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Thursday, 24 May 2001
Page: 26996

Dr LAWRENCE (12:12 PM) —The Family Law Legislation Amendment (Superannuation) Bill 2000 recognises that superannuation entitlements should be considered as property when assets are divided on marriage breakdown. We welcome that. The law as it currently stands does not allow the Family Court to divide superannuation assets. Under the current legislation the Family Court has the power to deal only with property owned by the parties at the date of the hearing. Superannuation assets in a sense have always represented an anomaly because they are an asset payable only on retirement or some other qualifying event. I am sure most members are aware that superannuation represents 15 per cent of the personal wealth of all Australians, second only in importance to the family home. A fair and just property settlement therefore must take superannuation savings into account. As property settlements often represent the only avenue for some women to achieve a level of financial security post divorce, it is therefore important that all property is included in the settlement process.

The Family Court in the past has adopted two approaches to overcome the limitation of the current law with respect to superannuation. The first is through offsetting or the `adjustment of non-superannuation assets', and this has involved increasing the dependent spouse's share of existing property to compensate for the loss of future superannuation rights. The problem with this approach, of course, is that it assumes that the liable spouse has the capacity to forgo the present assets—presumably rarely a reasonable assumption. The second approach involves adjourning part of the property proceedings until the superannuation benefits are payable. This, of course, is a very messy approach and leaves financial issues between the separating parties unresolved for many years after their divorce, compounding an already difficult situation, I have no doubt. It also risks the dependent spouse losing, most likely, her entitlements altogether if, for example, her ex-partner dies before the entitlement is paid. Successive governments have grappled with the problem of equitably dividing superannuation entitlements on divorce, and it has been clear for some time that those two approaches I outlined that have been adopted by the Family Court are unsatisfactory, but it is evident from the fact that this has taken a long time in coming that the solutions are not easy to find. Nine reports stretching back to 1986 have identified the problems, but the solutions, even now I must say, are still not clear-cut.

Obviously, until the process is changed, however, women in particular will continue to be disadvantaged during divorce proceedings. This, as we have heard from the previous speaker, is because superannuation entitlements are still unevenly distributed between men and women. The 1997 Australian Institute of Family Studies Australian divorce transition project estimated that the median value of women's superannuation at divorce was $5,590, compared with $26,152 for men. This same study also found that the smaller the total asset pool the greater the relative significance of superannuation. However, while its significance is more important to low income families, evidence suggests that it is the least likely to be taken into account. In many instances women exit a marriage with no regard to the couple's most valuable financial asset and therefore obtain no compensation.

The Australian Institute of Family Studies study also found that a wife's share of assets is reduced when non-domestic assets such as investments, business and superannuation comprise a high proportion of the couple's asset wealth. It is clear that, until the Family Court can properly consider superannuation assets in property settlement, women will continue to be disadvantaged when property is divided during divorce settlements. I speak particularly from the point of view of women today because, as I say, they are the ones with fewer resources in this area and because of my responsibilities as the shadow minister for the status of women.

This bill, therefore, represents an important step forward for Australian women. It provides that, where separating couples are unable to agree, superannuation may be divided by a court order. In making an order, the court, of course, will be required to make a decision that is just and equitable in the circumstances. The wisdom of Solomon surely will be needed in that case. There will be no presumption that superannuation interests must be divided equally. How superannuation is divided will be part of the broader process of considering the equitable division of other property of the marriage. Separating couples will be able to choose what proportion of the superannuation will go to each person, making the decision to suit their individual circumstances. For example, as I understand it, people will be able to trade off superannuation for housing where one parent needs to remain in the marital home to care for children. Agreements with respect to superannuation will be subject to the same rules as those for other financial agreements which have been before the parliament.

While the broad purpose of the bill is appropriate and necessary, there were, as I indicated earlier, a number of issues that were difficult and did require the detailed consideration of the Senate Select Committee on Superannuation and Financial Services following the bill's introduction into the parliament in April of last year. Those issues concerned, for example, the method of valuation of superannuation interests, the costs of the complementary education campaign, the flow-on costs associated with the implementation of the bill, and a range of other matters. The committee itself recognised that, while splitting superannuation interests is inherently difficult, the bill, as it stood then, seemed unnecessarily complex, and it recommended a number of changes to reduce the complexity while preserving the fairness. In response, the government has made a significant number of amendments, which have been incorporated into the revised draft. Whether they will achieve the outcomes is yet to be determined.

