Economic Security Strategy
E & O E – PROOF ONLY
MADONNA KING: Well, pensioners take a bow, you deserve this. And remember it’s just a down payment; you’re still promised that weekly increase from next year.
But the $4.8 billion increase in pensions is only Part A of a five-part $10 billion plan with the aim of kick starting our economy and to whether it will work shortly.
But first to the person in charge of the pension; also the Families and Housing Minister in the Rudd Government, Jenny Macklin. Good morning.
JENNY MACKLIN: Good to be with you.
MADONNA KING: Just to be clear: this is just a one-off payment to kick start the economy; the pension will still increase early next year?
JENNY MACKLIN: What we’ve said is this is a down payment through lump sum payments to pensioners. Single pensioners will get $1400 each; couples will get $2100 between them. We have really recognised that it is important to give proportionately more to singles given that the pressure – given they’re under significant financial pressure.
MADONNA KING: All right, but back to that question. So a down payment means the weekly increase will still go ahead next year?
JENNY MACKLIN: What the Prime Minister has made absolutely clear in his statement yesterday is that long-term pension reform will be delivered in the 2009 budget.
MADONNA KING: I guess I want to hear you say that y-e-s word. So…
JENNY MACKLIN: Well because it’s very important that we get this right; we intend to do it in the budget…
MADONNA KING: So when I say the pension will still increase early next year, why don’t you say ‘yes’?
JENNY MACKLIN: Well because it will happen in the budget. So I just wanted to make it clear that it’s – it’s not until the budget that we’ll finalise our pension reform.
MADONNA KING: So, in May, our pensioners can expect a weekly increase?
JENNY MACKLIN: In May they can expect to get the increases that – as you and others have been arguing for, and certainly pensioners have been arguing for, for a very long time.
MADONNA KING: All right, I’m sure they’ll think that’s good news, Jenny Macklin. How did you come to the figures? As you said, $1400 for single pensioners, $2100 for partner pensioners, $1000 for each person a carer has. Why specifically those figures?
JENNY MACKLIN: A few things: one is that we have made a commitment to get this right, and we will be delivering the long-term pension reform in the budget. From a point of view of getting this into law, that won’t happen until July next year. So we’ve wanted to make sure that from now until July next year pensioners were getting a reasonable increase in what you might call the equivalent of their weekly budget. This amounts to, for singles, around $35 a week over that nine month period.
MADONNA KING: All right. Just while on this point, self-funded retirees who also hold a Commonwealth Seniors Health Card, they’re also eligible for this cash payment?
JENNY MACKLIN: They will also be receiving this benefit. We do understand that self-funded retirees who are receiving a Commonwealth Seniors Health Card are under significant pressure right now with these very, very uncertain economic times.
MADONNA KING: What about part-pensioners, do you need to be on the full pension to get it?
JENNY MACKLIN: No, no, you’ll get the equivalent to your part-pension. So it obviously depends what level of pension that you’re on.
MADONNA KING: Now the pension is one part that was announced yesterday; the second is this $3.9 billion in payments for low and middle income families worth $1000 per child. Who is eligible?
JENNY MACKLIN: If I just run through all of the different categories with you – and just to make clear, sorry, on that part-pension issue, if you’re on a pension you will get the $1400, so…
MADONNA KING: Even if you’re on a part-pension.
MADONNA KING: Okay.
JENNY MACKLIN: So aged pensioners, disability support pensioners, carers who are receiving the carer payment will get the same as aged pensioners. Wife and widow pensioners, people who are on veteran’s pensions. So all of those different types of pensioners will receive the same amount as I outlined for aged pensioners.
MADONNA KING: Irrespective of whether they’re on a part pension or a full pension?
JENNY MACKLIN: That’s right.
MADONNA KING: All right. So onto Tax Benefit Family A…
JENNY MACKLIN: Yes.
MADONNA KING: …who is eligible there?
JENNY MACKLIN: Well people who are receiving Family Tax Benefit Part A, and the level of income depends on the number of children you have. So just to give you one example: if you have two children the cut-off point for a family income is $111,000. So…
MADONNA KING: How many families will end up getting something?
JENNY MACKLIN: Three-point-nine million children will benefit, and that’s 1.9 million families. So it’s about three-quarters of Australian families with children.
MADONNA KING: You’re listening to Jenny Macklin here on 612 ABC Brisbane, I’m Madonna King.
Housing is also your responsibility, Minister, $1.5 billion announced to triple the First Home Buyer Scheme in some circumstances…
JENNY MACKLIN: Yes.
MADONNA KING: …but I see this morning some property gurus already saying this will just be added to the price of the home. That would defeat the purpose, wouldn’t it?
