The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
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Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

24 March 2013

Treasurer's economic note

By any yardstick we have a lot to be proud of in Australia. I've always believed the best measure of success is how many people are sharing in it across our community. Throughout my time in public life I've been driven by the idea that generating wealth for our nation is vital so that we can spread the opportunities of prosperity to every postcode. That means putting in place a policy agenda that involves as many people as possible in the benefits of the economic growth we have recorded for the last 21 years on the trot. What this boils down to is finding new and innovative ways to boost opportunities for everyone to participate in our economy and our community.

Lifting participation goes hand in hand with the productivity agenda that we detailed late last year in our Asian Century White Paper. We know that our living standards in the future will be driven by high productivity, so we've got to keep doing the hard yards to lock in our current productivity growth upswing. That doesn't mean people working longer hours – we know Australians work harder than anyone in the world. It means working smarter, creating the jobs of the future, and getting more people involved. Nailing this challenge is vital to making sure we retain living standards that are amongst the world's best.

Historic increases to the age pension

As well as supporting jobs and getting people into work, we want to give a leg up to those who have reached their well-earned retirement. We understand that for a lot of pensioners there are challenges in making ends meet, which is why we've shown an ongoing determination to help with cost of living relief. I was proud that during the week Australia's 3.5 million age pensioners received a substantial boost to their payments. Single pensioners on the maximum rate are now receiving an extra $35.80 a fortnight, while couples on the maximum rate are receiving an extra $54.

Part pensioners will also see rise in their pension, along with this week's reduction in the deeming rates to better reflect the returns available to retirees on their financial investments. This change alone will benefit more than 740,000 senior Australians. And self-funded retirees with a Commonwealth Seniors Health Card will see their Seniors Supplement lifted by more than $350 a year for singles and $530 a year for couples, starting this quarter and paid in June this year.

This increase builds on our record of achievement for retirees, having already lifted the maximum rate of the pension for singles and couples by nearly 47 and 34 per cent respectively since coming to office. This week's injection comes on top of our landmark reforms in 2009 which represented the biggest increase in the pension's 100 year history.

In dollar terms, since our historic 2009 reforms, the pension is now over $200 a fortnight more for both singles and couples. To put that in perspective, it took well over twice that long for the last $200 rise in the single aged pension to be realised. The priority this government has given to pension reform can be seen by the fact that it has all occurred during the most significant global economic downturn in 80 years, at a time when government revenues having taken a massive hit. Even in the face of that serious budget challenge, through responsible fiscal management we found room to get this done because it was long overdue and too important to delay.

Tax reforms reflecting a modern workforce

The Government's commitment to senior Australians extends well beyond pension increases, with an important role in our participation agenda also. Our tax reforms – like tripling the tax free threshold and reforming the Senior and Pensioner Tax Offset – have also proved a massive boon for older Australians, not least those who choose to stay on contributing to the workforce well into their later years.

Treasury analysis demonstrates that older Australians are among the biggest beneficiaries of the government's most recent income tax cuts. This is illustrated by the fact that senior Australians are more than twice as likely as younger taxpayers to receive tax cuts of much more than $300 since we tripled the tax free threshold. To take that a step further, it means that 190,000 seniors getting are now getting an average tax cut of more than $550 a year. This includes not only those drawing on savings from a lifetime of hard work, but also those staying on in the workforce beyond age 65, which many people are doing now as we live longer lives and stay more active and healthy as we age.

These sorts of reforms encourage and reward older Australians who stay in the workforce for as long as they feel fit and healthy enough to do so. We now have more senior Australians than ever before going to work, with the proportion of Australians working aged 65 years or over increasing from 1 in 20 to nearly 1 in 9 over the last 20 years. In absolute terms, that means the seniors workforce has more than tripled over the same time period from just over 100,000 to over 350,000. The government has put in place incentives to cement and build on these gains, for example the new Seniors Work Bonus which means that pensioners can now earn up to $10,400 a year while still collecting the maximum aged pension.

Working Mums

It's not only older Australians who are making the most of opportunities to work, with the past decade something of a tipping point for the amount of working mums we have in our country. If you look back over the past decade, you can see more women than ever before going back to work after having a child. The latest Census shows that 54 per cent of women with kids under four are in work - mostly in part time jobs - compared with 50 per cent in 2006 and 46 per cent in 2001. As a result, working mums and their families are also among those who benefit most from our our 2012 tax reforms, with 3.6 million women getting a tax cut in total and just under one million women across the country receiving bigger tax cuts of over $500 on average.

These tax cuts come on top of the government's Schoolkids Bonus, where eligible families receive $410 for each primary school aged child and $820 for each high school teenager - as well as helping families balance work and life with our breakthrough reforms in paid parental leave and childcare. Introducing paid parental leave was a long-overdue move for Australia, and one that had a lot of parents or parents-to-be grateful it finally had arrived. Likewise, lifting the childcare rebate from 30 per cent to 50 per cent of costs took a big load off the shoulders of parents trying to balance the many pressures they face in keeping a family running.

A strong economy for all of us

Despite the fact that our economy walks tall in the world, we know that across the country there are lot of people doing it tough. That's why I'm so pleased the sorts of reforms we have been making to the tax system have not only helped build a stronger economy, but they have also helped make the books add up around the kitchen table. Our decisions are motivated by a belief that Australia's future economy will be driven by providing greater opportunities for more people. We want to build an economy strengthened by and for all of us. These values of fairness and equity wash through every decision we make as a government.

The Government has demonstrated that there are all kinds of creative ways to encourage people to participate in our workforce and to generate these opportunities throughout every Australian's life. Whether it is as a student, bringing up a family, or in retirement. This is not only great for individuals who benefit from these incentives, but it's also really important for our economy. Simply put, the more people participating in our economy and our community, the more people that will have a stake in the prosperity of the future. That's a pretty simple way of summing up the Gillard Government's agenda for the future.

Wayne Swan
Deputy Prime Minister and Treasurer of Australia