Introduction
On 15 May 2008, the Minister for Families, Housing, Community Services and Indigenous Affairs, the Hon. Jenny Macklin MP, announced that the Secretary of the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA), Dr Jeff Harmer, would lead a review into measures to strengthen the financial security of seniors, carers and people with disability. This would include a review of the Age Pension, Carer Payment and Disability Support Pension as part of the Government's wider inquiry into Australia's Future Tax System, chaired by Dr Ken Henry.
Recent rises in cost of living pressures have led to concerns that people on low incomes—particularly those who are dependent on the maximum rate of pension and have few assets—may be finding it harder to make ends meet. The recent Senate Standing Committee on Community Affairs' inquiry into cost of living pressures on older Australians found that people on low incomes are disproportionately affected by rises in the cost of petrol, food, medical care and rental accommodation. It also found the maximum rate of pension may be insufficient to maintain a basic, decent standard of living, and those most at risk of financial stress are single pensioners receiving the maximum rate of pension and living in private rental accommodation. The committee acknowledged that certain groups are more likely to be wholly reliant on pensions, including older women, people with severe disability or chronic illnesses, and those whose earning ability has been limited by their caring responsibilities.
The Pension Review will investigate the appropriate levels of income support and allowances, the frequency of payments and the structure and payment of concessions or other entitlements for Age Pension, Disability Support Pension and Carer Payment recipients. The review will carefully examine options for reforming the pension system to ensure that any changes are sustainable in the long term.
The Pension Review Background Paper is designed to support the public consultation and submission process for the Pension Review. All interested people are encouraged to participate in the public consultation. Details about the consultation process and how to get involved are available on the FaHCSIA website at
The wider inquiry into Australia's Future Tax System will consider improvements to the tax and transfer payment system for individuals and working families. This will include consideration of the relationships of the tax system with the transfer system and other social support payments, rules and concessions, with a view to improving incentives to work, reducing complexity and maintaining cohesion. Consultations will also be undertaken as part of the broader review. Further information on the Australia's Future Tax System review, including a copy of the architecture paper, is available on the tax review web site at <www.taxreview.treasury.gov.au>.
Readers of this background paper may also be interested in the report of the Senate Community Affairs Committee, A decent quality of life. On 20 March 2008 the committee released this report into the cost of living pressures on older Australians. The report made 15 recommendations to improve the financial wellbeing of older Australians.
The House of Representatives Standing Committee on Family, Community, Housing and Youth is also conducting an inquiry into Better support for carers, which was launched on 1 May 2009. More information, including copies of submissions to the inquiry, is available on its web site at <http://www.aph.gov.au/house/committee/fchy/carers/index.htm>.