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Thursday, 26 March 1987
Page: 1649

Mr MILDREN(9.45) —As the Minister for Aboriginal Affairs (Mr Holding) pointed out in his second reading speech, the Veterans' Entitlements Legislation Amendment Bill is of considerable significance to the veteran community. Its major purpose is to bring the poverty trap provisions that are already incorporated in the Social Security Act 1947 into the veterans' entitlements legislation. This move was announced by the Treasurer (Mr Keating) in his statement of 19 September 1985. I will return to this aspect in a moment. The other main thrust of the legislation is to amend the Act and make minor changes to correct a number of drafting errors to ensure that those areas of health fraud which had crept into the system are blocked. The most important provision is that to combat the problem of poverty traps.

I suspect that unless people live on pensions or social security benefits of one kind or another or are on otherwise very low incomes, they run the serious risk of not understanding the immense difficulties which face the poor in this country. It gives me no pleasure to listen to those who criticise the poor and in particular those who appear to pass judgment on people who have to rely upon some kind of welfare payments for their living. This criticism is usually directed at those who are social security benefit recipients, such as the unemployed, sole parents and aged or invalid pensioners. It is to the Government's credit that it has recognised the plight of these people and has designed measures to relieve as much of the pressure as possible.

Veterans also fall into this category all too frequently. The Government has recognised that what applies to the poor in other categories should also apply to veterans and their dependants. As the Minister pointed out in his second reading speech, there has always been a problem of communication between those responsible for taxation decisions and those concerned with welfare. In my own electorate of Ballarat I have encountered this problem for as long as I have been a member of this House.

Mr Tim Fischer —There is a very good RSL down there in Ballarat.

Mr MILDREN —I must say that I agree with the honourable member about my RSL sub-branch in Ballarat. They are great fellows. Taxation of incomes is tied to a threshold which, regrettably, always appears to be too low. The low income earner, such as the pensioner and in this case the veteran pensioner, has also suffered from the rapid decline in the pension when his earnings reach a figure above the level which is permitted. To the pensioner this always seems to be a heavy burden to carry. As part of the Government's measures to alleviate some of this burden, the threshold will be raised from $4,595 to $5,100 on 1 July 1987. I am sure that all those who receive a pension will be pleased by this decision. A higher threshold will be welcome and the Government has shown a commendable willingness to make this adjustment. This means that there will be an extra $500 which is tax free. The Government also raised the maximum rebate to $250 so that people who are wholly or mainly dependent on taxable pensions will not pay tax.

There are other government measures included in this Bill which are designed to take the pressure off the poorest and most deserving in our community. I have had many representations from people on low incomes, including veterans, asking the Government to lift the amount of extra income that a pensioner-aged or service-might earn before the pension is affected. It must be stated that the loss of 50c for every dollar earned above the allowable level is, to the pensioner, like a heavy tax.

When we came into office in 1983 the levels of income that pensioners could earn privately before the pension was affected by an income test was $30 for a single person and $50 for a married couple. This was so whether the person was a civilian pensioner or a service pensioner. These were particularly unrealistic figures. As from 1 July 1987 these sums will rise to $50 for a single person and $70 for a married couple. This is done with some cost to the Budget but the Government is determined that its program, aimed at pursuing relief for lower income recipients, should be maintained even in a period of economic stringency.

The plight of the poor grew worse under the heavy heel of Liberal-National Party governments. It is horrifying to think that the recently leaked document of the Liberal Party on its plans for office, should such a chilling possibility occur, includes the removal of the indexation of pensions. It also contained a suggestion that the pension entitlement age for women should be raised to 65. I might add that that would apply to servicewomen as well. The Leader of the Opposition (Mr Howard) has backed away from this one, but the very fact that some thought had been given to attacking pensioners in this way is disturbing indeed. Honourable members will notice that there is no philosophical commitment to the poor. There is no recognition of the need for social equity as a right. The future of the poor and needy is just manipulable. I find this approach to be totally reprehensible and indefensible. I wonder how truly committed is the Opposition to the time-honoured right of veterans to a service pension at age 60. Given that service pensions and age pensions have always been tied, it would appear that service pensioners would be worse off under a Liberal-National Party government. Without indexation the pensions would fall behind, whereas the Labor Government has been increasing the pensions both in real and relative terms--

Mr Hodgman —I raise a point of order. My point of order is that no such policy of any sort has been announced on behalf of the coalition. He is completely misrepresenting the position.

