Senate debates

Thursday, 25 June 2009

Social Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget Measures) Bill 2009

In Committee

Bill—by leave—taken as a whole.

5:10 pm

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

I move Greens amendment (1) on sheet 5840:

(1)    Schedule 11, page 108 (line 1) to page 109 (before line 1), Schedule TO BE OPPOSED.

This amendment opposes the provisions in schedule 11 of the bill, which increases the pension age from 65 to 67. As I articulated in my second reading contribution, the Greens are concerned about the decision to raise the age from 65 to 67, because it has ramifications for many people. While we are not necessarily opposed in principle to this amendment, we believe that this has been brought in without any consultation with the community and it has not been subject to a rigorous discussion or consultation within the community. The first the community knew about it was on budget night. The only real opportunity—besides the emails that I am sure other people have received—is the very quick review of the bill that the Senate Community Affairs Legislation Committee did. It was through no fault of the community affairs committee, I might add; they had to do it quickly because it was referred to us on either the Tuesday or the Wednesday and we had the inquiry on the Friday, so the community had very little opportunity to make submissions.

There are a number of concerns. One of my principal concerns is that, of those aged between 60 and 65, already 50 per cent of that cohort are on some form of income support. What you are doing for the cohort of people who are already on income support is condemning them to another two years of Newstart. When this bill, which we are just about to pass with the rises to the single base pension rate, goes through, the difference between Newstart and the pension will be $106, so you are condemning people who are already struggling on income support to another two years of income support on, for example, Newstart. We do not think that is good enough. We think the government needs to look at alternatives. It also has not looked at the fact that we may need to consider an increase in the preservation age for superannuation. We do not know if that is the case; we have not had an opportunity to look clearly enough into the facts. We believe that we need to be looking at who this impacts, at to what extent and at what measures should be put in place to help that group of people that is going to be affected.

One of the other groups of people that is going to be significantly affected is a particular group of women who have very little super. We all know about this group of women. They have very little super because they are of that age that they more often than not came out of the workforce when they were raising their children. That group is most likely to have people who come out of the workforce to look after, for example, their ageing parents. At that period of time when they were out of the workforce, they were not earning and were not able to contribute to super. There is a group of women in their mid-40s who have an average superannuation of $8,000. It is that group of women that is going to be caught up by these changes. They thought they would be going into retirement at 65 and now they have to stay in the workforce for another two years. We are not adequately looking after those women. Some of those women may not have employment later on and would then be subject to income support, and they will not be able to access their inadequate super.

So we have a number of concerns with these changes. As I have said, our principal concern is that these changes have been brought in without community consultation. People had been planning for 65; now it is going to be 67. We do not know to what extent it will affect people. We are not, in principle, opposed to this in the longer term, but we think the timing and the lack of community consultation are poor and we are concerned that it has not been considered as part of the Harmer review. We believe it should come out of this bill, that the bill should go forward and that the government can then bring this particular component of it back. When you think about it, it was a bit sneaky of the government to put it in this bill because they knew very well that both this chamber and the other place would want to support the bill. Most of us here have been urging the government to increase the age pension for quite some time. It is rather sneaky to put it in this bill when they know very well that we will not want to oppose it because it is raising the pension. So we say to the government: take it out, go and consult and bring it back when you have some answers to the problems that are going to affect those most likely to be caught up in these provisions. The people affected are those that do not have adequate super, those that have not been able to plan and, most importantly, those that are now on income support. You are condemning them to another two years in the workforce. We should be doing better than that for the people who are ageing in our community.

5:16 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

I indicate my support for the Greens amendment and I endorse the comments of Senator Siewert. We have not had community consultation. We have not had a national conversation about this quite radical shift in going from 65 to 67. I also wonder to what extent these changes will deliver the savings that they are meant to deliver. During the estimates process, I put some questions on notice about how many of the people affected by this change from 65 and 67 are manual labourers. There have been various media reports about these changes, including a vox pop undertaken by the ABC where they spoke to some workers—they may have been dock workers—who said that they did not think they were going to last beyond 65 and that by the age of 60 they were pretty well physically shot as a result of the hard manual labour. So these are things that need to be considered.

