ADDITIONAL COMMENTS BY COALITION SENATORS
Social
Security and Other Legislation Amendment (Pension Reform and Other 2009 Budget
Measures) Bill 2009
1.1 The Coalition
welcomes the pension rate finally delivered by the Government. Coalition
Senators do not oppose the legislation. However, Coalition Senators believe
that a number of submitters raised legitimate concerns to provisions of this
Bill. These concerns are that the pension reforms will make the system more
complex, that some families have been excluded and will receive a comparably
lower rate of payment, and that some groups of retirees will be made worse off
under the changes to taper rates on part-pensions.
Anomalies for Sole Parents
and Families
2.1 A
number of submissions gave evidence that the Bill would make Australia's welfare
system more complex and would leave some families worse off. Ms Clare Martin of
the Australian Council of Social Services (ACOSS), explained that the system
would be less equitable and more complex after the Bill's passage because:
What
we have got now in terms of a social security system is four levels of payment.
We have a level of payment for the pensioners, who are getting the terrific
increase of $32.50 a week, that is for the aged, carers, disability support and
veteran's affairs. They will roughly be on a level of about $330 a week,
including the supplements that they get, but that leaves sole parents $47
behind; it leaves your average Newstart recipient $106 behind, and it leaves
those on Youth Allowance or Austudy at $147 a week behind.[1]
2.2 The
proposed changes in the Bill will exclude or alter payments for certain welfare
recipients. With relation to sole parents being excluded from the increase
provided to pensioners, the National Welfare Rights Network made the following
comments:
This
exclusion is perhaps the most significant assault on the payment conditions for
sole parents in the last 35 years...NWRN was shocked at the decision to exclude
sole parents and cannot see any justification for the Government to sever the
tie between the rates paid to Age Pensioners and those on Parenting Payments.
This snub by Government undermines the financial security of hundreds of
thousands of Australia's poorest families which include 400,000 sole parents
and their 600,000 children.[2]
2.3 The
Bill also proposes to index the maximum rates of Family Tax Benefit A (FTB-A)
to movements in the Consumer Price Index (CPI), rather than Male Total Average
Weekly Earnings (MTAWE) through the combined couple rate of pension. Some
witnesses, such as the Australian Council of Social Services submitted that the
change in indexing will result in lower growth in the FTB-A payments. As ACOSS
noted:
Since
pensions are linked to average earnings, they increase by more than the CPI.
Removing the link between FTB and pensions means that FTB will no loner
increase above the inflation rate and that the incomes of the poorest families
will fall behind improvements in community living standards.[3]
Taper Rates
3.1 The
Bill will increase the pension income test taper rate from 40 cents to 50 cents
for each dollar of income earned over the threshold of $138 per fortnight for
single pensioners and $240 per fortnight for pensioner couples (combined). A
number of submissions raised concern that these changes will result in a
disincentive for individuals to self-provide in retirement because it will
lower the income support provided by the Government.
3.2
Mr Thomas Hayes of the Australian Council of Public
Sector Retiree Organisations pointed out that existing income tested part-age
pensioners will be forced onto the new taper rate and have their part-pensions
reduced. Mr Hayes continued:
People
who will be adversely affected include people of modest means, such as couples
with combined private incomes of as little as $12,000 per annum. It appears
that income tested part-age pensioners are the only group of Australians
required by government to accept a reduction in their standard of living.[4]
3.3 Dr
James Ritchie of the Association of Independent Retirees explained the effects
of changes to the taper rates:
A
retiree couple with 90 per cent full age pension presently receives about $574
a week, compared with the full age pension of about $500 a week, and they
contribute about $125 of their own money. For the same contribution of $125 a
week, under the proposed new taper rate, they will receive about $563 a week;
that is, their income will fall by $12 a week. (This is) a large amount for
individuals who are living at these levels...and it covers a very large number of
people, some 700,000.[5]
CONCLUSIONS
4.1 Whilst
Coalition Senators support the overdue pension increases in the Bill we believe
that the Government should have consulted more broadly with welfare groups and
stakeholders to address the legitimate concerns of sole parents, retirees and
others discriminated against by the legislation.
Senator Sue Boyce
LP, Senator for Queensland |
Senator Judith Adams
LP, Senator for Western Australia |
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Senator Gary Humphries
LP, Senator for the Australian Capital Territory |
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