cent. We supported those changes, and we welcome the government's efforts to further improve the PLS. Senior Australians have waited far too long for the government to address the known barriers to accessing the program. And still, many remain.
It was only last year when I spoke on addressing pension portability, meaning pensioners would be able to retain the full rate overseas for longer than 26 weeks. If they were to travel overseas they wouldn't have it cut off. Specifically, increasing the number of countries we have social security agreements with will ensure that Australians are able to receive their pensions while they are travelling overseas, when they start travelling again. Flexibility is important in decision-making, and that's why Labor supports this bill. This bill expands the scheme further, introducing more financial safeguards and greater payment flexibility. It allows two annual advance lump-sum payments to help participants with larger expenses.
As always with this government, they've focused on the marketing effort, giving the scheme a new name. They've called it the Home Equity Access Scheme. This scheme, allowing people to unlock their housing assets to improve their retirement incomes, should be fair and easy to access for all senior Australians. This bill is another missed opportunity to introduce significant and real change. It's a job half done, taken up too late. Too little, too late. There are still cultural barriers yet to be addressed by this government. Only then will we see real change in the take-up rates.
As always, this government would prefer to have done nothing and been left unbothered by the challenges of the people it's meant to represent. The government can't claim to be giving senior Australians real choices in their retirement without addressing these particular barriers. There are still many older Australians unable to access the program despite owning real property. For instance, many tens of thousands of Australians live in land-lease communities. These Australians own their own homes, but because they do not own the land they are unable to access the scheme. That's unfair. The government must look at this issue, make further changes and open the scheme up for those Australians.
As I've said, to be fair, although there are some positive changes to the PLS in this bill that do assist older Australians—and that's why we're supporting it—I don't think pensioners will be fooled by this government and what they're trying to do here. They won't forget the shameful track record of cuts and attempted cuts to the pension, making it more difficult for pensioners to access Centrelink. In a speech back in 2015, a freshly minted Treasurer, the now Prime Minister, made comments stating that the age pension should not be regarded as an entitlement for all. Just let that sink in. It should not be regarded as an entitlement for all. The then Treasurer also outlined the Turnbull government's vision for an overhaul of the country's retirement income system by both reducing expenditure on welfare payments and limiting the amount of revenue forgone through tax concessions.
Deputy Speaker, you know, and most of us who represent our communities know, that the vast majority of pensioners have worked very hard throughout their working lives, and they've contributed all of their lives. They've paid their taxes. It's not just because of their age that they deserve respect and dignity in their retirement. It's because of that commitment, that social contract. They've paid their taxes. They've paid their dues. They've contributed to this country. So we have an obligation to give them respect and dignity in their retirement but also to fulfil our side of that contract. Many of those in the firing line of the coalition's many attempts to cut the pension are migrants. These are migrants who came to this country 40 or 50 years ago, who worked very hard to build a new life for themselves and their children and who have contributed into building Australia up into the great country that it is today. They're now pensioners. They're at retirement age. They worked hard, they paid their taxes and they built their lives and their families here. They're people who helped make this country what it is today. Those people should be able to receive a pension that allows them to at least live comfortably and in dignity.
Deputy Speaker, you would be aware of many of the recent instances where the government have tried to get their scissors out and start cutting, start undercutting and start diminishing their side of the commitment of this contract. In 2015 the Prime Minister, when he was doing such a fantastic job as Treasurer, tried to cut the pension and increase the age of entitlement. In the 2014 budget, the government tried to cut the pension 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 over that period. In the 2014 budget, the government cut $1 billion from pensioner concessions, support that was designed to help pensioners with the cost of living—and wouldn't that be handy now for those pensioners? In the 2014 budget, the government axed the $900 senior supplement for self-funded retirees receiving the Commonwealth seniors health card. That infamous budget also saw the government try to reset deeming rate thresholds, a cut that would have seen 500,000 part pensioners made worse off. In 2015 the Liberals did a deal with the Greens to cut the pension of around 370,000 pensioners by as much as $12,000 a year by changing the pension assets test.
