I am delighted to have the opportunity to officially open the annual national conference of the Association of Independent retirees.
The Prime Minister has asked me to pass on his best wishes to you, Maureen, and all the delegates. Unfortunately he is unable to be here today because he is in Adelaide, where he will attend the memorial service for former South Australian Premier, Dr David Tonkin.
The theme of this years conference is celebrating a decade of growth. And it certainly has been an impressive decade of growth for the Association.
Ten years ago the Association of Independent Retirees was established with a single branch in Queensland. It now has 77 branches and 16,000 members across the country representing the interests of all self-funded retirees.
The impressive growth of the Association over the past decade reflects a number of factors.
Certainly the profile of self-funded retirees has increased greatly over this period. There has been growing recognition in the broader community of the benefits of self-funding for retirement.
These benefits include the direct gains in higher quality lives in retirement and independence for those who achieve self-funded status. There are also vital benefits for Australia that flow through the greater national savings and investment accumulation associated with the building and holding of retirement savings, which benefit the whole community.
There is also greater respect and support for the personal effort that it takes for people to save for their retirement.
The Association of Independent Retirees has clearly been very active and successful in representing the interests of self funded retirees. It has played an important role in promoting greater recognition of the place of self-funded retirement within the overall community. But a consequence of the growing number of self-funded retirees is that they have a very vital interest in the success of a broad range of public policies that both directly and indirectly affect them. And it is in this regard that the Association of Independent Retirees has played a particularly active role, and one that the Government welcomes. The number of Association branches has grown so rapidly over the past decade because of the quality of the input the Association has made on policy issues that impact on its members
For example, the Association has provided very helpful contributions to the Government on such issues as:
- the simplification and expansion of the Commonwealth Seniors Health Card;
- elements of tax reform for older Australians;
- the development of a National Strategy for an Ageing Australia; and
- dissemination of information on tax reform and other government initiatives via the associations quarterly newsletter, The Independent Retiree.
The growth of your association and other groups representing the retired is bound to continue. It is estimated that there are currently 3.2 million retired people aged 50 years and over, with financial assets of at least $133 billion and $278 billion in housing equity.
The population of the retired aged 50 plus is expected to grow to 3.6 million by 2005, 4.1 million by 2010 and 5.2 million by 2020. The retirement of the baby boomers, along with the growth in superannuation and other assets, will create a growing demand for organisations representing retirees.
But with this message of growth in the numbers of retirees comes two vital corollaries.
First, we must ensure that there is continuing effort made to encourage self-funding of retirement. That means continued strong growth in retirement savings.
And second, we must ensure that those savings are put to good use generating solid returns. To a very considerable degree, that means ensuring that Australia itself is a country that continues to enjoy strong income and asset growth.
In this respect, self-funded retirees have a direct interest in a strongly performing Australian economy
Growth in the Australian Economy
Like the Association, the Government has also delivered an impressive and sustained period of quality growth, in this case, economic growth. We have achieved thirteen consecutive quarters where the Australian economy has been growing by over 4 per cent in through the year terms. This is the longest continuous period of growth since the quarterly National Accounts commenced in 1959.
Unlike past periods of economic growth, Australia has enjoyed strong economic and employment growth in conjunction with low inflation.
- Since the Government was elected in March 1996, increases in the CPI have averaged 1.4 per cent per annum (significantly less than the 2.4 per cent increase in inflation recorded in the US over the same period). This compares with average rates of inflation of around 8 per cent over the 1980s.
- High inflation is the number one enemy of those living on their savings in retirement. There is nothing more insidious than high inflation eroding the value of retirement savings.
Strong productivity growth has been a key factor in Australias low inflation performance Labour productivity growth in the market sector in Australia has been around 3.5 per cent per annum since the Government came to office. This is well above the experience of the 1980s, and represents the outcome of the Governments pursuit of a major microeconomic reform agenda.
- In fact, the IMFs recently released World Economic Outlook, shows that for the period 1996-99, Australia has recorded one of the highest levels of labour productivity growth amongst the faster-growing advanced economies, and has achieved higher productivity growth than the US.
Sustained strong economic growth, low inflation and the benefits of labour market reforms have underpinned ongoing growth in employment and further falls in Australias unemployment rate. Indeed, at present, Australias unemployment rate of 6.4 per cent is around the lowest level seen in over a decade.
