Rachel Siewert (WA, Australian Greens) Share this | Hansard source

I rise today to speak on the Social Services Legislation Amendment (Fair and Sustainable Pensions) Bill 2015. A decent retirement is essential in a caring society—I think we all agree with that. That is why the Australian Greens have not ruled out any change to any part of our retirement income system if it makes the system fairer. Unlike other parties, we remain open to changes to both pensions and superannuation if those improvements result in a fairer system that ensures all Australians can enjoy a decent retirement.

We note that there have been some substantial reviews of parts of retirement incomes and that, in the past five years, these reviews—namely, the Henry tax review and the McClure report—have in fact been looking at these very complex systems. Both these reports identified that significant structural change is required and made recommendations to simplify the tax and transfer system and to make it fairer.

However, the Australian Greens recognise that complex change often requires some initial steps to spark the momentum for broader change. We are not the only ones who believe this, either. A number of stakeholders acknowledge that this is in fact heading in the right direction. Uniting Care said today:

… Uniting Care Australia is pleased that the government and the Greens have responded to ours and the calls of COTA and ACOSS to change the pension asset rules.

  …   …   …

This change is a constructive step in the right direction.

ACOSS have been pushing for this outcome for a long time and said on budget night:

This change in terms of moving away from indexation to a tightening of the assets test, we absolutely backed.

The Council on the Ageing clearly recognised that the review that we have secured will go some way to starting the process. They believe this is a step in the right direction, even if the Labor Party do not agree.

This is how we get change: by building momentum. Imagine if we stopped trying every time the government said, 'No, we won't do what you want.' I would not be here if I believed that was the case. But this policy stands on its own merits. This policy effectively reverses the decision of the Howard government to spend the benefits of the boom on tax cuts and bonuses to shore up support in the lead-up to the 2007 election. Senator Brown, who was leader of the Greens, said at the time:

The Howard government is focused on giving the aged pension to more wealthy retirees when it should be focused on raising the income of those currently struggling on the aged pension …

The Australian Greens opposed this measure in 2007 because it gave high-income earners a more generous retirement income while doing nothing to address the needs of the most vulnerable. We now support its reversal, particularly as this measure ensures that more Australians who do not have the advantage of a healthy super balance will be able to access a full pension.

We need to look at the role of superannuation and assets in retirement. The debate about the impacts of this bill has highlighted the role of superannuation as a complementary policy to means tested pensions that is designed to ensure that people save throughout their life for their retirement. I know that Labor has been citing a range of statistics supplied to them by the super industry, in particular, Industry Super Australia. One of these statistics is that half of new retirees will be affected by these changes. Without any further consideration, that sounds pretty scary. But one of the key conclusions that we draw from their submissions is that more people will retire with super assets that exceed the minimum thresholds into the future.

In fact, we know super is increasing. It is reflected by industry reports that superannuation hit a new record high this year, and over the past 12 months there has been a 14.3 per cent increase in total superannuation assets. A disproportionate amount of this is going to the top 20 per cent of people. But clearly everyone is benefitting from the higher compulsory super contributions from their employer and will retire better off than previous generations did.

When we consider this measure, we need to stay clear eyed about how much these pensioners are holding in personal wealth. The superannuation system is doing what it was designed to do. It is not doing enough properly, and I will come to that. Is it really fair for a millionaire to claim a pension? Is someone who owns their own home and has half a million dollars in the bank really comparing themselves to a single person who has no home and no assets and receives a full pension and thinking that the full pensioner has it better? Really?

I note that a number of organisations have said that the seniors that they represent will be worse off. But in making this assessment they are also promoting the assumptions that people should not and will not draw down on their superannuation assets to replace government assistance that they no longer receive. While individuals have autonomy and control over how they structure their retirement incomes and are encouraged to find arrangements that best suit their personal circumstances, the policy settings in Australia have deliberately encouraged the accumulation of financial assets for retirement, not for estate planning. In other words, people who have significantly accumulated wealth are encouraged to spend it. After all, super is, in particular, a forced savings scheme that helps people fund their retirement. So some draw down of assets is clearly required and is, in fact, intended.

The departmental modelling shows that an individual may be required to draw down up to 1.84 per cent of the capital annually if those assets are not earning them any form of return at all. At this rate, a single home owner with half a million dollars in the bank would take at least 25 years to draw down their assets to $290,000, which is the level where they would be eligible for a full pension. However, we also note the evidence that the committee received that many part pensioners are increasing their assets. For these pensioners, the time it would take to draw down their assets would be substantially longer than 25 years.

I acknowledge that some individuals have their investments invested in low-yield accounts and they are not earning very much additional income from them. It is clear that these individuals will need to adjust if they want to avoid drawing on their assets to the extent outlined by the department, and that is why we need to ensure there is significant and thorough financial advice provided to people so they can earn better income from their assets. While there will be some variation from person to person, it is clear that people will be able to supplement their retirement income and still achieve a decent life for the duration of their retirement if they have assets above the proposed minimum thresholds.