Despite these difficulties, we do give in principle support to these reforms. Australia does need a more equitable and consistent way to treat superannuation entitlements when a marriage breaks down. But we will need to monitor this legislation very carefully. The problems in dividing superannuation in the event of divorce are further exacerbated by a lack of information in the community about superannuation entitlements. There is a clear need for the new arrangements contained within the bill to be accompanied by an effective and wide ranging information campaign. This has to be the first step in ensuring that superannuation is properly taken into account in the divorce process. Not only is there a need for broader community information but the disclosure of all interests in superannuation schemes should be a requirement during the property settlement process. As the Women's Legal Service in Brisbane pointed out:

With the massive cuts in legal aid, many women are left with no option but to conduct their own negotiations and litigation. In cases involving domestic violence it can be extremely difficult and traumatic for the women to be able to get their husbands to agree to anything, even the signing of a form. The trustees should be able to provide the information about the fund directly to the women without the husband's authority.

This issue highlights again how women are likely to be financially worse off after divorce. I will return in a moment to the question of legal aid. Women's financial difficulties were highlighted when the Australian Institute of Family Studies reported that women's living standards fell after divorce and that women remained poor for many years thereafter. These findings instigated the establishment of the Child Support Scheme in 1988 to ameliorate many of the negative consequences of divorce on children. This reform reduced the need for the day-to-day support for children to be taken into consideration in property proceedings.

The Australian Institute of Family Studies last year repeated its early research and found that, while some things have changed, post divorce women and children continue to be financially vulnerable. I would like to draw the parliament's attention to Ruth Weston's and Bruce Smyth's article `Financial living standards after divorce' in the autumn 2000 edition of Family Matters, which is put out by the Australian Institute of Family Studies. It found that 44 per cent of sole mothers and their children were deemed to be below the Henderson poverty line, that women continued to dominate the low income group, and that men were more likely to be rated comfortably off. It is not that there is no disadvantage among men; but, relatively speaking, women and their children are likely to be worse off.

Sadly, I would have to say that policy changes over the last couple of years by this government indicate that these facts may be being overlooked, particularly when child support policies are being developed. I am concerned that the changes to child support and family tax benefits are in response to some pretty vigorous lobbying by non-custodial parents who have convinced the government, apparently, that women walk away from a broken marriage financially secure. They seem to be reaching this conclusion without the evidence of hard research, which indicates that the opposite is true.

I will turn for a moment to some of those changes. The government's system of family payments for families includes rules that disadvantage women who share the care of a child with a non-custodial parent—so-called share care arrangements. Custodial parents, nearly 92 per cent of whom are women, have to declare a shared care arrangement in excess of 10 per cent when applying for family payments. Previously, of course, the threshold was 30 per cent. Under the new system, if the non-custodial parents have care on alternate weekends—that is, around 14 per cent of a year—the custodial parent must notify Centrelink and immediately their family tax benefit A and family tax benefit B are reduced by the percentage of the non-custodial parent's care. This new rule has quite dramatically lowered the income of single parents, and all of us will have had representations from them. This is at the same time as the GST was imposed. It therefore stripped away pretty rapidly even the modest GST compensation which was provided to such families. In addition, the new shared care rules have been poorly administered by Centrelink—I have some sympathy for them; they are under enormous pressure —and, as a result, many women will face substantial debts at the conclusion of this financial year. For example, some women have been actively encouraged not to disclose shared care arrangements. We have heard examples of that. They will get a pretty whopping bill. The budget unfortunately contained no measures at all to address some of the problems that are already arising from this poorly conceived measure. I know that the changes to the child support policy under the coalition are not being adequately monitored—we had that in evidence before Senate committees—and we also know that they have already had a very deleterious effect on already financially stressed single parents.

The Australian Institute of Family Studies research, which I referred to earlier, indicates that young, sole mothers are the most disadvantaged post divorce, yet the government's policies are directed at further disadvantaging them. Evidence indicates that women are hard hit by divorce and that women are less likely than men to maintain the same living standard after the break-up. Our priority when considering this bill, and some of those other policies that I have mentioned, is to look at the impact that it will have on the lives of women and whether it delivers a fair and equitable settlement of property. Research clearly indicates that women are still disadvantaged and that more attention needs to be paid to the division of non-domestic property, such as superannuation. We recognise that this legislation goes some way to addressing the situation and does enable all the couple's assets to be considered as part of the property settlement. It is an important step but only one of many along the road to equality. We will, however, monitor the impact of this bill very closely.

I turn briefly to a couple of other questions which are related when it comes to the maintenance of income, particularly for sole parents caring for children—and for all those in the process of undertaking divorce where these questions have to be resolved. One of the disappointing things about the current budget is that it provides no assistance to Australian women who are unable to afford the cost of legal services, and that includes those services used during divorce and property settlements. Commonwealth funding for legal aid this year is static.