The ongoing trend of rising labour force participation and falling unemployment means that an increasing number of Australians are joining the ranks of the employed and sharing in the benefits of a strong economy. Increasingly, these opportunities are being shared by teenagers and the long-term unemployed.
Australias strong economic performance is largely the result of sound and transparent macroeconomic policies.
But we also have an economy that has been made more flexible and resilient through an ongoing structural reform agenda. This reform agenda has also delivered significant benefits to self-funded retirees.
Let me now turn to some of these other critical policy areas.
The new tax system
The most significant of these new reforms has been the modernisation of the Australian taxation system.
Under the new tax system self-funded retirees benefit from substantially lower income tax rates, two new savings bonuses, an increased Low Income Aged Persons Rebate, greater access to age pension payments, enhancements to company tax arrangements and the 30 per cent rebate available on the cost of private health insurance.
A key feature of the Governments new tax system is the significant reductions in personal income tax, through an increase in the tax free threshold and a cut in all marginal tax rates, except the top rate. Self-funded retirees, in particular those on low to moderate incomes and who face a tax liability, will keep a higher proportion of the income they receive.
The Government also introduced special new arrangements to help maintain the value of the savings of senior Australians following the introduction of the GST. A one-off, non-taxable Aged Persons Savings Bonus of up to $1,000 for each eligible person aged 60 years or more on 1 July 2000; and a one-off, non-taxable Self-Funded Retirees Supplementary Bonus of up to $2,000 for each eligible person aged 55 years or more who is not in receipt of a Commonwealth income support payment.
The value of the age pension will increase by 2 per cent in real terms as a result of the New Tax System. Means test thresholds will also increase.
When this Government came to office, it introduced the Low Income Aged Persons Rebate which ensured that a large number of self-funded retirees are freed from income tax. Under the new tax system this rebate has been increased by a further $250 a year for a single self-funded retiree and $175 a year for each of a self-funded retiree couple.
A very significant benefit from the new tax system for members of the Association of Independent Retirees is the reduction in the pension withdrawal rate from 50 per cent to 40 per cent. As a consequence many members of the Association will receive a significant increase in their part-rate age pension or, for the first time, will become eligible to receive an amount of age pension.
Self-funded retirees can also benefit from the redesigned company tax arrangements, whereby excess imputation credits are refundable to individuals and complying superannuation funds. This means that self-funded retirees now bear overall tax on their investments in companies and unit trusts at rates no higher than their marginal tax rates. Where self-funded retirees do not pay tax they receive a refund of their imputation credits.
In addition, members of the Association can benefit from the Governments new capital gains tax arrangements, whereby only 50 per cent of nominal gains are taxed, where the assets are held for at least one year. This means that the highest rate of capital gains tax for individuals will effectively be no more than 24.25 per cent. For 90 per cent of Australians, it will be less than this amount.
Since 1 January 1999, as part of the new tax system, self-funded retirees have been able to benefit from the 30 per cent tax rebate/benefit available on the cost of private health insurance. This is of great assistance to your members many of whom have always maintained private health insurance
Retirement income reforms
Another important reform area for your membership is retirement income policy. Australias retirement income policy is designed to ensure that Australians have an adequate income available to support themselves in their retirement years. It is comprised of a three-tier approach: compulsory employer superannuation contributions; voluntary superannuation savings; and the age pension.
Persons with low superannuation income in retirement are protected by the age pension safety net, while those with slightly higher superannuation or other incomes in retirement are entitled to also receive part age pension payments and those with high superannuation incomes in retirement benefit from concessional tax treatment.
This three-pillar approach to retirement income policy has been broadly endorsed by the World Bank.
The Government is a strong believer in encouraging self-reliance and assisting people to help themselves traits much in evidence in independent retirees. Since coming to office the Government has also continued to provide incentives for those who help themselves, including introduction of the Pension Bonus Scheme, a voluntary scheme which encourages older Australians to defer claiming the Age Pension in favour of continuing to work. A tax-free lump-sum bonus is provided once Age Pension is claimed.
The Government has exempted life or life expectancy income streams from the age pension assets test and given all complying income streams a full purchase price deduction for social security purposes.
The government has introduced a $500,000 capital gains tax exemption on the sale of a small business where the proceeds are rolled into a superannuation fund.The Government has also made changes to superannuation rules to enable people who remain in the workforce after age 65 to continue to make contributions up to the age of 70.