I wonder to what extent the projected savings from 65 to 67 will come to fruition given that many in that group between 65 to 67 may seek disability pensions and other forms of assistance because they cannot continue to do the hard physical work that they have been doing, particularly in those occupations. So I do have reservations about the extent of the savings in relation to this. Of course, along with all others in this chamber, I welcome the government’s legislation. The pension increases are overdue and it is a welcome boost for pensioners. But I wonder whether there ought to have been further consultation in relation to this change from 65 to 67 and the projected savings factor in the number of people that simply will not be physically able to continue working from 65 to 67 and will have to seek alternative benefits.

5:18 pm

Photo of Chris EvansChris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | | Hansard source

The first thing to say about the consultation process is that the Harmer pension review did canvass these issues, as did a lot of the submissions. There was a general review of the issues around pensions and there were over 2,000 submissions. It was, of course, a recommendation arising out of the Harmer review, although I concede that was only released in line with the budget papers.

The key point is that this is a small step that tries to deal with a long-term major shift in the demographics of this country. While the previous government talked about intergenerational reports and such things for a long time, very little was done to respond to those challenges. It is a big issue for me in the Immigration and Citizenship portfolio because we have an ageing workforce and from next year onwards the number of workers in the Australian economy will reduce. So we are seeing a decline in our workforce and it is a big issue for Immigration in its role in meeting that demographic change. But we do have to make policy responses to that huge demographic movement. It is the sort of policy response that other OECD countries have taken. It does have a long lead-in time and that is important because it is designed to allow people to adjust.

Senator Siewert quite rightly made the point about women and their inadequate access to superannuation compared to males because of their working experience over the course of their life. It is a really important issue and one that we have been grappling with in public policy terms for a number of years now. I think it is fair to say that we have not yet solved it but equally you do not stop doing other things because you have not solved a difficult problem. It is true to say, though, that when the new pension age is fully implemented, working Australians will have had 30 years of the superannuation guarantee. Labor made that big reform and by the time we move the pension age to 67 there will have been 30 years of compulsory superannuation in this country. We will have seen a large proportion of the population shift from reliance on the age pension to an increasing reliance on superannuation or a reliance only on part pension.

A huge shift in retirement incomes in this country is occurring and each year that shift is more marked. So we would say part of the answer to the concern is that this is another step in moving the reliance from the old age pension into the superannuation area. We think it is an important step. It obviously has to be part of a suite of other policies. But this sort of debate has been around for a long time now. While the actual measure was not specifically consulted upon by the government, it has been part of the general debate about pensions. It was part of the considerations of the Harmer review. Sooner or later someone had to bite the bullet and send the signal that these changes were going to be required.

There was a question again about people not wanting to work until age 67. I can say I am very much in that camp; I am a vote for that proposition. But I think this is a signal that people have to respond to the fact that people are living much longer and the whole basis of the age pension and the life expectancy upon which it was calculated has changed dramatically. The issues that Senator Siewert pointed out in this respect are perfectly reasonable. I used to be secretary of the Firefighters Union. They had a retirement age of 55, for the very good reason that you do not want to be going up ladders fighting fires at 65 or 67. It was an occupational response that a retirement age of 55 was more appropriate, and our superannuation schemes were organised to reflect the reality that blokes, and now women—there are increasing numbers of women in the job—were perhaps not suited to doing that at the age of 65. So there are a whole range of occupations where the argument about 65 or 67 is irrelevant. People have had to make changes in their lives, work in other areas and respond to the pressures or demands of certain jobs. So I think those changes—the way we deal with people in work, the way we allow them to work part time, the work bonus changes—are helpful in that regard.