I also note that a number of organisations have tried to model the effects of the pension changes. This has led to a range of claims and counterclaims being thrown about. I note that the Labor Party and the ACTU are quite happy to tell us how women will be affected in 2055. But I would argue that some caution citing these projections should be taken when you are projecting that far forward. Let us take a moment to reflect how difficult it is to make such predictions about the future. Who would have predicted in 1975 that our world would look the way it does today? In 1975, we did not have the internet—we did, in fact, have free education—and there were many other things that are totally different. Who really thinks we are going to have the same settings in 2055 that we have now? What things will change in another 40 years? There will be significant change in another 40 years. Who thinks that nothing else will change between now and 2055?

What we do know and what is clear is that superannuation tax concessions are not creating a sustainable system for the future. The Financial System inquiry shows that one-third of all superannuation tax concessions are going to the top 20 per cent of earners. This means that the well-off are able to get richer while those in lower and moderate income jobs are unlikely to have enough to comfortably retire. Submissions to the tax review have also demonstrated that a number of people will be unable to retire comfortably if we do not make structural changes to how people save for the future during their working life. Women in particular are poorly served by our current arrangements, and here I agree that numbers affected are likely to increase over time. But when we drill down into Labor's argument that 80 per cent of women will be worse off, we find it is based on this great little graph in Industry Super Australia's submission. When you look at the graph closely you realise that it shows that, in 2055, 60 per cent of women will not achieve a comfortable standard of living under the current policy settings. In their terms this is an annual income of $42,000—which is $20,000 more than the basic rate of pension for a single person—so there is also an argument to be made there.

Putting aside the argument about what a comfortable or decent retirement actually is—because different people have different opinions—this demonstrates the challenge that we still need to resolve if we aspire to ensure that women's retirement incomes are higher than the basic rate of the pension. With this in mind, increasing the minimum threshold in the assets test will assist those women who retire with very limited savings, by helping to ensure that they are eligible for a full pension. However, in the long run we need to address the reality that women are paid 17 per cent less than men, are regularly lumped with unpaid caring responsibilities and, as the majority of part-time workers are women, they bear the brunt of the regressive 15 per cent tax on super. This is why the Australian Greens support the effort to make the system fairer by giving more to those with modest assets while building momentum for super changes and the other changes that are needed to ensure all Australians have a decent retirement.

A number of organisations have called for a broad review of retirement incomes that builds on the substantial body of work that already exists. In particular, they are calling for an examination of the interaction between pensions, superannuation, taxation and employment. In response to this repeated call, the Australian Greens have taken steps to ensure that retirement incomes are a chapter, not a paragraph, in the tax review. Stakeholders will have not only the extra time to put in submissions but also the opportunity to talk directly with the government before and after the green paper is produced. It will be very hard for the government to continue to ignore the evidence that organisations are preparing for the tax review and the continued campaign to change super. It is clear that Australians will demand a response that makes retirement incomes more, not less, caring and equal. The Australian Greens are calling on the government to engage stakeholders in the tax review in good faith, and hope that all parties demonstrate their support for serious structural reform that does not exclude any aspects of superannuation, taxes, pensions or employment. We need this in order to reverse the growing wealth inequality between older Australians and to ensure that all members of our community can live with dignity in retirement.

I will take this opportunity to remind the chamber that the Greens are the party that has consistently stood up for those who rely on the pension. You will recall many of the attacks on low-income people that have taken place in this very chamber over the years—some before my time in this chamber, and some during the time that I have been here. Let us talk about single parents, shall we? It was Labor, as I recall, who supported pushing those single parents that were grandfathered from the Howard government's Welfare to Work; who pushed thousands and thousands of single parents and their children off the single parent pension and onto Newstart. Data from Senate estimates shows us that 95 per cent of the single parenting payment recipients are women, and that they are struggling to meet essential living costs. Where was the passion for the pension then?

Let us talk about those who are surviving on the disability support pension. It was Labor who brought in the legislation that denied both young and old Australians access to the disability support pension for 18 months while they had to prove whether or not they could find a job. They were condemned to living on Newstart—an allowance, not a pension. As well as that, Labor supported the Liberal government's attack on young people on the disability support pension, with their reassessments. And let us not forget the revised impairment tables, which made it even harder for those with disability to get access to the disability support pension. These are pensioners, these are people whose lives were made harder. How can Labor say that they care about pensions when they have demonstrated their willingness to hit other pensioners over and over again?

It is time to put policy first. The Greens have thought long and hard about this decision. I have agonised when I have been reading the emails, but this is about making the retirement system fairer for everyone. The Greens are sticking to our principles rather than trying to shore up votes for the next election. We have to take a stand to make long-term decisions that ensure our income support system truly provides a decent, adequate standard of living. Both of the major parties have been refusing to talk about real change that is needed, and to take this change seriously, whether it is addressing this particular change or changing superannuation. We know that needs fixing. We know that there is growing inequality in this country. The report from ACOSS today highlighted that. The report released by the Bankwest Curtin Economics Centre at Curtin University last week showed growing wealth inequality. We need to tackle it.

We need to be making change not from election to election, but long-term change. By supporting this measure and continuing to build momentum for change, the Australian Greens are building on the work we have been doing in this place for over a decade—work that Senator Brown did in this place on retirement and on ensuring that all Australians have access to a decent retirement. That is what our eyes are on—making a fairer system that looks at and takes into account superannuation, pensions, taxation, employment and age discrimination. Those are the things that we have on the map, and on the page. That is where we are heading.

Sitting suspended from 18 : 30 to 19 : 30