Pensions Haven’t Escaped the Budget Glare

The Federal Government’s approach and ideology to income support is at odds with the spirit in which the system first began more than a century ago, writes Australian Greens Senator Rachel Siewert.

The Federal Budget targets the most disadvantaged and vulnerable in our community, expecting these people, including pensioners, to carry the burden of savings measures.

The Budget represents a calculated effort to change the fabric of our community. Measures driven by ideology, rather than evidence, will fundamentally undermine our social security system.

This is a far cry from the attitude held by the Government of the day in the formative years of our pensions system.

Prior to the introduction of the aged pension in 1909 and the invalid pension in 1910, then Attorney-General Littleton Groom described the pension as ‘an ideal whose attainment should be earnestly sought, it being felt to be a reproach to civilisation that many persons whose lives have been spent in working for the advancement of the State should in their old age, through no fault of their own, be compelled to end their days in charitable institutions’.

In introducing these social safety nets, the Commonwealth was responding to growing calls from charities, benevolent societies and the public, who were under increasing pressure from a growing population and the impacts of the 1890s depression, which were leading to an inability to care for those who needed support.

Conversely to this, the Government’s proposed budget measures and cuts will push more people into depending on charities for support and increase the prevalence of poverty and disadvantage.

Every MP will have had the same calls and letters that I’ve received since budget night, from people who are concerned that the support they rely on is under threat.

In one letter, a couple describe a fear that their lives ‘will be reduced to little more than just an existence’, despite both having worked hard to pay a mortgage and raise a family. They continue: “It has been a continual uphill battle, trying to make ends meet and with the chances to the aged pension announced we are at our wits end. We really just don’t know how we are going to survive.”

This is a message I’ve heard again and again as the impact of the budget sinks in.

One of the budget measures proposed, lowering the indexation rate (the mechanism that increases pensions twice each year) would see pensions begin to lose value from September 2017.

The new indexation arrangements will link pensions only to the consumer price index, a dramatic departure from the current system. The Age, Disability Support and Veterans’ Affairs pensions, along with the Carer Payment are set to be affected.

Organisations including ACOSS and Unitingcare have estimated will take between $80 and $100 per week from pensions within ten years. Just as Newstart and Youth Allowance, which are only indexed to CPI, have become inadequate and lost touch with the true cost of living, so too will the pension.

There are cuts proposed for some recipients of the disability support pension, with a group of people aged under 35 to have their pension eligibility reassessed, in order to move them onto Newstart, losing more than $160 per week.

Rather than helping people into work, as the Government claims, forcing people onto Newstart will create new barriers to employment by exposing them to poverty. It will also do nothing to address issues like inadequate job services, workplace discrimination, lack of adequate workplace support and a lack of flexible working conditions.

The highest number of complaints the Human Rights Commission receive relate to disabilities, and 45 per cent of these complaints relate to employment.

Disability Discrimination Commissioner, Graeme Innes, said during Senate Estimates, that the Government’s proposed changes to the DSP will punish people who are already looking for work.

Mr Innes said successive governments had failed to deliver the jobs plan needed to help people move from income support into employment. In this budget, nothing has changed.

The story is similar for older job seekers. Newstart Allowance is a reality for 200,000 Australians in their 50s and 60s. This number has increased by more 41 per cent since 2010, as older Australians are locked out of the job market.

There are significant employment challenges facing older jobseekers, challenges that wage subsidies alone will not solve. Increasing the retirement age to 70 without ensuring that older workers can remain in the workforce will condemn older Australians to years of poverty.

Age discrimination, fewer employment opportunities for older workers and inadequate job services make it tough for older people to re-enter the workforce.

OECD figures show that poverty amongst Australians aged over 65 is already 35 per cent, almost triple the average of 12.8 per cent, with concerns this will increase as a result of the changes to indexation, the retirement age and other budget measures.

A three year freeze to the indexation of the aged pension income and assets test from 2017, will see fewer people qualify for the payment. $1.3 billion is being cut from concessions for older Australians, while the Commonwealth Seniors Health Card holders will lose the Seniors supplement.

A $7 GP co-payment and increased co-payments on medications will make health care more expensive and put more stress on people on low incomes.

These cuts and restrictions to important social safety nets will serve only to force more Australians into hardship, and will not address the fundamental issues that keep people entrenched in poverty and disadvantage.

This budget targets people on income support and low incomes who have the most to lose, making it hardest for the most vulnerable in our society.

The Government’s approach and ideology to income support is at odds with the spirit in which the system first began more than a century ago.

About the author: Greens Senator Rachel Siewert was first elected to the Senate representing West Australia at the 2004 election and commenced her term in July 2005. She was re-elected for a second term at the 2010 Federal election. Siewert is the Australian Greens Whip, chairs the Senate Community Affairs References Committee and is a member of the Expert Panel on Constitutional Recognition of Indigenous Australian.