Transcript: RN Breakfast, ABC Radio National

15 December 2016

The Hon Alan Tudge MP

Minister for Human Services
Topics: 
Changes to pension assets test
E&OE

HAMISH MACDONALD:        
Alan Tudge is the Minister for Human Services. Alan Tudge, good morning, welcome to RN Breakfast.

ALAN TUDGE:
Good morning, Hamish.

HAMISH MACDONALD:        
You heard Leanne there, so-called Leanne, don't know if it's her real name. She said the changes are un-Australian. Have you done enough to explain to people what you're doing and why?

ALAN TUDGE:
Hamish, I just think this is another day, another disgraceful union campaign aimed at putting fear into vulnerable Australians. And yes this has been forecast for 18 months now from when the policy first went through the Parliament with the support of the Greens and then the support of the Labor Party at the subsequent election.

We then informed the pensioners who are most likely going to be effected in a formal letter in October and then they have received notification in recent times as to the precise change to their pension come 1 January.

I think, as you pointed out at the beginning of the program, over 90 per cent of people will either receive an increase to their pension or there'll be no change. But there'll be some pensioners who have high assets above and beyond their family home that will see a small change to their pension.

HAMISH MACDONALD:        
Sure, but would you acknowledge though that these calls, whether you agree with what the unions are doing or not, are tapping into some quite genuine fears by people at or nearing retirement?

ALAN TUDGE:
I think this is a disgraceful campaign because I think it suggests that everybody's pension is going to be cut.

I want to confirm to the pensioners listening that the maximum rate of the pension stays the same, the pension will continue to increase twice per year and the family home is still excluded from the pension assets test.

All pensioners will continue to receive the Commonwealth Seniors Health Care Card and 90 per cent of all pensioners are actually going to get an increase in their pension or no change at all.

It's only really - and it's an important point, Hamish - because our changes are about making the system overall sustainable in the long-run and it's only those people with high assets above and beyond the family home that are being negatively affected.

HAMISH MACDONALD:        
Sure, look, you've had the opportunity to make those points twice now, that's fine. I'm just asking you to acknowledge whether or not you think some of the fears are genuine amongst pensioners and people nearing retirement age.

ALAN TUDGE:
Inevitably no one likes to have any reduction to their pension, however this applying to people who have got considerable non-housing financial assets and we're trying to rebalance the system if you like so that it's fairer and providing more support for people with very low means and overall trying to make the system more sustainable in the long-run.

Because, Hamish as you know, we've got an aging population, we've got a smaller proportion of people who are working to support that aging population and indeed the forecasts are that in 40 years' time we'll have twice as many pensioners as we do today, so we have to make sure that that system is sustainable.

HAMISH MACDONALD:        
So the forecast is that 88,000 people will miss out on the pension entirely after this and 225,000 people will see their pensions reduced. Are those figures correct?

ALAN TUDGE:
Those figures are correct. That's to the best of our knowledge at this stage.

HAMISH MACDONALD:        
Because what happens to those people? I mean, after 1 January these are scary times for them, are they not?

ALAN TUDGE:
Oh for those people who may no longer be eligible for the pension come 1 January, they would have been receiving probably a very small part pension as it is.

The important point that I say for those people is that they will continue to receive automatically the Commonwealth Seniors Health Care Card, which is often the most important thing for those people.

Those people would also have significant financial assets above and beyond the family home, probably in excess - if you're losing a pension altogether - of say $1 million. So you may have considerable financial assets which you can draw down upon of course.

HAMISH MACDONALD:        
So deal with it is the answer ultimately.

ALAN TUDGE:
Our aim is to make the system fairer and sustainable for the long term as I was saying and we've got to make these difficult decisions, but also support those with more modest means which is what we're doing as well in the process with about 170,000 people going to get an increase of about $780 a year to their pension come 1 January.

HAMISH MACDONALD:        
One estimate by Plato Investment Management has a home-owning couple with $800,000 in other assets having their part pension slashed from $567 a fortnight to just $47; that's over $500, that's not a small amount for them to lose.

ALAN TUDGE:
I'd want to check those figures, but I mean that is a couple that you're referring to which, I think you said, have than $800,000 in assets above and beyond their family home.

Now the estimates are that any reduction in the pension which a person faces, they would be able to make up by delving into their non-housing capital, at most 1.8 per cent of that non-housing capital.

HAMISH MACDONALD:        
So you said that these people would keep their Health Card, but do they lose their Pensioner Concession Card? Because that gets them discounts on things like car rego, council rates, utility bills as well.

ALAN TUDGE:
That's up to each local council and state and territory government has to how they're going to deal with that. I mean, we deal with what the federal policy is and we're making the very clear decision that those people who may have just dropped off the pension will continue to receive their Commonwealth Health Care Card [indistinct]

HAMISH MACDONALD:        
[Talks over] But you can't give them any guarantee on this stuff?

ALAN TUDGE:
Well it's up to each state and territory government what their policy decisions are in relation to pensioners and what sort of discounts they provide.

HAMISH MACDONALD:        
In this change aren't you punishing people who have saved and planned carefully for their retirement?

ALAN TUDGE:
We're trying to make a system that's fairer and sustainable in the long run and that's what a responsible government has to do. And I would point out by the way that this now effectively has tri-partisan support: support from the Coalition; the Greens; and through the election campaign, the Labor Party.

Actually, I call upon Bill Shorten to distance himself from this disgraceful union campaign which is putting fear into vulnerable Australians because his party is effectively supporting these changes as well.

They are aimed at making the system fairer, providing a bit of additional support for those with very low means and also making the system sustainable for the long run with a rapidly aging population.

HAMISH MACDONALD:        
Tony Abbott's criticised the number of people claiming disability support pension for conditions such as depression and bad backs which are not permanent disabilities, might we see some changes in relation to this sort of payment during the MYEFO statement, or even next year's Budget?

ALAN TUDGE:
We've already made some changes to the disability support pension as you might know, Hamish. What Mr Abbott was saying is that if you have a mental illness, sometimes that can be completely debilitating and you cannot work, but some mental illnesses also can be a temporary thing.

Now what we have done is ensure that when people are assessed going forward, they must go to a Government-appointed doctor to get that assessment and then we're doing more regular reviews of people's medical condition as well to ensure that they remain eligible for that disability support pension.

HAMISH MACDONALD:        
But broadly you're not planning to remove payments at all for these kinds of conditions?

ALAN TUDGE:
We've already made some significant changes to the DSP as I've said.

HAMISH MACDONALD:        
[Laughs] Okay, we're not going to get more from you on that.

ALAN TUDGE:
I'm not going into any speculation about what's going to happen in MYEFO next week, I'll completely leave that up to the Treasurer, but we've made changes already to the disability support pension, very important ones.

HAMISH MACDONALD:        
[Talks over] As is always the case on radio and television when you talk about these issues, I get texts and tweets from people saying: what about the politician's Gold Pass, what about Parliamentarians losing their pensions, or getting some of the payments diminished? You going to do anything, sacrifice anything yourself whilst you are taking away from the rest of us?

ALAN TUDGE:

Well the pension, the pension was changed back in 2004. So for those people elected, such as myself, after that period of time there's no longer the lifetime pension that used to be in place.

HAMISH MACDONALD:        
But nothing else, no more changes? You'll keep it as it is?

ALAN TUDGE:
Oh these things are constantly being looked at as you know, Hamish and there's constant change in relation to these things.

HAMISH MACDONALD:        
Alright, Alan Tudge. Thanks for joining us this morning, have a good Christmas.

ALAN TUDGE:
Thanks very much, Hamish.

[ENDS]