LABOR WILL FIGHT ABBOTT’S UNFAIR CUTS TO PENSIONERS, FAMILIES AND YOUNG PEOPLE

June 24, 2014


I rise today to speak on the Social Services and Other Legislation Amendment (2014 Budget Measures No. 1) Bill 2014 and the Social Services and Other Legislation Amendment (2014 Budget Measures No. 2) Bill 2014. 

Between them, these two Bills contain many of the harshest measures in this year’s Budget – indeed, some of the harshest measures to have ever come before the Australian Parliament. 

These Bills are full of the Prime Minister’s broken promises, cruel cuts and unfair increases in the cost of living. 

These Bills seek to destroy the fundamental pillars of the Australian way of life. 

They seek to savagely cut support for ordinary working Australian families. 

And push hundreds of thousands of vulnerable young people into poverty. 

These Bills represent a cruel betrayal to Australia’s 3.2 million pensioners, who were promised by the Prime Minister before the election that there would be no changes to their pensions. 

These cruel cuts to pensions will see the living standards of Age Pensioners, Disability Support Pensioners, Veterans and Carers dramatically decline. 

These Bills deliver a cruel blow to all of our older Australians – self funded retirees as well as pensioners. 

Hundreds of thousands of senior Australians, who have worked hard all their lives and diligently put their money away for a secure retirement, will have their payments callously cut. 

These Bills are disastrous for all Australians who believe in a fair, tolerant and compassionate Australia. 

These Bills seek to write into law this Government’s plans for a colder, nastier and fundamentally unfair Australia. 

And Australians know the truth – that the measures in these Bills are unfair and undeniable broken promises. 

Over the last 100 years, a social contract in this country has taken shape. 

It is based on the pillars of the Australian way of life: 

• access to universal healthcare and education; 

• a fair and secure pension system; 

• support for people who cannot work due to disability or caring responsibilities; and 

• support that helps get people into work. 

It took more than a century to get to where we are today. Successive Labor Governments have led the way in strengthening it over the years, making it fairer and more inclusive for all. 

And Australians are rightly proud of our smart, fair and uniquely Australian approach. 

Shamefully, not only do the measures in these Bills throw out the Government’s responsibility to maintain and further strengthen these pillars of the Australian way of life - they go out of their way to tear those pillars down. 

And, of course, the Government’s best attempts to come up with a rationale for the harsh measures in this Bill are based on a complete fallacy. 

A fabricated sense of crisis. 

Australia’s economy is strong – our economic situation is certainly not the crisis the Government has done their best to make it out to be. 

We have low inflation, low interest rates and net debt well below comparable countries. 

We have a triple A credit rating from all three credit rating agencies. 

Ever since the election, all we have heard from this Government are false claims that Australia’s spending on welfare is out of control. We’ve heard senior government minister’s cry that Australia is on a path to countries like Greece and Spain. 

These claims are just not true. 

Just last week, the Treasurer’s budget credibility was destroyed by analysis from the Melbourne Institute using the Household, Income and Labour Dynamics in Australia (HILDA) Survey. 

This data showed that Australians have dramatically reduced their dependence on welfare in recent times. In 2001, 23 per cent of working age people in Australia received a welfare payment each week. In 2011, that had dropped to 18.5 per cent. 

Across the OECD, we spend less on welfare than any other country except Iceland. 

None of this is to say we can’t do things better. But it does confirm that the Government’s whole platform is based entirely on a mistruth. 

The Prime Minister and the Treasurer are not ending the “Age of Entitlement, they are ushering in an “Age of Hypocrisy”. 

The Prime Minister wants to pay $50,000 to wealthy women to take six months off work to have a baby through his $22 billion unfair and unaffordable paid parental leave scheme. 

What an appalling example of this Government’s twisted priorities. 

These Bills contain around 30 Budget measures, including some of the cruellest attacks on basic fairness that the Australian Parliament has ever seen – cuts to the pension, cuts to low and middle income families, and forcing our young people to live for 6 months at a time without any support at all. 

And disgracefully, the Abbott Government has gagged debate on these Bills in this House today. 