This is really an important signal that, again—just like when the Hawke-Keating government introduced compulsory superannuation—says, ‘We are having to respond to the demographics and we are putting in a different policy framework for support in retirement.’ This signals another important response to the realities of Australian society and the changing demographics. We think it is important that this change occur now and that we continue to deal with the other issues which senators quite rightly raise as important issues. I think it is like the debate we had about alcopops. You cannot solve all the alcohol related health issues with one piece of legislation. We see this as a really important step; it is an important signalling of what needs to occur in public policy. We think there is some urgency in taking these steps because we cannot keep putting off dealing with the issues that are confronting Australian society.

5:25 pm

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

As I said earlier, we are not necessarily saying that we should not be taking this step. The point here is that we do not know all the ramifications. Community consultation has not occurred. Yes, I do take the point that the Harmer review did not talk about issues around the single pension. However, I am sure that 2,000 people did not say that you should raise the pension age. There were 2,000 submissions, not 2,000 people saying we should raise the pension age.

The point here is that, even if you undertook a consultation process for six months until the end of the year and then brought in legislation, you would not be doing it, bam, like that. You might also be able to inform the Australian community about what you are doing to address those very significant issues around the 50 per cent of people that are already on income support, that are already aged between 60 and 65 and that will now be on Newstart for another two years. There cannot be any confidence in the community that they are going to have quality of life when, as I said earlier, once these changes go through, Newstart will be $106 below the single age pension. So there are significant quality of life issues here. One of the reasons that you are increasing the age pension is quality of life. It was recognised that as people aged they could not survive on the previous base rate of the pension. But now we are saying that it is okay for those same people, at 65, to receive below what the pension was for another two years, unless the government moves to address the difference between Newstart and the age pension.

I am glad Senator Xenophon raised the issue that some workers are physically exhausted and that it is a real struggle for them to continue working for those extra two years. We did not touch on that group of women that work in areas like hospitality and retail. People think it is mainly men who do hard physical labour and whose jobs have taken a great toll on them. If you are working in retail and hospitality—

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source


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

and cleaning, areas which are largely dominated by women, that takes a huge toll as well. So, although people automatically think about blue-collar workers being physically exhausted from their work, there is also a cohort of women who are exhausted from their work and who are being asked to be on their feet for another two years. These issues have not been dealt with. The government has not articulated how it is going to look after that group of people who are already on income support and moving through. I have heard the government saying, ‘We are going to be doing more training.’ I have some issues with that because at the moment I do not think it is well targeted to that group of people that are coming out of employment around the age of 55 and trying to find more work. There are a lot of people that are continuing to work beyond the age of 65; I absolutely acknowledge that. But there is a group that is not. I do not think the training packages are there yet. I would like to know what the government is doing beyond what it is already doing and how it is going to help those people that are already on income support.

Minister, you touched on an issue around the work bonus. I have a specific question on the work bonus that I was going to ask later, but since you have touched on it I will ask it now. Could the government explain why the work bonus will not apply to people on the disability support pension? As we know, there is a big push to get people on the disability support pension into the workforce, and where they can enter the workforce and they have got support that is a really good idea. I am just wondering what the rationale was for not providing the work bonus to people on the disability support pension.

5:29 pm

Photo of Chris EvansChris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | | Hansard source

I will deal with the last bit first, in relation to people on DSP not entitled to the work bonus. Firstly, they have access to the working credit arrangements and, secondly—as the senator knows, and we have had this debate in other contexts—the Harmer review and the responses to it were focused on people at retirement age. The review by Mr Henry was dealing with the working age persons issue, so those issues will be addressed as part of that review. That is why there is a distinction between those who are on DSP who are working age versus those who are on age pensions.

Senator Siewert, you refer to the sorts of answers you have had previously about supporting mature age workers, training and reskilling et cetera. I can repeat all of those to you, but your point is well made. The women who work around Parliament House are good examples of women doing very heavy work—with those floor polishers and other things. Many of them are mature women who work very hard and no doubt find that very taxing work, as we all would. But I guess my main response to you is that all the problems you point to are problems whether you retire at 60, 65 or 67. These are issues we confront and we have to respond to—

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

Why don’t you fix them now then, instead of changing the pension age?

