Age Pension, McClure Review, DSP
Greg Jennett: Let’s start first of all with that much vaunted Tony Abbott quote of the evening before the September election, no change to the pension. Has the Government advanced the argument that it’s doing now without breaching that commitment?
Minister: Australia is facing a major demographic transition that huge baby boomer generation are entering into retirement, there is going to be many more dependants and they are going to live longer. So unless we are prepared to continue to hop the future to effectively charge the next generation for our living standards today then we have to address that and that is what we will do.
Greg Jennett: Is the implication that commitment was good for one electoral term but the changes you seek to make extend out over many?
Minister: Well if you look at what Labor did they increased the pension age going up from 65 to 67 over many years, now they can hardly argue about us doing something which they have done themselves. As I said we’ve got this major demographic shift occurring, many more dependants, many more people living post retirement age and that’s a huge cost to the budget, either we pay for it now or our children and their generation will pay for it in the future.
Greg Jennett: Now we’ve seen the Treasurer basically backing the idea of going to 70, are you able to say that is the figure we’re looking at?
Minister: All of this will be revealed in the budget, obviously on budget night, but we need to have a national discussion about how we pay for an increasingly large older population in Australia. Yes we need to provide welfare, we need to provide pensions particularly for those who are poor and who need them and that should be the focus of the argument, who needs it and how can we pay for it in the future?
Greg Jennett: Now we do see these demographic projections about a doubling of people aged between 64 and 85 in the decades ahead and yet within that you’re starting to get the first generation of full superannuation, compulsory superannuation generations, are they factored into this? Could it be that the situation for that generation is not as costly to the public purse as previous generations?
Minister: The reality is that many older Australians rely on the part pension so that whilst superannuation is having an impact the reality is, if I recall when it was first introduced, it required about 15 to 18 per cent of salary saved for a period of 25 to 30 years. Now we’re a long way from achieving that so that means that many older Australians in retirement will be reliant on the part pension.
Greg Jennett: So a continued reliance despite compulsory super?
Minister: That’s right, and these things hopefully will balance out over time but if we are looking at the next 20 years or so then the reality is that there is going to be a very significant reliance by many people on at least the part pension.
Greg Jennett: Okay well let’s talk about another costly welfare item in your portfolio, it is the Disability Support Pension, that’s been reviewed in what’s called the McClure report, when do you expect to receive that?
Minister: I expect to have the interim McClure report sometime either this week or next week and we will release that fairly soon and that in a sense I believe will set out some of the pillars for welfare reform in the future.
Greg Jennett: Is that sustainable without change?
Minister: Well this has been a large and increasing number of people on the DSP, it’s grown faster than the aged cohort of the population so it’s something we need to address but importantly the DSP for decades has been a dead end payment, people have been put on the DSP and frankly governments have forgotten them. Now our view is that if we can encourage people to stay in the workforce, at least work part time, rather than being put on the DSP and left there then that’s a good thing for them, their families and indeed the whole of the community.
Greg Jennett: What about the case management of those people and medical assessments of their condition, could it be reasonable to expect they will happen more frequently?
Minister: I think what’s important is the group that are coming onto the DSP, if we can do some more work with people who would potentially just end up on the DSP for years if not decades, help them at that stage so that we can give them a different pathway which can involve employment rather than just welfare, then that will be to their advantage.
Greg Jennett: And the volume of savings, have you any ball park what could be achieved overtime?
Minister: All I can say is if you look at my portfolios, Human Services and Social Services we are responsible for almost one third of the Commonwealth budget so this is a big outlay and with an ageing of the population unless we address it then that outlay is going to grow bigger.
Greg Jennett: Alright so this is an argument that has to be won, Ministers are starting to advance the argument. Now when budget comes is it supported by campaigns, advertising to carry public sentiment with it?
Minister: We’ll be out there discussing it because it’s important that every Australian realises what’s happening especially demographically in this country, so we’ll be out there. As to any advertising that’s a matter for others not for me.
Greg Jennett: Well Social Services Minister Kevin Andrews, I know you are very busy at the moment, thanks for making time for us today.
Minister: Pleasure Greg.