Just three hours to debate some of the most savage cuts in our nation’s history. Some 30 individual measures. 

The Prime Minister will ram this legislation through the House. 

This is an absolute affront to the Parliament and an affront to the Australian people. 

The Treasurer had the gall to remark in this House last week that the Abbott Government was the best friend pensioners have ever had. 

But pensioners will not be fooled. They know they have been betrayed. 

The changes to pension indexation arrangements in these Bills are a cut. They are a very direct cut to the living standards of Australia’s 3.2 million pensioners. 

The pension is benchmarked to wages for a reason – so that pensioners’ standard of living keeps pace with the standard of living of the working population more broadly. 

John Howard knew that – that’s why he legislated for it. 

Indeed, the current Minister explained to this House in 2011 how the wages benchmark “enabled pensioners to keep ahead of cost of living increases…” 

According to the Australian Council of Social Services (ACOSS), pensioners will be $80 a week worse off within a decade because of these changes. 

That is a cut in anyone’s language. And about as big a broken promise as you can get. 

These Bills also seek to increase the pension age to 70. 

It is clear that the Prime Minister’s only plan for older Australians is for them to work longer and retire with less. 

How else would you explain their decision to abolish the Low Income Super Contribution, a measure that reduces the tax burden for 3.6 million Australians who earn $37,000 or less a year, two thirds of whom are women? 

How else would you explain the Government’s decision to further delay the increase in superannuation from 9 to 12 per cent and at the same time reverse the proposed changes at the top, to tax earnings over $100,000? 

Measures in this Budget will see more people be reliant on the pension in the future. 

And it’s not just pensioners that are bearing the brunt. Self-funded retirees have been betrayed by this Budget, too. 

These Bills include a cut of $1.1 billion to older Australians through the abolition of the Seniors Supplement. 

The Seniors Supplement is an annual payment of $876 to people who receive the Commonwealth Seniors Health Card. 

And at the same time as they do this, the Government is cutting $1.3 billion in concessions for pensioners and Commonwealth Seniors Health Card holders, for help paying their water and electricity bills, their rates and public transport fares. 

A double whammy for pensioners and those seniors who are on the Commonwealth Seniors Health Card. 

The Abbott Government is cutting every single cent of that money the Commonwealth put towards concessions these seniors get for things like electricity and water bills and council rates. 

Not to mention hitting older Australians with a new GP tax and higher costs of medicines. 

Before the election, the Prime Minister said there would be no change to pensions. 

The Prime Minister was not being truthful with pensioners before the election, and the Prime Minister is not being truthful with pensioners now. 

The Liberal Party has long thought of itself as the Party that represents the views of seniors and self-funded retirees. 

But recently my office has been inundated with messages from angry seniors who feel betrayed by the Abbott Government. 

The sneaky measures in the Abbott Government’s first Budget that hurt seniors are printed in black and white in these Bills. 

It’s these sneaky measures that have provoked such anger among seniors across the country. 

And it exposes the fundamental dishonesty that lies at the heart of this Government. 

But seniors are smarter than that. 

This Prime Minister says one thing to seniors during an election campaign and rips money from their pockets straight after the election. 

This just demonstrates that seniors cannot trust the Abbott Government. 

Labor will oppose these cruel cuts because we believe in fairness. 

These Bills are an unprecedented attack on our pensioners and seniors. And it will hit them hard. 

I will move amendments to these Bills today to remove the following cruel cuts from these Bills: 

• Cuts to pensions through the indexation changes 

• Increasing the pension age to 70 

• Abolishing the Seniors Supplement 

• The resetting of the social security and veterans’ entitlements income test deeming thresholds 

• Cessation of the Pensioner Education Supplement 

• The removal of the three month backdating of the Disability Pension under the Veterans’ Entitlement Act 1986 

• A pause to indexation of the income test free areas for all pensioners 

This Bill also includes a measure to include income from superannuation in the assessment of the Commonwealth Seniors Health Card. 

Labor will not oppose this measure. Labor is committed to ensuring our payment system remains one of the fairest and most targeted in the world. 

