Protecting Pensioners

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14 February 2022

I rise to speak on the Social Services and Other Legislation Amendment (Pension Loans Scheme Enhancements) Bill 2021 and in support of the amendment moved by the member for Barton. There must be an election coming, and some members opposite are feeling under pressure, because this third-term government is finally taking some long-overdue action on the Pension Loans Scheme—or Home Equity Access Scheme as it will now be known. Unfortunately, once again, it appears to be too little, too late.

The Pension Loans Scheme is a legacy of the Hawke Labor government. It was intended to allow older Australians who are asset rich but cash poor to access additional income if they missed out on the full age pension because of the assets test. The Pension Loans Scheme is effectively a reverse mortgage, administered and distributed by Services Australia. The initial payments above any age pension entitlement accrue as a debt secured against real estate the person owns, such as the family home or an investment property. As with a commercial reverse mortgage, participants can stay in their family home and do not have to repay the loan while living there. The government generally recovers the debt when the property securing the loan is sold or from the person's estate after they passed away.

In the 2018-19 budget the government made changes including expanding eligibility to full-rate pensioners and self-funded retirees; increasing the maximum fortnightly payment rate under the Pension Loans Scheme from 100 per cent to 150 per cent of the full pension; and reducing the interest rate from 5.2 per cent to 4.5 per cent. Labor supported these changes as they meant more senior Australians, including full-rate pensioners, could survive in the face of the rising cost of living. The cost of living is a real concern among older Australians in the electorate that I represent on the Central Coast of New South Wales, where one in five people is aged over 65. Dobell, the northern part of the Central Coast, is home to over 22,000 people relying on the age pension for some or all of their income, and there are over 2,500 self-funded retirees holding a Commonwealth Seniors Health Card.

Under the current arrangements, a full-rate pensioner can increase their income by up to $12,580 for singles or $18,960 for couples combined per year, based on the current rates of pension. Self-funded retirees can get up to 150 per cent of the maximum age pension. This bill introduces a 'no negative equity' guarantee so participants would not pay more than the market value of their property, regardless of the debt. The bill will also allow for two lump-sum advances in any 12-month period. This will help people to meet larger expenses such as replacing a car or home improvements or renovations.

Labor supports these amendments, but more could be done so more senior Australians could benefit from this scheme. In MYEFO 2021-22 the government finally gave up one of its long-term efforts to improve the budget bottom line at the expense of older Australians; it reduced the scheme's 4.5 per cent interest rate to 3.9 per cent, a change which came at least two years too late. Participants have been paying a higher interest rate than almost every mortgagee—a savings measure for the budget off the back of senior Australians during a pandemic, including full-rate pensioners who are struggling with the rising cost of living. The high interest rate is likely to have contributed to the low uptake of the scheme. Although some four million Australians are of age-pension age—including 2.6 million age pensioners, of whom around 80 per cent are home owners—there are currently only 5,000 participants in the scheme.

Labor believes this scheme, allowing people to unlock their housing assets to improve their retirement income, should be fair and easy to access for all senior Australians. Unfortunately the government has again missed an opportunity to achieve real change and address the barriers to participating in this scheme. The government cannot claim to be giving senior Australians real choices in their retirement without addressing these known barriers. Research by the University of New South Wales has found that, where there is a low awareness or low understanding of financial products such as commercial reverse mortgages and the Pension Loans Scheme, interest in them can be improved by providing information in an easy-to-understand way. Clearly, for the government, there is much more to do here.

There are still older Australians unable to access the program despite owning property. For instance, many Australians live in land-leased communities, including many in my electorate on the New South Wales Central Coast. There are over 500 such communities in New South Wales, accommodating around 34,000 residents. These Australians own their own homes but, because they do not own the land, they are unable to access the scheme. This isn't fair. The government must examine this issue and make further changes to open the scheme for these Australians who could otherwise benefit. Of course these changes do nothing to address the very real living costs and the pressures faced by age pensioners who do not own their own homes, many of them women—the fastest-growing group of homeless in our society today.