Photo of Chris EvansChris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | | Hansard source

Senator, in 18 months we have not solved all the problems of the world, but I know Ms Macklin is working on it. I think if you give her another 18 months she may have done that. I guess what I am saying is that there are a range of problems in social policy, if you like, and response to demographics et cetera. What you are highlighting are serious social issues that need to be confronted—that is right. But that was true before we changed the date of access to the pension and it will be true afterwards. Can we fix all of that in this legislation? No. But they are live issues. They are issues that we are attempting to deal with in some of these measures that we have been talking about in terms of retraining, reskilling and support for mature age workers. These are challenges that will be with us whether the retirement age is 60, 65, 67 or 75. We need to attack them, but clearly we cannot solve those as part of this legislation.

5:32 pm

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

I appreciate that you cannot solve all the problems in 18 months. There are some issues that I know have been here for a long time. My point is that I think we should make a go of tackling some of those problems before we actually extend them further by extending the retirement age from 65 to 67, because I think you have brought on some other problems that will need solving. I am pleased to hear—if I can interpret what you have said—that the government will be reconsidering these issues around work and support for those on the disability support pension once the Henry report has been released. Thank you.

5:33 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | | Hansard source

Could the minister take on notice: in terms of the difference between retiring at 65 or at 67, have any projections been made about the extent to which this change might mean that, instead of people being on the pension—because they will not be able to be on it—they might be seeking alternative benefits, such as disability payments? I obviously do not expect an answer now, but perhaps this is something the minister could correspond with me about in due course.

Photo of Chris EvansChris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | | Hansard source

I understand that this issue was canvassed a bit in estimates. Ms Macklin’s office took some questions on notice. I will check to see whether any modelling—I know you are big on modelling this week, Senator Xenophon—has been done on that transference between payments, if you like. I think the best thing is if we treat that as part of the response to the Senate questions on notice—if that is fair enough. I cannot give you an answer now, but I will encourage Ms Macklin’s office to provide as much as they have as part of that process.

Question put:

That schedule 11 stand as printed.

5:43 pm

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

As set out at Greens amendment (2) on sheet 5840, the Greens opposes schedule 14 in the following terms:

(2)           Schedule 14, page 117 (lines 1 to 16), Schedule TO BE OPPOSED.

Schedule 14 relates to the indexation of family tax benefit. We seek to oppose this schedule. This schedule effectively freezes family tax benefit, which will result in a real decrease in the amount of money going to single parents. I covered this in my comments in the second reading debate. We are opposing this because it effectively freezes the family tax benefit for the highest maximum rate, which means that those on very low incomes—in particular, sole parents—will effectively have a decrease in real terms. It saves the government a substantial amount of money, and that money of course comes from those families who are the most vulnerable in our community and can least afford it.

We do not believe it is a measure that supports the government’s claim to be socially inclusive. We think it will substantially affect single income families and low income families. We think this is the second hit that single parent families take through this bill. The first one, of course, is not getting an increase, which we discussed earlier. This one means that they are going to take a substantive cut in real terms. We think the government needs to rethink it and take this schedule of the bill out.

5:45 pm

Photo of Chris EvansChris Evans (WA, Australian Labor Party, Leader of the Government in the Senate) Share this | | Hansard source

Can I say in response that we fundamentally disagree with Senator Siewert’s analysis. We just do not think the analysis is right. It is a change in the indexation arrangements. The rates are not frozen. They maintain in real terms over the years. I understand the forgone future increase in 2009-10 will be about 35c a week in family tax benefit A maximum rates for each child 12 and under but effectively it will be increased in future years and will maintain its value in real terms. It will be based on the CPI rather than MTAWE, but it is not true to say that it will be frozen. It will continue to be indexed and will continue to increase and maintain its value in real terms over coming years.

The Temporary Chairman:

The question is that schedule 14 stand as printed.

Question agreed to.

Bill agreed to.

Bill reported without amendments; report adopted.