Commonwealth Seniors Health Card

Mr HAWKE (Mitchell) (12.34 pm)—I rise to speak on the Social Security and Veterans’ Entitlements Amendment (Commonwealth Seniors Health Card) Bill 2009. The government is continually reminding us that people are being stripped of their entitlements, that they are unable to claim their redundancy entitlements and that they are suffering because of the global financial downturn, so it is extraordinary that we have before us today a piece of legislation which will effectively cut the entitlement of 22,000 people to a concession card that provides them with significant benefits which allow them to continue to fund their own retirements.

It is important for us to note that this group of people is not fabulously wealthy. These people do not have more money than they know what to do with. These people are on the very edge of being able to fund their own retirement and thereby remove a burden from all other taxpayers and the government. This is something we need to encourage for the future of Australia. We need to ensure it is a viable proposition for future generations to take up.

I find it especially hard to understand this measure when retirement incomes have been so badly affected by the global financial crisis. I believe that the government will again have to reconsider and address the whole question of retirement incomes in the near future. Interest rates are low and they are set to fall further. This will badly affect many retirees. While it may conversely provide a benefit for people with mortgages, it punishes people at the other end of the equation, who rely on income streams that have interest rates attached to them. When cost-of-living pressures are maintained and when people have already been affected by the bungled bank deposit guarantee, it is hard to understand this as being anything but an ideological measure. It is typical of a Labor government, which says, ‘We don’t want you to do anything for yourself; we will take care of things for you.’ It is a typical Labor approach: ‘Don’t ever dare to do anything such as fund your own retirement. We’d prefer to have governments fund everything for you at every moment of your existence.’ It is stunning to think that this includes veterans and will affect veterans’ entitlements.

I think that when these measures are viewed in the light of what they mean for many of those people on the edge of returning to full government assistance, it will be seen that these perhaps should be scrapped. We know that the Commonwealth Seniors Health Card is provided to non-wealthy self-funded retirees primarily to allow them concessions on health care and pharmaceuticals. Because we have allowable income thresholds which are applied, the card is widely recognised as a means-tested provision. I think this is an important point. This is one of the benchmarks that is used for those people who are barely funding their own retirements for a wide range of other benefits by other governments and other services and other facilities and other entitlements. So by taking away the Commonwealth Seniors Health Card we are actually removing access to a wide-ranging series of things. Indeed, the flaw in the legislation before us is that the threshold limits, which are at the moment $50,000 for singles and $80,000 for couples living together, will not change. The threshold limits will remain the same. Superannuation drawings from a taxed fund will remain untaxed but the drawings will be added to a person’s adjusted taxable income for the purposes of assessing eligibility. Of course, herein lies the rub. Those people who have structured their arrangements around superannuation changes of the previous government, people who have put in place what they consider to be a modest retirement, will then be caught up and have this card removed.

What does this mean for those people who will have their Commonwealth Seniors Health Card removed? It is quite dire when you consider what it does mean. Under the Pharmaceutical Benefits Scheme, Commonwealth Seniors Health Card holders will pay $5 per script. When they lose it they will pay $31.30 a script. There is the PBS safety net. With the card, a senior will reach the safety net threshold when he has paid a total of $290 for scripts. Prescriptions after $290 are free. Without the card, the safety net threshold rises to $1,141.80, after which a fee of $5 per script will still apply. People who lose their eligibility for the card will lose many other benefits, including the seniors concession allowance, the seniors bonus payments and the telephone allowance.