Although these are positive changes which will assist some older Australians, Australia's age pensioners won't be fooled by this government. They know that this government is not on their side. They need only look to the bungled vaccine rollout, the problems with boosters, and RATS not being available to aged-care homes. This government has failed older Australians, especially older Australians living in the outer suburbs or the regions. Many times, they've tried to cut the pension and increase the pension age, including in three budgets when the current Prime Minister had the job of Treasurer. In the 2014 budget, they tried to cut pension indexation, which would have meant that pensioners would be forced to live on $80 a week less within the decade. This unfair cut would have ripped $23 billion from the pockets of Australian pensioners. In that budget, often known as the 'horror budget', they cut $1 billion from pensioner concessions—support designed to help pensioners with the rising cost of living.

They also axed the $900 seniors supplement to self-funded retirees receiving the Commonwealth seniors health card. As a pharmacist and as someone who worked at the local hospital in Wyong in my community for almost a decade, I know how much that support means to older Australians, especially in terms of being able to afford health care as out-of-pocket costs grow and waitlists lengthen. This government then tried to reset the deeming rate thresholds—a cut that would have seen 500,000 part-pensioners worse off.

In 2015, the Liberals did a deal with the Greens to cut the pension to around 370,000 pensioners by as much as $12,000 a year by changing the pension assets test. In the 2016 budget, they tried to cut the pension of around 190,000 pensioners as part of a plan to limit overseas travel for pensioners to six weeks. They also tried to cut the pension for over 1.5 million Australians by scrapping the energy supplement for new pensioners. The government's own figures show that this would have left over 563,000 Australians who were currently receiving a pension or allowance worse off. Over 10 years, in excess of 1.5 million pensioners would be worse off under this government.

On top of this, this third-term government spent five years trying to increase the pension age to 70 and they waited four years before adjusting the deeming rates for age pensioners, despite the Reserve Bank continually reducing its rate over the same period. The Liberals still have cuts to pensions before the parliament. They want to completely take away the pension supplement from pensioners who go overseas for more than six weeks. This could see around $120 million ripped from the pockets of pensioners, many of whom have family ties and family responsibilities outside of Australia which mean absences of longer than six weeks—for example, those caring for a loved one or a family member. The government still wants to make pensioners born overseas wait longer before qualifying for the age pension by increasing the residency requirements from 10 to 15 years.

Older Australians are worried, and why wouldn't they be? They're worried about the rising cost of living, including out-of-pocket healthcare costs. They're worried about the spiralling cost of living under this coalition government. They're worried that, if they need more assistance to stay in their home, they'll have to wait far too long to get it. They're worried that, if they need residential aged care, it will be substandard because it's underfunded and understaffed. Above all, they are worried that, if this Morrison government is re-elected, they could face another three years during which these problems just continue and grow.

In time I have left, I want to briefly turn to the subject of aged care. Frail older Australians in our community deserve better. They deserve better than this government. They deserve better than a minister who goes to the cricket for three days rather than presenting to the COVID hearings to be held to account for the deaths of over 600 older Australians who have died in aged care this year of COVID.

It was four years yesterday that I lost my dad to younger onset dementia. I know many people in this House and many people across Australia have lost a loved one slowly, piece by piece, as dementia has ravaged them. So many people have spoken to me who, through COVID, haven't been able to speak to or see a loved one. One local person told me that she could only see her mum through a screen on FaceTime and her mum tried to pass her a cup of tea through the screen because she didn't understand that they weren't in the same room. Then there was the great-grandson who was so distressed that he couldn't visit his great-grandma because he wasn't old enough to get a jab and so couldn't see her.

Senior Australians deserve better. They deserve a government that cares. There have been countless reports on aged care in Australia, including from the royal commission. An interim report is titled Neglect, and the neglect has continued under this government. What I can't forgive is this Prime Minister, who, as Treasurer, made savage cuts to aged care which have left the system underfunded and older people vulnerable and exposed. I can't forgive the Prime Minister for this and nor will I forgive the aged-care minister for going to the cricket while older Australians died alone, without someone to comfort them, without a kind word. This is not good enough. Older Australians deserve better. No frail, older Australian—someone's father, someone's mother or someone's grandfather—should die alone, lonely and afraid, in aged care.

If there is any measure of our society, it is the respect and dignity that we show to the most vulnerable in our community. Senior Australians deserve better. Older Australians deserve better. They deserve a change of government. They deserve a government that cares. They deserve a government that acts. They deserve a Labor government.