JENNY MACKLIN: Yes, we don’t think that will be the impact. The reason for going down this path of increasing the First Home Owners’ Grant is really to give a boost to the housing construction sector. We do want to encourage those who are thinking about buying a home to really take that step; it is a big step for young people to take, and this is an encouragement for them to do that.
MADONNA KING: But how do you stop sellers just putting that money onto the sale price?
JENNY MACKLIN: Well we don’t think that that is what will happen. We think in this market it’s likely that what we’ll do is encourage young people who were being a bit hesitant to take that extra step and buy their first home.
MADONNA KING: This spending spree is essentially half your surplus. Is there a fear here, though – and I think it was raised by Malcolm Turnbull yesterday – that this could actually boost inflation and force the Reserve Bank to increase interest rates?
JENNY MACKLIN: Well we’ve seen the Reserve’s decisive action to reduce interest rates to help encourage growth in the economy. What we know is that this measure is more likely to have a more immediate impact on the economy to increase growth more quickly, and that is why we’ve done what we’ve done. We wanted to take and early and decisive action…
MADONNA KING: But couldn’t that boost inflation and therefore prompt the Reserve Bank to increase interest rates?
JENNY MACKLIN: Well that’s not the advice we’re getting; we’re getting the advice that it’s important to act quickly, to act in this very substantive way to encourage economic growth.
MADONNA KING: Some people have lost hundreds of thousands of dollars in super, the surplus belongs to all Australians. Are those who get nothing yesterday entitled to feel a bit disappointed?
JENNY MACKLIN: Well, if people have found that they’ve had a reduction in the value of their assets and they’re self-funded retirees, they can in fact go to Centrelink and ask for their asset valuations to be looked at again to see whether or not they are entitled to…
MADONNA KING: Yes, but that doesn’t really answer my question. You’ve got people…
JENNY MACKLIN: Well…
MADONNA KING: You’ve got people in the workforce who are to retire in a few years who have found that their super may have dropped, you know, $160,000, $200,000.
JENNY MACKLIN: Yes, but can I just make sure that people who are in this situation know what to do. It’s really making sure people have got the right advice, I’m sure there are older Australians who are concerned about the reduction in their asset values. And, if they are, they should go and talk to Centrelink and see what their entitlements are.
MADONNA KING: But do some people – are they entitled to feel a little bit disappointed they didn’t get anything out of yesterday?
JENNY MACKLIN: I think, when you have a look at the package, it’s a very, very substantial number of people who are going to benefit. There are around four million pensioners and other senior Australians who are going to benefit, nearly 3.9 million children. So it is a very, very substantial number of Australians who will benefit.
MADONNA KING: This only works if pensioners and the families you’re talking about actually spend the money or use it to pay off debts; it needs to circulate in the economy to kick start things. How do you encourage that, how do you prevent people taking this $1400 or $2100 and putting in a bank or putting it under their bed?
JENNY MACKLIN: Well, that’s why we’ve really made this available to those people who are under significant financial pressure. We’ve really heard from pensioners, whether they’re aged pensioners, disability support pensioners, carers that they are under significant financial pressure. And certainly the pensioners that I spoke to yesterday said to me that this is going to make a real difference for them in the lead-up to Christmas…
MADONNA KING: But do you concede that they need to spend it to kick start the economy, that it’s no use being saved?
JENNY MACKLIN: Well there’s no doubt that this is a two-pronged strategy: one, we want to give assistance to those who are under significant financial pressure, and we want to sustain economic growth. So we certainly want to make sure that people spend it on the things that they need.
And the sort of things that people are raising with me, they are going to spend it on some of the things around the house that need fixing that they haven’t been able to afford…
MADONNA KING: Yes.
JENNY MACKLIN: White goods, like a washing machine, that they haven’t been able to afford. So this, because it’s a decent-sized lump sum…
MADONNA KING: You believe they will spend it?
JENNY MACKLIN: I think they will, certainly that’s the message they’re giving me.
MADONNA KING: Jenny Macklin, thank you.
JENNY MACKLIN: Thank you.
MADONNA KING: That’s the Minister for Families, Housing and Community Services and Indigenous Affairs. So you get this money in December. The question is will you spend it or will you put it away?
A couple of months ago you will remember the Reserve Bank was telling us to save; now we’re being told to spend. Tell me what do you plan to do? Whether it’s through Family Assistance Tax Benefit A, whether it’s through the money given to those on a pension: single, aged, widows, disability, veteran’s pension. Will you spend this money or will you save it? Let me know this morning, 1300 222 612.