In the 2016 budget, the government tried to cut the pension to around 190,000 pensioners as part of a plan to limit overseas travel for pensioners to six weeks, which I referred to earlier: the portability issue. In the 2016 budget, they also tried to cut the pension for over 1½ million Australians by scrapping the energy supplement for new pensioners. The government's own figures show that this would have left over 563,000 Australians who are currently receiving a pension or allowance worse off. In 10 years this would be in excess of 1.5 million pensioners. In August 2020, more recently, the government was caught out by Labor on its pensions freeze for 2½ million pensioners.
Pensioners will not be surprised to hear that the coalition has tried to cut their pension this many times, again and again, over the past nine years. The government's obsessed with it. They've tried to do this in every single budget. Cutting the pension, unfortunately, is in the government's DNA; building and supporting the pension is in Labor's DNA. When we were last in government, we increased the pension by $30 a week.
We have seen stagnant wages, the slowest growth in a decade, productivity in decline and the cost of living going up, all under the coalition government. The Morrison government likes to do a bit of a smoke and mirrors act to pretend to care about cost-of-living pressures because, guess what, the election is around the corner. It's going to be called within a week or so. If they really cared about cost-of-living pressures on Australian families, they wouldn't have spent the last decade attacking wages, job security, pensions and Medicare. The government has no plans to turn the economy around. They're just paying out with handouts. The billions of dollars that Scott Morrison, the Prime Minister; and Josh Frydenberg, the Treasurer, spray around in this budget won't change the reality for Australians that everything is going up except their pay.
The age pension is a proud Labor legacy introduced decades ago to ensure older Australians could live with dignity. It was doubled by the Whitlam Labor government in 1972 and increased again by the Hawke and Keating governments. The changes have been enormous, but the principle of giving older Australians security, support and dignity remain the cornerstone of the system. That is the Australian way, and it's always been the Labor way—to meet our obligation to those Australians who've made that contribution throughout their working lives, who've worked hard, whether it's the pension, Medicare, unemployment benefits when they can't find a job and they're looking, superannuation, the NDIS. These are the sorts of era-defining policies that Australians can actually trust the Labor Party to deliver. These are the kinds of policies that the Liberal Party, in contrast, for some reason, hate. They are always trying to knock down, diminish, destroy, slash and cut at the earliest opportunity, much like we have seen in the pattern of this current government over the past nine years. Australians expect better from their government, and I am sure they're pleased that there is an election coming so that they can make their own choice.
Firstly, I would like to thank those members and senators who have contributed to this debate on the Social Services and Other Legislation Amendment (Pension Loans Scheme Enhancements) Bill 2021. The Australian government announced measures to further enhance the flexibility of the Pension Loans Scheme in the 2021-22 budget. The Pension Loans Scheme enables senior Australians of age pension age to supplement their retirement income by increasing the equity in their home. This bill will introduce to the Pension Loans Scheme a no negative equity guarantee, which means that participants will not need to repay more than the equity in their property used to secure their loan when settling their debt. The guarantee is in addition to the strong safeguards already in place to minimise the chance of someone's debt ever exceeding their equity.
This bill also introduces the option for Pension Loans Scheme participants to access a portion of their annual loan payment, usually received as a fortnightly instalment, as a capped lump sum advance. This bill demonstrates the government is continuing to support senior Australians by providing them with greater flexibility in how they draw on their real estate assets to support their living standards in retirement if they choose to do so. To complement the changes made to the Pension Loans Scheme through this bill, the government will also raise awareness of the Pension Loans Scheme so senior Australians are aware of all the options they have to improve their living standards in retirement.
The original question was that this bill be now read a second time. To this the honourable member for Barton has moved as an amendment that all words after 'That' be omitted with a view to substituting other words. The immediate question is that the amendment be disagreed to.
Question agreed to.
Bill read a second time.
Message from the Governor-General recommending appropriation announced.