Why is this important? It is important because we know that retirement incomes are one of the major challenges that we face as a nation, not just during the present financial crisis but well into the future. We know that people are living longer. We know this presents us with many new and emerging challenges. Experts say that one in three female children born today will live to the age of 100. One of the biggest challenges that we face in terms of growth in government expenditure is the one surrounding pensions, superannuation and retirement incomes and it is something that we have to take very seriously. So any measure that we face in this place, like this legislation before us today, which attempts to alter the arrangements ought to be considered very carefully. We ought to ask what is the benefit of this measure as opposed to its cost. I want to argue today that, regardless of the financial crisis and the problems that we currently face, any measure that we take in this place which reduces the incentives for people to fund their own retirement is going to lead to a bigger problem for future federal governments. We need to make it attractive for people to fund their retirement. We need to make it easier and make it a viable option, especially when you consider all of the other alternatives which mean that the Commonwealth government will have to find extraordinary amounts of revenue with a declining revenue base, with the demographic challenges that we will face. I think we need to design policy settings to encourage people to fund as much of their own retirement as possible.

I was pleased to meet recently with representatives of the Association of Independent Retirees and members from my own Hills Seniors Association to discuss Labor’s proposed changes to the seniors health card. As we know, the Rudd Labor government is planning to take away this card from many Australians. Indeed, hearing their stories about how this will directly affect those seniors brought home to me exactly what this will mean for people at a very vulnerable stage of life, people who have worked hard, people who have sacrificed to put away money for their retirement, people who have given up a different lifestyle at different stages of their lives to ensure that they had a measure of their own security later in life. I want to note that they are particularly upset that these changes were never mentioned prior to the last election. There was no mandate to make these changes to the Commonwealth Seniors Health Card. The government has no mandate for these measures. Much has been made in recent times of having a mandate, of outlining your policy prior to an election. Indeed, that has not been sought nor has it been achieved in relation to the legislation before the House.

They raised with me that the thresholds were last adjusted in 2001, and I have some sympathy with that. If this measure today was viewed in the light of an amendment or there was a proposal to see those thresholds raised, I believe many of these self-funded retirees could live with that. What we are concerned about is that $50,000 for singles and $80,000 for people living together are not realistic amounts taking into account that CPI figures indicate a rise of 20 per cent in the cost of living since the thresholds were last adjusted in 2001. In other words, retirement incomes have crept past those thresholds, just to fund the day-to-day cost of living. Again, I would stress to members here that these are not wealthy people. We are going to be affecting thousands of people who are not well off. They have worked hard to fund their own retirement and achieve a measure of security and we are threatening that security. I want to note that we have already seen thousands of people returning to the pension over the December-January period. We do not want to create a system which encourages that trend or indeed adds an extra burden on the government at a time when we will face significant challenges.

I want to reiterate that one of the things that most concerned the members of the Hills Seniors Association

Australia and the Association of Independent Retirees who met with me was that they had structured their superannuation arrangements to take advantage of reforms and are now caught in the unenviable position of having to restructure their arrangements, with no guarantee that they will be able to fall under the thresholds that are set in this legislation.

I believe that self-funded retirees are playing a significant role in ensuring that our retirement system is viable. They are people who have worked hard and sacrificed much so that they can fund their own retirement and thereby lift a burden off other taxpayers. When you consider the question of what will happen in future with declining revenue bases and increasing costs and liabilities to fund many more older citizens and their retirements, this legislation attacks the very heart of a system that would encourage people to fund their own retirements.

I find the proposal to index eligibility threshold limits for Commonwealth Seniors Health Cards a good one. If this legislation were to be improved to receive my support and the support of the coalition then indexing those threshold limits would be one way to do that. But there is no proposal to reset these limits. There is no proposal to reindex them annually. Fifty thousand dollars and $80,000 are not reasonable levels in the current circumstances, with declining incomes for many people funding their own retirements.

Without any changes to this bill, I will be standing up for the self-funded retirees in Mitchell, for the 10 per cent of people in my electorate who are over the age of 65, many of whom have sought to fund their own retirements, who have done the right thing by the government, done the right thing by society and done the right thing by themselves. We need to ensure that in the future we see legislation that encourages and rewards people and strives to get as many of them as possible to fund their own retirements, for the future of all of us in our nation. But, unless there are changes, I will be opposing this bill and will work to see it defeated in both places.