Minority Report by the Australian Greens
1. Introduction
The Australian Greens welcome the move to increase
the base rate of the aged pension and a range of other pensions (including some
but not all disability pensions, as well as carers, veterans, widows and wives
pension) by $32.49 per week for singles and $10.14 for couples. The Greens have
campaigned for a number of years on the issue of the inadequacy of these
pension payments by comparison to community standards in the face of rising
living costs, and welcome the increase in the pension rate as an important step
in the right direction.
However, we remain extremely concerned that some
groups have been excluded from the pension rise, and that the disparity in
different types of income support payments continues to grow.
This Bill represents arguably one of the most
significant change to Australia's social security safety net since the Whitlam
era. For the first time in our history we have a Labor Government making a
legislative distinction between types of pensioners: on the one hand a group
including those on the aged pension who are to finally receive a significant
increase; and on the other hand those on the single parent pension and
disability support pensioners younger than 21 – who will not receive this
increase.
No credible rationale is presented for this
distinction, which on the face of it seems to identify one group as 'the
deserving poor' and another group as 'undeserving poor'.
No evidence is presented that the impacts of cost
of living pressures are any greater for one group than another. If current
pension rates cannot adequately sustain a single aged pensioner it is not at
all clear how sole parents or unemployed people can get by on even less.
These significant structural changes have been
introduced without a proper opportunity for community consultation and debate.
The Government have argued that there has been an opportunity for consultation
around the 'Harmer Pension Review' and the 'Henry Review of Retirement Incomes'
– however both of these reviews were very narrow in their terms of reference.
They did not consider the social security system as a whole, or look
into the impacts of cost of living pressures on other groups of people on
income support – including single parents, the unemployed, and other low income
families.
We are seeing a massive change to our social
security system (and yet another layer of complexity added to entitlements)
with no consideration given to others who have been excluded, and insufficient
opportunity to consider the proposed changes before they are made law.
2. The exclusion of single parent
pensioners and others.
The Australian Greens share the view of all of the
community service organisations who presented evidence to the Community Affairs
Inquiry (including the Australian Council of Social Services, Catholic Social
Services, Uniting Care, St Vincent de Paul Society, the National Council of
Single Mothers and their Children, Solo Mums Australia, Family and Relationship
Services Australia and the Sole Parents' Union) that single parent pensioners
and their families and young people on the disability support pension should not
have been legislatively excluded from this increase in the base pension rate.
The Greens are extremely concerned by the plight
of the 600,000 or more children growing up in around 360,000 single parent
families[1]
who rely on parenting payment single (PPS) – and at least 20,000 others moved
on to Newstart Allowance under Welfare to Work[2].
The decision to exclude this group from the pension increase flies in the face
of the Government's 'social inclusion' policy.
In addition to being overlooked in the proposed
pension increases, single parent families are also disadvantaged by this
legislation by changes to Family Tax Benefits that change the way in which
payments are indexed (from MTAWE (male total average weekly earnings) to CPI)
which will see payments gradually fall behind the cost of living.
The Australian Green are worried that there have
been a number of recent legislative changes which have impacted on single
parent families which have been made without due consideration of the impacts
on children growing up in these families.
As Therese Edwards of the National Council of
Single Mothers and their Children points out:
"... this payment
was not part of the scrutiny of the Harmer review. It was excluded. It is documented
in the Harmer report that it is excluded. Here we have a significant part of
our population and also our future population and we do not know what has
happened. I talked about three almost invisible hammers coming over and hitting
sole parents, one in the disguise of welfare to work, one in the disguise of
family law reforms, one in disguise of the child support and now this one."[3]
The Australian Greens are concerned that this
series of far-reaching and inter-related reforms have been pursued in isolation
from eachother without consideration of their cumulative impacts, despite the
fact that they impact directly on a group who are particularly vulnerable to
small changes in income and at high risk of poverty.
The linking of family payments to the average
weekly earnings of a working male was a key plank of a deliberate strategy by a
previous Labor government in 1987, and its aim was described by the Prime
Minister of the time, Bob Hawke that "by 1990 no Australian child will be
living in poverty." While this audacious goal was not accomplished,
research suggests that over the period 1982 to 1996 there was a one third
decrease in child poverty[4].
The sole parent pension was introduced by another
Labor Government in 1974, and championed by Bill Hayden, who reportedly remains
very proud of it.[5]
It appears not that these proud family-friendly anti-poverty policies are no
longer a priority for the Rudd Labor government.
As Frank Quinlan from Catholic Social Services
pointed out: "...the exclusion of those on parenting
payment (single) from receiving the increase is a retrograde step that severs
the 30-year tie between the rate of age pension and that for sole parents.[6]"
The only rationale for breaking this long-standing
nexus between child payments and community standards and dismantling this
anti-child-poverty strategy is given by the Minister in her second reading
speech, where she states:
"The removal of
the link to earnings ensures that government expenditure on family assistance
is more sustainable in the long term."[7] The Minister then goes on to say that "...in a tight fiscal environment,
savings from reduced expenditure on family tax benefit can be directed to
funding other priorities, such as the Secure and Sustainable Pension
Reforms."[8]
It is clear in this context that the term
'sustainable' is used (or rather misused) to refer narrowly to the economic
'sustainability' of the budget rather than to the sustainability of those
families and children depending on these payments to make ends meet. The Minister
is effectively saying that money is being taken from one group so that it can
be given to another group who are considered a greater political priority. The
fact that the first group (families receiving family tax benefit) includes
those single parent families reliant solely on income support – who are the
biggest user of emergency support and the most likely to be living in poverty –
is not addressed anywhere in Minister's speech.
