Senator REYNOLDS (Western Australia) (09:47): I rise to speak on the Social Services and Other Legislation Amendment (2014 Budget Measures No. 1) Bill 2014 and the Social Services and Other Legislation Amendment (2014 Budget Measures No. 2) Bill 2014. Responsible governments do not take the easy way. They do what is right, they do what they are elected to do, and that is rarely, if ever, the easy way. This budget calls on everyone and every business to contribute and to grow the workforce, to boost productivity and to help build a stronger economy through more productive investment. It will do this while supporting the most vulnerable and it will also take significant steps towards ensuring that as a nation we once again live within our own means.

I believe good governance means ensuring that every taxpayer dollar is wisely spent and, in particular, that the welfare budget is as effectively targeted as possible to those in most need at the time. Those on the other side of this chamber often talk about fairness as if their point of view on what is fair and what is right is the right opinion and everybody else in this chamber is wrong—or, worse, that we are unfair and uncompassionate. The truth is that nobody in this place has a mortgage on compassion. Instead, we have differing philosophical perspectives on social policy outcomes.

For example, unlike those opposite, I believe that it is neither fair nor just to saddle our children and grandchildren with this generation’s prolific debt, racked up so swiftly by the previous government. Sadly, this debt was used by the Labor government on recurrent expenditure to avoid taking the tough decisions that needed to be made over their six years in government. It was not used to nation-build, and today we are all saddled with that legacy. I believe this was simply bad governance and also irresponsible governance. That is not what the coalition government was elected to do. While we were not responsible for the circumstances in which we found the country, we have certainly taken responsibility for fixing it.

I agree with Ronald Reagan, who famously said, ‘We should measure welfare’s success by how many people leave welfare, not by how many are added,’ and that welfare’s purpose should be to eliminate the need for its own existence. To me, this is the most compassionate outcome.

The context of any legislation is always very important and, in the context of this budget, understanding the starting point for the Abbott government is critical. Labor’s budgetary legacy is a shameful one. Despite all of their rhetoric in this place and all of their spin, they presided over the fastest budget turnaround in Australia’s history, with the sixth-largest budget deficits ever. In fact, gross debt was projected to rise to $667 billion and
$123 billion in cumulative deficits for the Australian taxpayers to pay back. This was the starting point 12 months ago for the Abbott government and for our first budget in May this year. This is what Labor did in just six years, so let us have a look at what the Abbott government has already done in its first year. We have already reduced Labor’s deficits by $43.8 billion through to 2017-18 and gross debt has now been forecast down to $389 billion in 2013 compared with the $667 billion that Labor left us. This includes provision for future tax relief to address bracket creep. But there is still much more to be done.

A key component of any budget is social security and ensuring that spending is sustainable into the future. All government programs must evolve and change over time to ensure they are sustainable. Change never just happens; it requires deliberative and often tough decisions by government. Nowhere are these decisions tougher or more important than in social security. The 2014-15 budget includes $146 billion in social security spending, which is a full 35 per cent of the total federal budget. In 2013-14, spending on the age pension alone will reach
$40 billion for the first time in our history. We must do everything we can to ensure that it is well targeted and most effectively spent.

The Senate Community Affairs Legislation Committee, of which I am a member, noted in its inquiry into these bills that the changes proposed in both these bills are motivated by a desire to ensure a more sustainable welfare system. These measures seek to strike a balance between providing incentives toward greater individual responsibility and self-reliance and providing support to the most vulnerable members of our community, who need our support the most. The committee also noted that there was generally a high degree of support among submitters to the inquiry for the general intent of the bills, particularly the need to better target payments to those who most need them and to provide incentives for greater workforce participation. The committee recognised submitters’ concerns regarding specific provisions of the bills but was satisfied that the measures are accompanied by appropriate safeguards to address these concerns. A number of the measures in these bills are based on the premise that everyone who can contribute to the economy should contribute, but we also acknowledge that not everybody can contribute in the same way. On this side of the chamber, we also believe that young Australians under 30 years of age who are able to work full-time should be either earning or learning. I believe most Australians would agree that it is reasonable to expect that our young should be earning or learning and not becoming, so early in life, welfare dependent. I was in Tasmania earlier this month, and those appearing before the Community Affairs References Committee looking into income inequality acknowledged that the best pathway out of poverty is employment. A job is always the best form of welfare. Like many others on this side of the chamber, I have been dismayed by Labor’s misleading claims and that have unnecessarily and, I would argue, cruelly upset so many in our community—often the most vulnerable.

Why are these measures so important now? The 2010 Intergenerational report projected that the ratio of working- age to pension-age Australians will fall from the present day five to one to around 2.7 to one by mid-century. This means that there will be fewer and fewer Australians participating in the workforce and paying tax to support those on the age pension. Without policy reform, the cost of the age pension is projected to increase by 70 per cent over the next decade, from almost $40 billion a year currently to $68 billion a year—a drain indeed on the next generation of taxpayers.

When the age pension was instituted in 1909 with an eligibility age of 65, average Australian life expectancies were 55 for men and 59 for women. Over the past century, average Australian life expectancies have lengthened by at least 25 years. Despite the claims from those opposite, this budget does not deliver any cuts to the age pension. It will continue to increase twice a year to keep up with the cost of living. In fact, the last increase was based on a cost-of-living increase which was higher than the increase in male total weekly earnings.

In conclusion, structural changes are being made to ensure the long-term sustainability of the budget and our social security system and to ensure that pensions remain a viable payment into the future. Targeted welfare payments are about making sure that we spend every taxpayer dollar in the most efficient way possible to ensure the Australians who need support get it and the Australians who are able to work do so. It is for these reasons that I commend these bills to the Senate.