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Tuesday, 29 May 1984
Page: 2029


Senator HAINES(4.56) —As has already been pointed out by the previous speaker, Senator Grimes, the urgency motion is divided into two parts. The first part concerns the failure of the present Government to develop a coherent social security policy. The second part concerns what the Opposition refers to as 'the punitive effect of the proposal to include the pensioner's home in an assets test'. Like previous speakers, I intend to deal with the urgency motion along those two lines. Senator Messner began his contribution to this debate by talking somewhat wildly about a national portable contibutory superannuation scheme and the question of universality. Yet, to the best of my knowledge, neither the Liberal Party of Australia alone nor any coalition government did anything about this during its term-


Senator Messner —I was not suggesting that we should. I said that that is what they said they were going to do.


Senator HAINES —It does not alter the fact that as far back as 1939 a coalition government was talking about doing something about that. During the rest of the honourable senator's speech he castigated all and sundry for changing the line of attack all the time and for being confused. The honourable senator raised the question of a national portable contributory superannuation scheme and the question of universality. I am simply pointing out that that was something that a previous coalition government faced up to many years ago. After that, the Menzies Government took away from people's view, if you like, of the taxation system the tax levy that had been imposed on taxpayers. An amount indicating what an individual was contributing to the age pension was shown quite clearly on the tax forms until Menzies removed it. That was absorbed into Consolidated Revenue and it has never really been taken into account again. It is, however, one of the reasons why some people, rightly or wrongly, believe that an age pension is a right. Those people whose memories go back to that period and who recognise that at one stage a coalition government was showing a tax levy as being applicable to a contribution for the age pension do have something to grumble about.

Senator Messner also talked about the confusion caused in the community by the changes of approach by the present Government. I suggest that it is therefore incumbent on the Senate to look and see how much trouble the previous Government had in developing what Senator Messner calls in his urgency motion a 'coherent social security policy'. We should look at the trouble that Government had in developing such a policy in recent years. Senator Messner certainly objected in his speech to comments which I made somewhat facetiously on Adelaide radio this morning to the effect that, in regard to the question of means testing of pensions, the Liberals have had more positions than the Kama Sutra. By objecting to this he is apparently denying it. Yet I suggest that the facts do not bear him out. In 1976 the assets test was removed-


Senator Walters —How far back do you want to go?


Senator HAINES —Well, 1976 is not a long way back in this matter when we are talking about people who muddle around. The assets test was removed in 1976 and was referred to by Gay Davidson in an article in the Canberra Times as an element in the first Lynch Budget in 1976 which the Fraser Government came up with that included a different mixture which: '. . . as is now becoming apparent , has the major ingredients for political and economic disaster.' If the Opposition is going to throw brickbats at various people, it ought to look at exactly where the problem stemmed from. In the minds of most people, it certainly stemmed from that action taken in 1976 which, I repeat, the Canberra Times wrote up as having all the: '. . . major ingredients for political and economic disaster'. It went on to point out that the action in 1976 meant that the needy aged pensioners were again being treated meanly, but not the: '. . . comfortable, well off or rich aged. To them the Government hath given.' The second pensioner provision in that Lynch Budget made an even rasher bid for popularism than the Australian Labor Party's progressive abolition of the means test. It abolished the assets component of the means test for all aged pensioners. The report continued:

Thus the Government encouraged well-off and rich pensioners to use various ruses to avoid income. For instance, taking lump-sum payments for superannuation (tax- deductible as contributions during working life and attracting a mere 5 per cent tax on payment), and putting this and other cash in appreciating assets such as up-market housing, or in family trusts.

That is what happened in 1976. We then muddled along with an income test until Mr Peacock got in on the act on 10 September 1981. The Australian Financial Review stated:

In a speech carefully tailored to appeal to all his political constituency, Andrew Peacock has attacked the Federal Budget for dampening business prospects, placing an unfair burden on low income earners and failing to honour government promises to reduce personal income taxes.

He suggested amongst other things:

. . . that the only equitable route to lower Commonwealth outlays would be to means test welfare entitlements.

He said:

'So much of government spending goes to people who demonstrably do not need government assistance.

The article continued that he:

. . . specifically raised the question as to whether the dependent spouse rebate , the health insurance rebate, family allowances and the home saving grant should be paid without income testing.

He also raised the possibility of imposing a means test on pensions, saying 'a fundamental reassessment of the taxation welfare system was needed if taxpayers were not going to be increasingly burdened by the rising number of income- support claimants.'

As Senator Grimes mentioned earlier, a few days later an article appeared in which Julie Flynn had a look at what Senator Chaney had to say. Her article was headed: 'Moves to close pension test loophole run into trouble'. It stated:

The Federal Government is working frantically to change the Social Security Act to crack down on schemes aimed at beating the pension income test.

The Minister for Social Security, Senator Fred Chaney, announced on Budget night that he would be introducing legislation to amend the Social Security Act because of the growing number of schemes designed to get around the pension income test.