It is simply not appropriate for the Government to
trade the well-being of one group in desperate circumstances off against
another. The reason why Australia has relatively high rates of spending on
family payments as a proportion of GDP by comparison to other OECD countries is
entirely related to the manner in which family payments were extended by the
previous Government upward to middle class families with other sources of
income and does not reflect the adequacy of the payments made to single parent
families reliant on either PPS or Newstart who are receiving the maximum rate
of FTB(Part A)[9].
We are not opposed to the targeting and tightening
of eligibility for family tax benefits, but believe simply taking money from
low-income families to pay for pension increases is poor policy. As Kate
Beaumont from the National Welfare Rights Network put it "...over the next
four years this one initiative will take $1 billion out of the mouths of
children in our community."[10]
Given the challenges we face with our shifting
population demographics, The Greens cannot understand how any measure that
relies on taking money from a group and giving to another (growing) group can
be considered sustainable. The Rudd Government has both failed to address these
crucial issues of fundamental change to our social security system in a
joined-up and holistic manner, and it has failed to consider how these and
other changes impact on its other areas of government policy – including its
commitments on social inclusion, early childhood development and child
protection. It has also shied away for reasons of political expediency from
addressing the fraught issues of adequacy and equity across the system of
social payments as a whole – by failing to tackle head-on middle and upper
class welfare in both superannuation and family payments.
The exclusion of single parent families from
pension increases could be summed up in one simple statement:
"By 2020
no child of a single parent family reliant on income support will NOT be
living in poverty"
3. Changes to the qualification age
for the aged pension
The Australian Greens are concerned by the
decision to raise the pension qualification age from 65 to 67 years of age.
This proposed legislative change has been made with no community consultation
and little consideration for the varied circumstances of working Australians
approaching retirement age.
We support the position expressed by the
Australian Council of Social Services and others, who argue that these measures
are tackling the need to respond to changing population demographics from the
wrong end. Efforts to increase the participation of older Australians in the
workforce should focus on maintaining the participation of those with the
greatest capacity to continue working. They should not come at the expense of
the living standards and quality of life of the large proportion of elderly
Australians who are unable to find work or to continue working.
We recognise that Australia is facing a
significant shift in population demographics, which will mean in the not too
distant future a significant proportion of our population will be over 65 years
old[11].
In considering how to tackle this problem we need to give genuine consideration
to the capacity of different groups of ageing Australians to continue working
so that we can maximise workforce participation without adversely affecting
those who have limited capacity to continue working or are excluded from the
labour market.
Approximately half of the people currently moving
onto the aged pension are transferring from another social security payment,
such as the Disability Support Pension, Newstart Allowance or the Carer
Payment. The majority of this group have not chosen to retire early, but have
been forced out of the workforce by redundancy, workforce injury or disability,
or the need to care for an incapacitated family member. This group is also much
more likely to have relatively little in superannuation savings and do not
benefit greatly from earlier access to their superannuation. They are also more
likely not to own their own home and to need to continue a significant
proportion of their incomes on rent. Surely if, as the Henry and Harmer reviews
have found, the current rates of the aged pension are not sufficient to
maintain the living standards of these people, how will they then cope with an
additional period on much lower payments (i.e. $106 per week less for
Newstart)?
The Greens are concerned with existing
superannuation provisions which give significant financial advantage to
wealthier Australians. For example, there is a significant number of
Australians aged over 55 who are still working and are churning an estimated $4
billion per year through their superannuation to avoid paying tax. Direct
salary sacrifice allows high earners in this group to significantly reduce
their tax rate down to only 15%. ACOSS proposes that the age at which this
group can access super should be raised, or they should be able to access their
superannuation progressively. This would free up significant resources to
support an increasing retirement population and encourage later retirement.
Measures could also be introduced to allow those who cannot work because of
disabilities, work injuries or caring responsibilities to access their super at
an earlier age.
The changes proposed in this Bill present
significant implications for working Australian approaching retirement age,
which require a consideration of how best to address the varied capacity of
different groups of ageing Australians to continue working and the financial
and life challenges they face. Consideration should be given to maximising
workforce participation without adversely affecting those who have limited
capacity to continue working or are excluded from the labour market. These are
important issues that require thorough community consultation.
Recommendations:
Single parents and other excluded
groups:
- That the pension rate increases in this bill
should be extended to those on parenting payment single rate and to all
recipients of the disability support pension including those who are under age
21 without children, who have been excluded from the rate increase
- that the rate of Newstart Allowance should be
increased to equal the pension rate
- That the Welfare to Work changes which force
single parent families onto inadequate Newstart Allowance payment once the
youngest child reaches 8 years old be rescinded.
- That indexation to male total average weekly
earnings be maintained for Family Tax Benefit A.
Modernising
Australia's social safety net
- That a comprehensive review be undertaken that
considers the totality of the social security safety-net (building on the
Harmer and Henry reviews but also including the single parent pension, Newstart
Allowance and other income support measures such as Youth Allowance and
Austudy) to design a simpler, more equitable and more flexible system that guarantees
an adequate income with top-ups for specific needs.
- That the government consider the introduction of
an independent statutory Entitlements Commission along the lines proposed by
Catholic Social Services Australia.
Retirement age
and workforce participation
- That changes to the qualifying age for the Aged
Pension be postponed and a comprehensive consultation and review of retirement
age policy be undertaken – that takes into account the circumstances of different
groups approaching retirement age, their health and financial means (including
home ownership), and their varying capacity to work – with the aim of
delivering more equitable and sustainable reforms.
Senator
Rachel Siewert
Australian Greens
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