These Bills are a full scale cost of living attack on Australian families, who will have their family benefits and parenting payments slashed at the same time as they are hit with a new GP tax and a new fuel tax. 

These Bills include $7.5 billion in cuts to family payments. 

These Bills will put more pressure on the budgets of millions of families – and low income families will be hardest hit. 

Recent expert analysis from independent modelling agency NATSEM has put to shame the Government’s claims that the burden of this Budget is shared by everyone. 

Overwhelmingly, analysis has demonstrated that those on the lowest incomes are hit the hardest, while those at the top are spared. 

NATSEM found that around 1.2 million families will be on average $3,000 a year worse off by 2017-18. In contrast, the top 20 per cent of households will have either no impact or a negligible positive impact. 

These Bills seeks to freeze the payment rates for Family Tax Benefits. 

They seek to freeze the low income free area for Family Tax Benefits, including the low income free area for those who receive the maximum rate of FTB A of $48,837. 

According to the Department of Social Services, a freeze to the low income free area for FTB A alone will see more than 370,000 families around $750 a year worse off in 2016-17. 

This comes at the same time the Prime Minister is trying to abolish the Schoolkids Bonus, with eligible families losing $410 per year for primary aged children and $820 a year per secondary aged child. 

As a result of this Budget, including measures in these Bills, a single income, couple family on $65,000 with two school aged children will be around $6,000 worse off each year by 2016. 

That’s around 10 per cent of their entire family budget. 

How is that fair? 

The Abbott Government is so arrogant and out of touch – it doesn’t care that millions of Australians will be worse off because of its savage cuts. 

This Budget is incredibly short sighted. 

Because of these Bills, single parent families are faced with a huge disincentive to work. 

These Bills create a new Single Parent Supplement, which single parents will get when they are kicked off FTB B when their youngest child turns six. 

This measure actively discourages single parents from working. Once a single parent earns just one dollar more than $48,000 a year, they will lose this supplement. 

According to NATSEM, they will pay an effective marginal tax rate of around 80 per cent for every dollar they earn above $48,000, taking home just 20 cents in each of those dollars. 

NATSEM has described this as a ‘sudden death drop.’ 

Unsurprisingly, we have heard quite a bit of dissent from National Party Members and Senators in recent times. 

But they should be protesting much louder. Many of the low and single income families hit hardest in this Budget live in country and regional Australia. 

The Department of Social Services revealed at a recent Senate Estimates hearing that around 700,000 families will lose their FTB B if the Government gets its way and kicks families off the payment when their youngest child turns six. 

Labor will stand up for low and middle income families who will be so savagely hit by the cuts in this legislation and oppose the cruellest measures before us today. 

And so today I will move amendments to reflect that Labor will oppose the following: 

• Indexing Parenting Payment Single by CPI only. The Government is removing the wages benchmark. 

• Labor will oppose the Government’s move to freeze the rates for Family Tax Benefits. 

• Labor will oppose revising the Family Tax Benefit end-of-year supplements to their original values and cease indexation. 

• Labor will oppose limiting Family Tax Benefit Part B to families with children under six years of age, and the new allowance which fails to compensate for this measure. 

• Labor will oppose freezes to the income free areas for family payments. 

These Bills also include a measure to tighten the means testing for FTB B, from $150,000 to $100,000. 

Labor believes in a targeted family payment system, where Government support goes to those who need it the most. 

That’s why Labor has always supported means testing. 

It was Labor that first introduced means testing to the Age Pension, it was Labor that introduced means testing to the Private Health Insurance Rebate and it was Labor that introduced means testing to Family Tax Benefit Part B. 

The former Labor Government’s first budget featured means testing on Family Tax Benefit Part B for the first time and that we were accused by members opposite of committing class warfare. 

We were accused of saying that people earning $150,000 a year were rich. 

And yet now – in an act of pure hypocrisy - we see a Liberal Government led by this Prime Minister, a man who devoted an entire chapter of his book to the evils of means testing, reducing the primary earner income limit to $100,000. 

Perhaps the Prime Minister believes that families with an income of $100,000 are the new rich. 

