Labor understand the pressure that pensioners are under, especially age pensioners. Providing a basic standard of living for those not able to support themselves is a core Labor value and a key principle of the income support system, because every citizen should be able to meet their basic needs and participate in Australian society. We recognise that rising food and petrol prices and the cost of heating and other utilities can determine whether or not Australians are able to live in comfort and dignity and remain active in their communities, particularly when they are surviving on fixed incomes. That is why last year, when in opposition, Labor initiated the Senate inquiry into the cost-of-living pressures on older Australians—because we understood that seniors were doing it tough.
We are intent on properly addressing 11 years of coalition neglect, giving pensioners dignity in their everyday life. The unsustainable position that pensioners are in today is a problem created by those opposite, who did nothing to fix the problem in 11 long years of government. In contrast, immediately on coming to power, Labor acknowledged the problem and took responsibility for doing something about it. We recognised the needs of pensioners in our very first budget with a substantial increase in the utilities payment. It is not appropriate to fiddle with the base rate of the pension without looking at the issues as a whole. For example, we have just had a claim that the Liberals fixed the pension to average male weekly earnings. What happens to that benchmark once you fiddle with it by adding the extra $30?
Senator Humphries- It goes up! That’s what happens.
Senator Pratt- Yes, it will, but what happens to that policy in the future when you do not have a robust policy setting? It may well mean that pensioners go backwards. It is not appropriate to fiddle with the base rate of the pension without looking at the issues as a whole. With a flat increase, not everyone will be better off. That is too simplistic a way to look at the issues. I would like to highlight to the Senate today some of the complexities behind this—issues the coalition never dealt with.
We have known for a long time that many pensioners are struggling to get by on the base pension rate, particularly single women—who have worked hard all their lives, raised families but have little or no superannuation. As the cost of living rises, we know they are finding it harder to make ends meet, particularly if they are renting their home. Labor recognise that the recent practice of simply paying one-off bonuses to carers and seniors when the budget allows, though better than nothing, has created huge uncertainty for pensioners. The former government’s repeated unconscionable practice of not providing for these payments in the forward estimates left pensioners with no financial security.
Importantly, this is a problem this government has rectified in its forward estimates, with big increases to the amounts paid. In other words, those opposite never budgeted for real increases in the pension. The Labor government, in contrast, are committed to developing a reliable, long-term system to support aged pensioners, not perpetuating the short-term quick-fix ways of the past. In the interim we are paying seniors and carers a bonus valued at $1.8 billion. There are differing views about how assistance to seniors and carers should best be paid and how current arrangements should best be adjusted for the future. We have paid the bonuses this year to give our carers and seniors assistance while we work with them to answer these questions.
The constant political grandstanding of those opposite does not alter the fact that these issues are more complex than they appear. The government want to address this properly so that pensioners can live with dignity. The Senate Standing Committee on Community Affairs highlighted in its report A decent quality of life: inquiry into the cost-of-living pressures on older Australians the importance of doing the job properly. It also highlights that the adequacy of pension and superannuation levels, the indexations arrangements for government benefits and the payment of concessions all substantially impact on the ability of older people to deal with cost-of-living pressures. The report noted that the most at risk are single pensioners, especially women receiving the full pension rate. Older people with severe disabilities or chronic illness and those in residential aged care are also particularly sensitive to cost-of-living increases. These issues are well understood by pensioners.
As highlighted, the federal government recently held consultations with pensioners in Western Australia about these issues. As part of this review, we are getting out there and talking to pensioners about their day-to-day problems, their cost-of-living pressures and the problems in the system. Some of the issues raised by pensioners included issues around assets tests and whether they are set at realistic levels; how pensions are taxed; the high effective marginal tax rate for pensions when people undertake extra work; how people who want to do some work feel discouraged from doing so; the fact that, for disability pensioners, the grants and rebates do not cover the kinds of equipment that people need; and the fact that the current system does not cater for the extra costs associated with having a disability once you turn 65 because people are taken off the disability pension when they turn 65.
What if you are a person with a disability? The fact that people have the choice about whether they want a carers payment or an age pension confuses the situation further. People who would otherwise be eligible for an age pension could opt for a carers pension instead. Did you even know that? In doing that, you have just cut out all those carers from the pension increase. It just goes to show that you cannot do this unless you do it properly.
People struggle to do the complicated maths about whether they will be better off under one or the other because of the lack of consistency between the two. For example, with carers pension you get some lump sum assistance but no seniors concessions. There you can see the simple difficulty you are putting people into. There is also the problem of concessions and rebates. These are massively inconsistent between states. Did you also know that hardships rules vary between age and disability pensions?
Yes, giving people more money is vital, but if the things said by WA pensioners are to be believed, that is not the whole problem. They said, ‘The system is confusing. We struggle to make sense of what options give us the best financial support.’ And, yes, they said, ‘We’re concerned about making mistakes and owing money. Yes, we need more money, but we also need the system to be simplified and work better for us.’ This shows that there is an urgent need to do this properly. A simple increase in the base rate for single pensioners will leave carers behind, it will do little to help those in residential aged care and it will do little to address those struggling with chronic illness.
During the last decade, the needs of pensioners were neglected. For too long those opposite raised expectations that something would be done but offered only bandaid solutions—solutions that were not budgeted for from one year to the next. It is cruel to raise expectations in this way. It is cruel to mess around with payments without committing to long-term solutions, and the coalition are still at it. They are still raising expectations that they have no capacity to meet. They are still offering up stopgap solutions as substitutions for sustainable solutions.
This government has more heart than that. This government is committed to finding real solutions to the problem of providing adequate assistance to aged pensioners. The valuable contribution of aged pensioners should be recognised with real, budgeted and sustainable solutions for the long term—solutions age pensioners can rely on into the future.