Mr DEPUTY SPEAKER (Mr Ruddock) —Order! There is no point of order.

Mr MILDREN —The Labor Government has been increasing pensions both in real and relative terms. Under a government formed by the present Opposition in both ways service pensioners would be worse off, but this Government is determined that service pensioners will not be worse off. Sometimes, and I think it is fairly understandable, people make the mistake of thinking that the service pension population comprises only those who are Second World War veterans. While they form the largest population of service pensioners, there are still those from other conflicts such as Korea, Malaysia and Vietnam where such service took place in a designated theatre of war. Nevertheless, it is to be expected that the number of claims for a service pension will decrease for some time as veterans reach retiring age. That was referred to by the honourable member for Farrer (Mr Tim Fischer). In the year 1985-86 the number of service pension claims declined by about 20 per cent. This trend is expected to continue for some years. The actual number of service pensioners is expected to peak during the first half of this year.

I indicated earlier that I hold great concern for the future of automatic indexation of service pensions under a Liberal-National Party regime. This would seriously disadvantage service pensioners, as was the case during the previous conservative Government. To give the House an indication of what automatic indexation means, I cite the following figures: In May 1985 the service pension for a single person was $94.30 per week; on 7 November 1985 it was $97.90; on 8 May 1986 it was $102.10; and in December 1986 it was $106.20. This is the result of indexation. For service pensions for a married couple, in May 1985 it was $157.30; in November 1985 it was $163.30; in May 1986 it was $170.30; and in December 1986 it was $177.10. That is by way of indexation. Without indexation pensions are dependent upon the whim of the Government, whether it wants to provide it or not. That is the reason why pensions fell behind before. Without automatic indexation service pensioners would always be falling behind.

In fact, during the latter part of the Fraser years pensions fell appreciably in relation to average weekly earnings. Automatic indexation also removes from service pensioners the demeaning experience of having to wait for governments to determine whether they will get an increase at all, or just how much it will be. I am absolutely certain that the 406,000 service pensioners in Australia as at 30 December 1986 including the 97,000 pensioners in Victoria, would be appalled should that happen.

I indicated that the amount of income that a pensioner will be able to earn will be increased by $10 per week for a single pensioner and $20 per week for a married couple. Even allowing for a loss of pension under the income test, the maximum amount of income a single person can receive and still receive some pension will increase from $242 per week to $252 per week as from 2 July 1987. For married couples it will increase from $404 per week to $424 per week from the same date. The move to reduce poverty traps is in line with the Government's action to encourage pensioners to invest their assets to reduce income.

Currently, 19,000 service pensioners in Australia receive rent assistance and, of these, 4,500 are in Victoria. I suggest that quite an appreciable number are in my own electorate of Ballarat in communities such as Ararat, Ballarat itself, Beaufort, Clunes and Creswick and, of course, in the areas scattered to the south-west of the electorate. As a result of this legislation, aimed at reducing poverty traps, single pensioners will be able to earn up to $80 a fortnight and married pensioner couples $70 a fortnight before rental assistance is reduced. This will also mean that a large number of pensioners who are currently ineligible for rent assistance will now become eligible for the first time.

Finally, the Bill also makes provision, as from 1 July 1987, for service pensioners to earn $12 a week rather than $6 a week for each dependent child. This is in addition to the $40 a week which a single person is permitted to earn before the pension is affected. I think those pensioners will recognise that as a considerable benefit. Currently this provision applies to approximately 4,000 service pensioners Australia-wide and 900 in Victoria. I believe that this Government has taken firm steps to ensure that the worst effects of poverty traps are reduced. This does not mean that we can be complacent, nor does it mean that there is nothing more to be done. What it does mean is that the Government recognises the existence of poverty traps and also the responsibility that it has as the representative of the people of this nation to address this issue.

I am quite convinced that further measures will be adopted over time by this Government to provide a basis for a reasonable standard of living for service pensioners and their dependants. I caution those who are attracted by the temptations offered by the Opposition to bear in mind that its record of assistance to the poor, the needy and the veterans is abysmal. The Opposition's recently leaked list of proposed cuts would definitely reduce the living standards of these low income groups. I have great pleasure in commending this Bill to the House.