Pushing Age Pension to 70 ‘unfair’

On 5 April, YourLifeChoices interviewed Greens Senator Rachel Siewert on her party’s approach to Federal Budget 2018. This week, we asked the Labor Shadow Minister for Families and Social Services, Jenny Macklin, what her party really thinks about the Age Pension, superannuation, the rising cost of healthcare and energy, and other issues affecting retirees. We thank Jenny Macklin for taking time out of her busy schedule to answer some of the more pressing questions affecting our members.

YourLifeChoices: One of the so-called zombie measures still on the table from the 2014–15 Budget is the increase of the Age Pension age to 70. Where does your party stand on this issue?
Jenny MacklinThere are a few zombie measures, but the biggest is the Government’s desire to increase the age when one can receive the Age Pension to 70.

We are strongly opposed to this. It is unfair. There is evidence that it would be harsh, particularly on those with difficult physical jobs, farmers, builders, nurses. There is also evidence from the USA of a big gap between high-income earners and low-income earners in life expectancy.

The proposal is very unfair as low-income people already have a lower life expectancy. The government should take this legislation out of the Budget as it is grossly unfair.

And the numbers show that 375,000 people would be hit in the first four years – an overall cut to the Age Pension of $3.6 Billion.

This legislation will affect those born after 1 July 1958 who are planning retirement. Many people are not aware the government is planning this significant change.

The second zombie measure to which Labor is strongly opposed is the cutting of the energy supplement. It will have an impact on two million people, including age pensioners, carers, people on disability pensions and those on the Newstart allowance. It is essentially a cut to the pension, reducing the Single Age Pension by $365 per year and the couple Age Pension by $550 per year. We have defeated this legislation more than once and we call on the Government to take it out of the Budget and the parliament.

There are a number of other zombie measures we oppose, including people who spend more than six weeks overseas who will lose their pension supplement.

The Liberals still want to make pensioners born overseas wait longer to get the Age Pension by increasing the residency requirements from 10 to 15 years.

Every single Budget since 2014 has seen a cut to the pension. The 2014 Budget was the worst when the Government tried to change indexation, deeming thresholds and pension concessions. And in 2015 there was the change to the assets test.

Looking at the current income and asset eligibility tests for the Age Pension, what does your party think of the current limits?
We opposed the last changes in 2015 (which came into effect on 1 January 2017). Before the last election Labor said it would conduct a major enquiry into the Age Pension (including income and assets tests), superannuation and savings as the three pillars of retirement income which need to work together.

In the last Budget, the Federal Government introduced its downsizing legislation. What did you think of that legislation?
We did not oppose this legislation, but I do not consider that it will do much for many people. It is very different from the ALP program – Housing for Seniors which was announced in the 2013 Budget. The change of government meant this program did not proceed.

Should the family home be exempt from the Age Pension assets test?
Labor does not support having the family home counted in the assets test, at any value.

Most people’s homes are not worth millions of dollars. Older Australians need to know that, if they want to stay in the community where they have lived for a long time, they will not be forced out.

Why is Labor’s policy of cancelling the cash rebate for franking credits important? And can you explain, in plain English, who will be affected?
All Age Pensioners (whether full or part) with individual share holdings, will still receive franking credits.

The reason why Labor is proposing this change is because of how much this concession costs the Budget. It was originally introduced by the Howard Government and cost $550 million per year. It has now grown enormously – in the next few years it will cost $8 Billion – more than the Commonwealth spends on public schools.

We need to prioritise.

The vast bulk of the benefit goes to self-funded retirees on higher incomes. Labor prefers to spend on aged care, hospitals and schools.

When the Age Pension was first introduced into Parliament in 1909 it was intended as a ‘reward for years of service’. How would you describe it in 2018?
A couple of big things have changed since then, namely the introduction of compulsory superannuation and the introduction of Medicare. We consider the Age Pension to be one of the essential pillars of our retirement income system, alongside superannuation and people’s own savings. The Age Pension needs to provide an adequate level of income. I think it is completely offensive when the Government describes it as older people bludging on the system. Older Australians have worked hard, so we should make sure these people have an adequate level of income.

So, is the Age Pension adequate?
There is no question that, if you are completely dependent on the full Age Pension, it is very, very tough. It is especially difficult for renters. There is no question that housing affordability is a serious issue for older Australians, most particularly women, who have no home. We will have more to say on this issue.

In 2009, it was the hundredth anniversary of the Age Pension in Australia. As the Minister responsible, I oversaw the largest increase to the Age Pension. It lifted around one million people out of poverty with a $30 per week increase. It also improved indexation with the Pensioner and Beneficiaries’ Living Costs Index used alongside the CPI, and it included a work bonus. This was a very important structural shift in the adequacy of the pension.

What is the single policy measure that your party supports that will be of the most benefit for the wellbeing of older Australians?
There are so many issues, it is hard to single one out. For the last five years we have been working hard with seniors’ groups to stop large cuts to the Age Pension (e.g. indexation changes in the 2014 Budget would have cut $23 Billion to the pension over 10 years). Cutting pension indexation would have seen the pension drop from 28 per cent of average weekly earnings today to just 16 per cent by 2055. The conservative government has done everything they possibly can to attack the pension. It’s been our job to try to stop those cuts.

Next up is the biggest cut – the increase in Age Pension age. It doesn’t affect existing pensioners, but it does those coming along behind. And removing the Energy supplement is a direct cut to pension entitlements.

Other big issues for pensioners are access to health services and healthcare. This government has had a freeze on Medicare rebates for the past five years. And made cuts in funding to public hospitals. People have to wait much longer. Plus, the cost of private health insurance is going through the roof.

Labor will lift the Medicare freezes and limit private health insurance rebate rises.

Specifically, Labor is proposing to cap private health insurance premium increases at 2% in our first two years.

Labor will also task the Productivity Commission with the biggest review of the industry in twenty years to improve the quality, value and affordability of private health insurance.

Another issue that comes up a lot is deeming rates. Interest rates keep coming down and part pensioners are very angry that the government is refusing to change the deeming rates. This is straight theft from pensioners. I’ve been calling on them to change deeming rates for some time now – I asked the Minister about this issue in the Parliament earlier this year.  It’s been three years since the Turnbull Government last lowered deeming rates, and pensioners are paying the price, with current deeming rates now significantly higher than real rates of return. Interest rates have fallen from 2.25 percent in February 2015 to 1.50 percent today, yet Mr Turnbull has done nothing give some relief to pensioners.

Do we need a Minister for Ageing?
Yes, we do. Julie Collins is the ALP’s Shadow Minister for Ageing and Mental Health. She will hold this role if we form a government.

Anything else you wish to say
I really would like to reiterate that the Government policy of increasing the Age Pension age to 70 should be taken out of Parliament and out of the Budget. The same with removal of the Energy Supplement. These changes will NOT get through the Senate.

In closing, the most important pre-Budget talking point is that there should be no more cuts to the Age Pension.

Could we please have one budget – one Liberal Budget- that doesn’t include cuts to the pension?

That’d be a first.

Do you agree with Labor’s views? Is the age of 70 too late to receive the Age Pension?

Related articles:
Is the Age Pension adequate?
Greens discuss fairer Age Pension
Pension too complicated

Written by Kaye Fallick

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