Since assuming office in 1996, the current government has slashed Commonwealth funding for legal aid. That affects women disproportionately. In the last year of the previous Labor government, Commonwealth spending on legal aid was $160 million— even then under pressure, it has to be said. But in 2001-02, the Commonwealth, as a result of this latest budget, will spend only $114 million on legal aid—still significant cuts. During the time period for which the government has budgeted, the total reduction in Commonwealth legal aid, in real terms, has been significantly reduced. Not only that, but we have also seen—and previous speakers have alluded to this—cutbacks in the capacity of the Family Court to provide timely and efficient justice to families before it. Counselling and dispute resolution services provided by the Family Court have been progressively reduced over the last 12 months. The Family Court's circuit counselling program has been decimated, with many regional centres throughout Australia no longer being visited by Family Court counsellors at all. Once again, people living outside metropolitan areas have been left worse off.

Since 1 July 1999, the number of full-time equivalent counselling staff in the Family Court in metropolitan areas, too, has declined from 101 to 81—that is, a 20 per cent reduction. The number in regional areas, however, has declined from 22 to 16—a cut of 27 per cent. Over the same period, the number of hours of circuit counselling in the regions has declined by 26 per cent, and counsellors simply no longer visit at all the towns of Nowra, Orange, Parkes, Bourke, Lightning Ridge, Muswellbrook, Tenterfield, Glen Innes, Inverell, Ayr, Bowen, Emerald, Mount Isa and Griffith. Circuit counselling and in-house dispute resolution services are particularly beneficial to all the parties, as they allow matters to be resolved before they proceed to an expensive trial and the outcomes that this bill deals with. Given the immense value of providing facilities for the early resolution of Family Court matters, the decision to cut back on these services is very unfortunate—indeed, very puzzling.

Where we have seen `improvements' in services, sometimes they seem ill-conceived. For instance, there is a proposed legal information service, which was described by one of the people who spoke to me about it as a `hotline to nowhere'. A new telephone hotline is going to be staffed by Centrelink officers—those officers who are already under pressure—and they will allegedly provide legal information on family law matters. That is due to open on 1 July this year.

Of more than $6 million which was committed in the 1999 and 2000 budgets to establish the service, less than $750,000 will actually go to increasing the availability of legal advice. The rest has gone on consultants' fees, establishment expenses and the cost of employing legally untrained Centrelink staff whose primary role will be to refer people to existing legal services, which in any case are inadequate. The new service will create an extra layer of duplication, with no benefit, before people can access the existing services which are already attempting to address their needs—organisations such as state and territory legal aid commissions, community legal centres and private practitioners. The average caller to this service will receive only five minutes of attention from a Centrelink staff member before being told that he or she should contact some other organisation for assistance. No provision has been made for ongoing funding of the service, in any case, after 2002-03.

It looks like window-dressing to me, and expensive window-dressing at that—particularly at a time when we have seen such substantial attacks on community legal centres, to which people will be referred. During the last year, three community legal centres in South Australia were closed—as a result of the federal government's decision to fund services elsewhere in the state, it has to be said. But most community legal centres have been built from the ground up; that is why they are called community legal centres. Local communities have identified the need for them, and work in them. They rely on the support and goodwill of local legal practitioners, law students and others in the community who give their time for free. That community support base is not transportable simply because a decision is made here in Canberra that a legal centre is not ideally located. The damage having already been done in South Australia, unfortunately, they are now going to review funding arrangements in Victoria, New South Wales and Western Australia. God knows what the outcomes will be there.

Finally, I want to speak briefly about superannuation itself, since the division of superannuation is the subject of this bill. Sadly, since coming to office the current government have made some pretty harsh cuts and changes to Australia's retirement incomes policy, and they have put secure retirement out of the reach of a lot of Australian women in particular. While the budget has some measures to assist older Australians, most measures are focused on those who are already able to live off their investments. Our retirement incomes policies developed in the 1980s and 1990s would have benefited women in a number of ways. For instance, the introduction of the superannuation guarantee and other measures resulted in a massive increase in the number of working women using superannuation. When Labor came into office in 1983, less than 40 per cent of the work force received superannuation. When we left in 1996, around 90 per cent of the work force received the benefits of saving through some superannuation. Part-time and casual workers were particular winners from our retirement incomes policy.

The 1996 budget saw the Howard government include superannuation benefits in the means test for persons aged over 55 who received a Commonwealth income payment. That meant they had to run down their super, their retirement nest egg, before they could get access to support payments. I am pleased to say that that has been reversed in this budget, but only because it was so unpopular and had such a serious campaign against it and would have had more in the coming election campaign. Sadly, for those people who have suffered in the meantime, there is no compensation. In conclusion, in this area the government have been extremely short-sighted. While we welcome this legislation, we hope that they will eventually develop, in opposition, a decent superannuation policy.