More recently, the Government has identified simplification of superannuation as a future area of major reform - but not until tax reform has been well and truly bedded down
Health
The Government recognises that health care is a crucial issue for older Australians. In the 2000-01 financial year we will provide more than $17.7 billion to ensure that Australians have access to high quality medical services, medicines and public hospital services.
- This includes around $7.5 billion for medical services, $3.9 billion for medicines and $6.2 billion for public hospital services.
The Government has also introduced a number of successful measures to reduce the cost of private health insurance, increase private health insurance membership and reduce hospital waiting lists. At the end of the June quarter, the proportion of people with insurance for hospital care had risen to 41.2%, the sixth consecutive quarter of increased membership.
Other initiatives to address the health care needs of older Australians include:
- Improved access to cheaper medication and assistance to manage medication better.
- Income test changes for the Commonwealth Seniors Health Card, made in January 2000, resulted in 200,000 more people having access to cheaper medication.
- The latest Community Pharmacy agreement provides $114 million over 5 years to enable pharmacists, in co-operation with doctors, to help older Australians to properly manage the various medications they receive.
- The Government's 1999 Budget measures, worth $171 million, aimed at enhancing primary
health care. The package includes:
- Health assessments for older Australians, introduced on 1 November 1999 and available to people aged 75 and over and Aboriginal and Torres Strait Islander people aged 55 and over. So far more than 20,000 voluntary health assessments have been undertaken.
- Expanding the role of general practitioners in health care for older Australians, with better-integrated health care for people with chronic conditions and multiple care needs.
- A four-year $14.4 million initiative to improve the quality of life for older Australians with chronic conditions, launched in February 2000. It targets the four million Australians with chronic conditions such as cardiovascular disease, diabetes, chronic lung disease and mental disorders.
Regional Health and Aged Care
This years Budget also included a $562 million Regional Health Strategy which is the largest-ever effort by an Australian government to improve rural health. The strategy builds on our earlier initiatives and aims to ensure that older Australians living in regional, rural or remote have access to more doctors and better health services. It provides (over four years):
- $210 million for more health professionals in country areas;
- $162 million to further doctors' and medical graduates' training and educational needs; and
- $185.8 million to put more health services into regional Australia, which includes $30.8m to assist rural aged care facilities with their day to day operating costs and in upgrading their facilities to continue providing aged care in rural areas
Aged and Community Care
A further important issue to the Association is that of aged and community care. Over 17,000 residential aged care places and community aged care packages have been allocated to areas of need across Australia since the Coalition Government came to office. The Government is also working to improve the quality of care given to older Australians in residential care facilities.
The Government is serious in getting poor quality aged care providers out of the industry. The Aged Care Standards and Accreditation Agency has been established to monitor standards of care and to assess facilities against the accreditation standards. The accreditation standards were developed in conjunction with provider and consumer stakeholders. All aged care facilities must be accredited if they are to receive Commonwealth funding after 1 January 2001.
The Government recognises that most older Australians would prefer to remain in their own homes and in the community and receive the support they need to do so. The Government is implementing the $280 million Staying At Home Package and announced in this years Budget that it is establishing a separate Home Care program for eligible veterans. This will allow the Home and Community Care Program to expand its services to around 20,000 more people in the general community
Maureen Kingstons retirement
In closing, I would like to pay particular tribute to Maureen Kingston who is retiring after ten years with the Association of Independent Retirees. Maureen was a foundation member of the Association in 1990, its first National President from 1992 to 1996, and again from 1998-2000, and its first Honorary Life Member.
She has been a familiar figure around Parliament House and other institutions as a tireless advocate, not only for the Association of Independent Retirees, but for older Australians and her community in general. The recognition she has received at the State and Federal level, including the Medal of the Order of Australia (in 1995), attests to her compassion and community spirit.
Maureens achievements serves as a reminder of how much can be done through constructive social partnerships between government and community organisations. They also serve as a valuable reminder of the active contributions many older Australians make to our communities.
I can assure you that Maureen was an active, intelligent and persuasive advocate on your behalf as we went about designing the New Tax System.
It gives me considerable pleasure to declare open the ninth annual conference of the Association of Independent Retirees and I hope you have a very productive and enjoyable conference.