Introduction
The Commonwealth Government welcomes the Senate Community Affairs Committee’s report, A decent quality of life: Inquiry into the cost of living pressures on older Australians.
The Government understands that cost increases in the essentials like food, petrol, gas and electricity bills are having a significant impact on people on fixed incomes, including age pensioners and other seniors.
Before being elected in November 2007, the Australian Labor Party had growing concerns about claims that many age pensioners have difficulty managing on the base pension rate.
Acting on these concerns, the following matters were referred on 14 June 2007 to the Senate Committee on Community Affairs for inquiry and report:
- the cost of living pressures on older Australians, both pensioners and
self-funded retirees, including: - the impact of recent movements in the price of essentials, such as petrol and food,
- the costs of running household utilities, such as gas and electricity, and
- the cost of receiving adequate dental care;
- the impact of these cost pressures on the living standards of older Australians and their ability to participate in the community;
- the impact of these cost pressures on older Australians and their families, including caring for their grandchildren and social isolation;
- the adequacy of current tax, superannuation, pension and concession arrangements for older Australians to meet these costs; and
- review the impact of Government policies and assistance introduced across all portfolio areas over the past 10 years which have had an impact on the cost of living for older Australians.
After hearing evidence and taking submissions from a wide range of groups and individuals, the Senate Committee on Community Affairs released its comprehensive report on 20 March 2008. It highlights a number of issues relating to the adequacy of assistance for seniors and provides evidence that some groups, such as single women and people who rent, are not faring as well as others. The report provides thought-provoking material and provides a solid basis for further work. Through its recommendations, it clearly identified a range of issues for the Government’s consideration.
In other action before its election, the Australian Labor Party framed a number of election commitments in its “Making Ends Meet” package that would enable increased financial assistance to be delivered quickly to senior Australians.
Since the election, the Government has been implementing its election commitments, including those that provide more support to senior Australians, and also announced measures in the 2008-09 Budget that provide additional support.
All eligible seniors received a $500 bonus payment resulting from the Government’s first Budget. The $500 bonus was paid directly into bank accounts before 30 June 2008.
The Government is paying pensioners an increased Utilities Allowance of $500 a year (singles or couples combined). The first $125 instalment of the increased Utilities Allowance was paid in March and the second payment was made in June 2008.
For the first time the Utilities Allowance has been extended to all recipients of Carer Payment, Disability Support Pension, Widow B Pension, Invalidity Service Pension, Income Support Supplement, Partner Service Pension, Wife Pension and Bereavement Allowance.
Commonwealth Seniors Health Card holders and certain Veterans’ Affairs Gold Card holders have received an increased Seniors Concession Allowance of $500 a year, which is paid in quarterly instalments, in line with the Utilities Allowance.
The Government has increased the Telephone Allowance to $132 a year for those who have the internet at home. This is available for eligible veterans, income support recipients of age pension age, Commonwealth Seniors Health Card holders and recipients of Carer Payment and Disability Support Pension who have a home internet connection.
From 20 September 2008, almost four million Australians will receive an increase in their pensions and other income support payments and allowances. Indexation will deliver an increase of $15.30 a fortnight in the maximum single pension and $12.70 in the maximum partnered rate for each member of a pensioner couple.
The third instalment (now $128.50) of the increased Utilities Allowance and the Seniors Concession Allowance (now $514 per annum) will also be paid from 20 September.
In addition, the Government has provided extra assistance with dental and aged care costs. It is also working with State and Territory Governments to introduce national reciprocal transport concessions for older Australians with a Seniors Card when interstate. The Commonwealth Government is working with State and Territory Governments to have these concessions in place from 1 January 2009.
The Commonwealth Government also provides substantial income tax relief for eligible senior Australians through the senior Australians tax offset. When the senior Australians tax offset is combined with the low income tax offset, eligible single older Australians can have income up to $25,867 in 2007-08 without paying income tax.
s part of the Government’s plan to reduce income taxes, this has increased to $28,867 for 2008‑09, and will increase to $29,867 for 2009‑10 and $30,685 in 2010‑11.
Similarly a senior Australian who is a member of a couple can earn up to $21,680 in 2007‑08 without paying income tax. For 2008-09 this threshold has increased to $24,680 and will increase to $25,680 in 2009-10 and finally to $26,680 in 2010-11.
The Government recognises that housing affordability can be an issue for senior Australians. Through measures such as the National Rental Affordability Scheme (NRAS) and the A Place to Call Home Program, the Government is addressing these challenges. In relation to NRAS, a total of $622.7 million has been allocated for the implementation of the Scheme to create 50,000 new affordable rental dwellings over the next four years (2008 to 2012) for low and moderate income households.
Under the A Place To Call Home initiative the Government will implement its election commitment and spend $150 million over five years to deliver at least 600 additional homes across Australia for families and individuals who are homeless (2008-09 to 2012-13). It is anticipated that older people will benefit from the scheme.
The Government has already implemented a wide variety of measures, which are specifically targeted at helping seniors with cost of living pressures. However, the Government recognises that more needs to be done.
As this year marks the centenary of the introduction of legislation for the Age Pension, it is timely to consider the assistance being provided to senior Australians. The Government is committed to getting this right for the long term.
On 13 May 2008, the Treasurer, the Hon Wayne Swan MP, announced a comprehensive review of Australia's tax system to create a tax structure that positions Australia to deal with the demographic, social, economic and environmental challenges of the 21st century and enhance Australia's economic and social outcomes.
The 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 payments system and other social support payments, rules and concessions, with a view to improving incentives to work, reducing complexity and maintaining cohesion.
As part of the Review, the head of the Department of Families, Housing, Community Services and Indigenous Affairs, Dr Harmer has been asked to investigate measures that may be adopted to strengthen the financial security of seniors, carers and people with disability. This will include appropriate levels of income support and allowances, including the base rate of the pension, with reference to the stated purpose of the payment; the frequency of payments, including the efficacy of lump sum versus ongoing support; and the structure and payment of concessions or other entitlements that would improve the financial circumstances and security of seniors, carers and people with disability.
In establishing the Review, the Government was cognisant of the Senate Committee’s first three recommendations, which call for a review of the base level of pension, of indexation arrangements and of incentives and initiatives related to superannuation savings.
On 11 August 2008, the Pension Review Background Paper was released. This paper begins to address the terms of reference for the Pension Review. A reference group comprised of representatives from seniors and community groups has been established and a public consultation process is underway to inform the Pension Review.
Finally, the Government recognises that its primary response to tackling climate change—the introduction of the Carbon Pollution Reduction Scheme in 2010—will have an impact on the cost of living for all Australians.
The introduction of the Carbon Pollution Reduction Scheme will result in changes to a wide range of prices, although the overall increase in the cost of living is expected to be modest. Nonetheless, the Government recognises that even a modest increase in the cost of living impacts on household budgets.
The Government has therefore committed to assist households adjust to the impact of the scheme. Notably, the Government will increase payments, above automatic indexation, to people in receipt of pensioner, carer, senior and allowance benefits and will provide other assistance to meet the overall increase in the cost of living flowing from the scheme. The Government also commits to increase assistance to other low‑income households through the tax and payment system to meet the overall increase in the cost in living flowing from the scheme.
The Committee made fifteen recommendations. The Government response to specific recommendations is provided in this report.