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2008
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
Urgent Relief for Single Age Pensioners Bill 2008
EXPLANATORY MEMORANDUM
(Circulated by authority of
Senator the Hon Helen Coonan)
Preface
This Bill is the first step by the Coalition to deliver a comprehensive
policy in relation to pensions, income support, Veterans' support and
carers over time. Assistance for single age pension is an immediate
priority due to the urgent circumstances facing many recipients struggling
to cope with escalating costs of living
The Coalition will continue to address the further concerns being raised by
pensioners and pension groups.
The Coalition recognises that the single service pension is not a welfare
payment however for the purposes of this Bill the term 'single pensioners'
and 'single age pensioners' refers to single recipients of the Age pension,
Widow B pension and the Age Service pension
This Bill amends the Social Security Act 1991 and the Veterans'
Entitlements Act 1986 to increase payments to single age pensioners by $30
per week.
The Bill aims to increase the single age pension, single age service
pension and Widow B pension by $30 per week with effect from 20 September
2008.
The increase in payments is to be met from the Standard Appropriations in
section 242 the Social Security (Administration) Act 1991 and section 199
of the Veterans' Entitlements Act 1986.
The Bill inserts new sections into the Social Security Act 1991 and
Veterans Entitlements Act 1986 to provide that an amount equivalent to $30
per week is added to the Single Age, Widow B and Age Service pension rates.
General Outline
Older Australians are a growing and diverse demographic within the
population who are active contributors to the Australian Community.
As a nation we enjoy one of the longest life expectancies in the world,
currently 13 per cent of Australians are over 65 years of age and this is
expected to grow to 25 per cent by 2047[1]
Currently, government funded pensions and allowances are the main source of
income for most people aged 65 years and over.[2]
The current single rate of pension is 60 per cent of the combined couple
rate, which is lower than the average for major OECD countries which stands
at 63 per cent. The proposed increase of $30 per week would bring the
single age pension in line with the OECD average.
The important role that older Australians play in our society should not be
understated. Almost half of older Australians aged 65-74 years (48%)
provide unpaid assistance to someone outside their household, one-third
(33%) provided volunteer services through an organisation, 29% are actively
involved in community organisations and support groups of various kinds.[3]
However many older Australians are finding it harder to afford these social
activities because they are even struggling to afford the basic necessities
to live and live with dignity.
The current focus has been on the plight of working families, with seniors
barely rating a mention. Social Inclusion is the government's mantra, but
seniors, who are dealing with spiralling costs, are being socially
excluded.
Single pensioners expected relief this year from the increasing cost of
living pressures. That is what the Labor party promised them in 2007.
The Senate Inquiry into the Cost of Living reported in March this year and
outlined the critical circumstances of many pensioners due to the increased
cost of living. However there was no extra relief provided in the Budget.
Grocery items are costing more and single pensioners are struggling to meet
these costs. There are many reported stories of pensioners doing it tough.
They are doing without fresh fruit and vegetables and surviving on jam
sandwiches to see them through. Along with the reports of substandard food
purchases there are some pensioners taking strangers into their home as
boarders.
Affordability of health care is also a concern for many older people and
single aged pensioners are putting their health at risk.
Older Australians have also experienced significant increases in the cost
of petrol for their cars. For many single pensioners, their car is a
lifeline into the community, providing them with the ability and mobility
to participate. However this is a freedom that is fast becoming
unaffordable.
The Coalition in Government had a strong record.
It was the Coalition in Government that introduced the Utilities Allowance
in 2005 to assist older Australians with meeting everyday household bills
such as electricity and water.
During almost 12 years of Coalition Government the pension increased by 57
per cent in normal terms or 24 percentage points above inflation. This was
through good economic management and adjustments to the pension when
needed, not just commissioning reviews upon reviews. The Coalition
Government legislated to set the maximum single rate of the pension to at
least 25 per cent of Male Total Average Weekly Earnings (MTAWE). This
meant that whenever pensions were adjusted for increase in the CPI, and the
pension rate fell short of the 25 per cent MTAWE there would be a top up
equivalent to 25 per cent of MTAWE.
Due to the strong economic management of the Coalition in Government
pensioners enjoyed three, one off bonuses. These were criticised by Labor
when in opposition and in Government were reported to scrap bonus payments
this year. Pressure from the Coalition, pensioners and pension
organisations saw the bonus paid for this year only. They survived because
of the outcry from pensioners and pension groups. These are the bonuses
the Government is touting as relief for older Australians in the face of
rising costs.
It was because of the Coalition's strong economic management that the Labor
Government inherited fiscal surpluses of $110 billion over five years.
Labor's tax and spend measures increased the surpluses to around $112
billion - an increase of 1.5 per cent. The $22 billion dollar surplus in
2008-09 - the result of the Coalition's strong economic management - is
being hoarded by Labor. It is a surplus which Labor is not willing to
share in these tough, financially uncertain times with Australia's most
vulnerable individuals.
The Rudd Government received an 83 page cabinet submission on the 25th of
March from the Department of Families, Housing, Community Services and
Indigenous Affairs, followed by an 11 page briefing from Treasury regarding
the inadequacy of the pension on the 16th of April this year. Yet to date
there have been no new policy initiatives to address the issues raised by
pensioners and pension groups.
The intent of this Bill is to provide urgent relief to single pensioners in
recognition of the increased pressures placed on their budgets through
soaring costs that the Rudd Government has not brought under control.
Financial Impact
This Bill will affect 928,834 pension recipients in total.
857,229 Single Age Pensioners
700 Widow B Pensioners
70,905 Single Age Service Pensioners
Total expected cost of $1.45 billion.
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[1] 2008 Pension Review Paper page 33
[2] "Older Australia at a glance" Australian Institute of Health and
Welfare Report, November 2007, page 43
[3] "Older Australia at a glance" Australian Institute of Health and
Welfare Report, November 2007, page vii.