The Government action followed revelations in The National Times that upwards of $500 million was being held in non-interest bearing accounts in banks and building societies, and hundreds of millions of dollars more in capital appreciation schemes run by insurance and finance companies.

However, with the best intentions in the world the then Minister ran into difficulty. As the article went on to point out, the Government found that the changes:

. . . present both political and administrative difficulties.

In fact, it would seem that the political difficulties far outweigh the administrative ones because one Federal back bencher was reported as describing the moves to the National Times as 'political suicide'. Senator Grimes also referred to a report that the Australian Council of Social Service and the Australian Council on the Aging were called in by the Prime Minister some time in February 1982 to help the Government sell a proposed assets test. There were some cries from the Opposition regarding whether that had been authenticated. I can say to it only that I had staff check with Philippa Smith this morning whether she was involved in just such a discussion, and she confirmed it. Then of course came the Lowe by-election in which Mr Fraser had to put out a letter to all the electors in Lowe denying that the Government had plans to change eligibility for pensions. The letter apologised: '. . . for the worry that reports this week might have caused'. An article in the Canberra Times stated:

Senior sources of the Liberal Party said last night the letter had been drafted by the Minister for Social Security . . . at the request of the New South Wales branch.

That was a purely political decision that was motivated by the fact that the changes the Government was envisaging, which were sorely needed, were likely to upset sufficient people in Lowe for it to dampen Liberal Party chances. The fact of the matter is that in the seven years that the present Opposition was in power it did nothing to develop a coherent social security policy and contributed to the mess that we are in now. I must admit that the Sydney Morning Herald did give Senator Chaney a pat on the back on 13 August 1982 when it described him as being among the brighter of the Federal Ministers and based this assessment of his ability on the fact that:

. . . he seems to be the first of them to see through a particularly dense element in Liberal Party dogma. He observed this week that a person's income was only one of the determinants of his level of material well-being. Other factors had to be taken into account, including . . . assets.

This was the Liberal Party's point of view in 1982. So I do not know how, after a year and a half of a Labor Government-when it is currently looking at some of the things that the previous Government said it was looking at and then chickened out of-the present Opposition can have the gall to talk about the failure of a government to develop a coherent social security policy. By Friday afternoon, when the Government does finally bring down what it is going to do following the publication of the report of the Gruen Assets Test Review Panel the Opposition may be quite correct. It may be that the Prime Minister (Mr Hawke ) takes a soft option. It may be that he chooses to do what the previous Government did, and that is to put political considerations before the needs of the majority of welfare recipients. But we are not going to know until Friday afternoon. It does seem at best a little premature, and at worst a little stupid , to start talking about coherent social security policies when we are three or four days away from the tabling of the report.


Senator Teague —Which option do you favour?


Senator HAINES —I am coming to that, Senator Teague. The second part of the motion today refers to one of the options that has been brought forward in the Gruen report, and that is whether to include the family home. At the moment we have not the faintest idea whether the Prime Minister is going to include or exclude the family home. If he includes it, he is going to have to take some action to mitigate the effects that this will have on people who do not own homes. The double dipping that occurred previously is just as likely to occur again if the family home is excluded, because it means those people with liquid assets are going to be able to buy their way into grandiose homes which will then allow them considerable capital assets and an exemption from having them taken into account as far as the assets test is concerned. If the Government chooses to include the family home it is going to have to make sure it comes up with some sort of system which takes into account east-west variations in property values.

At the moment all of this is pure speculation. It is anybody's guess which of the three options the Government will choose. If the rumours going around this place are any indication, the Government has not even come to a decision yet. What the Government has to face up to, however-I think this is even more important than the debate on whether the family home is to be included in the assets test-is what it intends to do about the indexation of the thresholds set. I would have thought that the matter of indexation was such a patently obvious problem that the Opposition would have faced up to it before now. However, to the best of my knowledge, it has not come to terms with what could be a significant hidden agenda item in the Government's proposal and one that could do far more damage to pensioners than the inclusion of the family home in the assets test.


Senator Messner —We are opposing it.


Senator HAINES —Senator Messner is burbling on about opposing the whole thing. I suggest that if the Government, for probably the first time in its life, takes the intelligent step of implementing this proposal as part of its Budget in August the Opposition will have nowhere to go, since its esteemed Leader opened his mouth last year and planted both of his feet firmly in it by saying that he did not intend to oppose any Budget proposal. For that reason, the Opposition supported increased levies on various primary producers. If the Opposition does daft things like that, it is incumbent on the Australian Democrats and on anybody else to apply sufficient pressure on the Government to ensure that when it comes up with a piece of legislation that Opposition senators are likely to support because it is a Budget measure-


Senator Messner —What rate would you use to index it?


Senator HAINES —The consumer price index.


The DEPUTY PRESIDENT —Order! The honourable senator's time has expired.