Labor will not stand in the way of this measure. We will not move an amendment to remove this item from the Bill. 

But we say to the Government that this is very sloppy, unsophisticated policy design. 

Labor would not have designed this measure in the way being proposed by the Government today. 

We believe that a taper rate would have cushioned the harsh edge that will be created by the Government’s policy. 

We believe that a more sophisticated design of this measure would have been beneficial. But as we have always said, we will not obstruct for the sake of it. We will work cooperatively with the Government where possible, but only when the Government is not undermining the basic principle of fairness. 

Perhaps the cruellest measures in these Bills are the Prime Minister’s brutal attack on young jobseekers. 

Legislation in these Bills will mean young people under 30 who are looking for a job will be forced to wait six months before receiving any income support – and in some cases longer. 

This Government is saying to young people who lose their jobs: you’re on your own. 

If, after six months without income support that young person has not found a job, this measure will require them to take part in a work for the dole scheme. 

And if after six months in work for the dole they have still not found a job, then they will lose their payments for a further six months. 

These Bills have the potential to confine young people to an endless cycle of periods without any income support at all. 

Make no mistake: if passed in their current form, these Bills will see many young jobseekers pushed into poverty, crisis and homelessness. 

In fact, the Budget includes extra money for the emergency assistance that the Government believes will be required as a result of the measures in these Bills. 

The Department of Social Services has admitted that they anticipate around 500,000 new claims for emergency assistance as a result of this measure. 

Imagine a government which takes a decision which it knows will push people into poverty. Well that is exactly what this Government has done. 

Labor will oppose this mean and nasty attack on Australia’s young people. 

Labor will also oppose the Government’s plans to push young people under 25 from Newstart onto the lower Youth Allowance, included in these Bills today. 

This is a cut of at least $48 a week, or almost $2,500 a year. 

And Labor will not support such punitive measures. 

How exactly does this Prime Minister expect young people to find work if they have nothing to live on? 

Let’s be very clear about the meaning of these measures that affect young people. 

They represent an abandonment of young people by their Government. 

And they reflect the gross unfairness at the heart of this Government’s budget. 

To put this unfairness into some perspective – a 24-year-old living independently on Newstart will be slugged with an almost 20 per cent cut in their support, while someone on $200,000 will pay $400, a meagre 0.2 per cent reduction in their income. 

Prime Minister – how is that fair? 

The Prime Minister has made clear in this legislation he wants vulnerable, low income earners and in particular young people to do the heavy lifting. 

Labor understands the importance of giving young people a hand up to find work, not cruelly telling young Australians: you’re on your own. 

Labor will stand up for young people by opposing these measures. 

And so today I will move amendments to remove the following sections of these Bills: 

• Extend the ordinary waiting period for working age payments. 

• Cessation of the Education Entry Payment. 

• Moving people under 25 years from Newstart onto Youth Allowance. 

• Forcing young people under 30 to wait six months without any support at all. 

• Pauses to indexation for the low income free area for student payments, including the student income bank limits. 

• Pausing indexation of income free areas for all working age allowances. 

 

These Bills also include changes to the Disability Support Pension. 

They include a savage cut to the Disability Support Pension through changes to indexation. These changes will leave Disability Support Pensioners around $4,000 worse off each year within 10 years, according to analysis by the Australian Council for Social Services (ACOSS). 

The first of these Bills includes a measure to review the eligibility of Disability Support Pensioners under 35 years of age. 

Labor will not seek to remove these measures in these Bills today. But we are concerned about the lack of detail on how these measures will work, and we urge the Government to release this detail. In particular the detail on compulsory activities that will apply, which is not included in the legislation we are debating today. 

Labor will pursue these matters in the Senate inquiry into these Bills. 

If the Government refuses to agree to Labor’s amendments that would remove the harshest measures form these Bills, Labor will oppose this legislation in its entirety. 

That is why I have moved these amendments in this House today – because Labor will never stop fighting for what is right, for what is fair, for all Australians. 

END 

MEDIA CONTACT: CATHERINE CHARLESON 0419 987 947 

Download PDF