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Thursday, 23 August 1984
Page: 308


Senator GRIMES (Minister for Social Security)(9.38) —My time for reply is limited but I certainly wish to reply to the motion which has been moved by Senator Messner. I think it is about the third time that he has moved a motion of this type and I think it is the third time, or certainly the second time, in a debate of this type that we have heard Senator Messner, Senator Walters and Senator Sir John Carrick speak. I must say that it was refreshing tonight to find Senator Martin added to that list. I particularly commend to members of the Opposition, particularly Senator Walters, that they read at least the first 10 or 15 minutes of Senator Martin's remarks. Then, perhaps, they will not go along with the sorts of editorials we have seen in the past in newspapers such as the Australian and others talking about the problems of this country in social security and in particular the problems of retirement.

Senator Martin largely confined her remarks towards the end of her speech to the assets test and its application. Because my time is limited I implore her before we debate that legislation in this place to actually read the legislation and see what it is all about. Then, I believe, she will not make the sorts of remarks she made tonight about the $10,000 value on personal possessions in the home and in particular she will not repeat her statement that every pensioner in this country will have to assess those personal possessions and inform the Government about them. That is not so.


Senator Martin —That is not all that I said.


Senator GRIMES —That is what the honourable senator said. That is not true, and I urge the honourable senator to look at what was said.

Senator Martin then made remarks about concern for the elderly, for those who have retired and especially for the frail aged. I can add only that I also-the honourable senator may be surprised to hear this-have considerable concern for the frail aged in the community. Before I became a senator, I spent a fair bit of time looking after the frail aged in the community. I know the sort of problems that face them. I shall be willing to debate that matter, particularly in the debate on the assets test which will soon come up. At least Senator Martin's speech had the ring of sincerity and at least she quoted the documents that she had read. I wish that she had read the legislation and the explanatory notes, but that will happen in the near future.

I have very little to say about Senator Sir John Carrick's speech, but I have three basic points. I shall state the first one briefly. It always amuses me when Senator Sir John Carrick gets upset about a bit of repartee or even abuse across the chamber. I sat in Opposition when Senator Sir John Carrick was Leader of the Government in the Senate and heard the vitriol and abuse. Every Question Time I heard the sort of nonsense that came from the honourable senator. Now, when he gets a bit back, he does not like it. He says that his honour is impugned and goes on with all the nonsense such as that we have heard tonight. I just put that aside.

Senator Sir John Carrick talked tonight about the Government setting up a social security inspectorate that will go into everyone's home. He said that 1, 500 people will go into people's homes to inspect them. Just for accuracy, I point out that it takes 1,100 people not 1,500 to establish an assets test. I accept that point. After the first year of operation, it takes 300 people to keep the assets test going. They will not be going into people's homes unless they are asked to do so to help people. Any suggestion otherwise is a lie; but that is what we expect from Senator Sir John Carrick in view of his speeches in this place on Rundle shares, et cetera.


Senator Sir John Carrick —I raise a point of order, Mr Acting Deputy President. It is a complete breach of Standing Orders for the honourable senator to say that it is a lie and that that is what he expects from me and to impute to me motives on Rundle shares. The fact is that during the time that Senator Grimes was in Opposition he sat on this side of the chamber and hurled personal abuse at me, not at the issues of government.


The ACTING DEPUTY PRESIDENT (Senator Townley) —Order! Senator Sir John Carrick is starting to debate the point of order. I ask Senator Grimes to withdraw what was said.


Senator GRIMES —I withdraw. Senator Sir John Carrick said that 1,500 people would inspect homes. He said that an inspectorate would be employed by the Department of Social Security and would go into people's homes. That is not true . Senator Sir John Carrick knows that that is not true, and his statement was a product of his fevered imagination-I think that term is within parliamentary language. I shall leave the issue at that point.

The important point is that Senator Sir John Carrick, Senator Walters and Senator Messner spoke in the debate. All they did was nark and nitpick. We heard no positive statements, except one from Senator Messner, to which I shall come in a moment. One point made by Senator Sir John Carrick was very important. He said that previous Australian Governments had encouraged superannuation, and indeed they have done so. He said that they had given people tax incentives and that there had been special tax treatment on lump sums. I must point out that Australia is unique in the world in that regard. During the past 30 or 40 years, successive governments of both political persuasions, but largely conservative, took those measures to encourage people to be self-reliant.

If Senator Sir John Carrick reads the debates and the arguments by people who preceded him in this place and even honourable senators who were in this place with him, he will find that there was one other compelling argument, which he did not mention tonight. That argument was that if we encourage people to go into superannuation schemes and encourage them to prepare for retirement, they will end up able to provide an income for themselves on retirement and would, therefore, ease the burden on the social security system.

As pointed out by the report of the Taxation Review Committee, chaired by Mr Justice Asprey, and the report of the National Superannuation Committee of inquiry, chaired by Mr Hancock, what is wrong with our system is that people have been able to take tax incentives and obtain preferential treatment for lump sums on retirement and still draw fully on the social security system. They are able to obtain full pensions and full fringe benefits, whereas their brothers and sisters, who had weekly superannuation payments or small weekly incomes-not lump sums-lost part of their earnings and frequently their fringe benefits because of the income test. That inequity has been pointed out over and over again by people who have looked at the superannuation system in this country. Obviously, that inequity does not worry any Opposition senator, because four Opposition senators have spoken tonight and none has mentioned that aspect.

Over the years, the aim of the superannuation scheme was to enable people to prepare for retirement and provide themselves with a retirement income. In exchange for considerable tax concessions, they would not have to draw on the social security system. That result has not occurred and, therefore, something must be done about the problem. Of course we can cope with our aging population. Australia is one of the lowest taxed countries in the world. We have one of the lowest social security bills in the world, and our population is not aging at the rate it is in European countries. If we are to provide an adequate level of income to people who are aging, those who are becoming invalids and those who may not be able to obtain employment, particularly those who have no other support, and if we are to raise the base rate of support, we shall have to change the system.


Senator Messner —How are you going to do it with your assets test?


Senator GRIMES —I shall talk about how I think we shall do that. The honourable senator did not mention how he would do it, except in one regard. I shall come to the point. Senator Messner made one positive statement. He said that the Opposition would provide an adequate level of income to those people by giving tax incentives and removing impediments in the social security system to encourage people to care for themselves. That is what we have been doing in this country for 35 to 40 years. What have we got out of it? Forty per cent of the population have access to personal superannuation schemes. There is the inequity of people who are able to take large sums and have a great advantage over their brothers and sisters on weekly payments. Those who take large sums have a considerable advantage over their brothers and sisters who have nothing and must rely on the base rate pension. We have a social security system that provides inadequate support, according to anybody's calculation, for the other disadvantaged people in the community-the single parents, widows with children and the unemployed, especially those with children. There are people in the community who are in great need of better support. In comparable countries, those people obtain that better support.

Let me give one example of the sort of direction in which we in this country have gone and where successive governments, having realised that they have gone in the wrong direction, have turned back. As soon as Senator Walters and company get into opposition they forget this. When I first became a member of this Parliament, both major parties, both sides of the Parliament, had it as a policy that they would abolish the means test. In 1975 in this Parliament I remember Senator Chaney, for one, and myself on the other side, questioned both of our parties' policies. We said that we did not believe it was right; we did not believe it was fair. We knew what happened in other countries that had a means- test-free pension. We knew that the pension was inadequate. We knew that it was inadequate support for poor people and for people who had nothing with which to supplement it. We knew of the situation in England, for instance, where there are supplementary pensions on top of the pension which are viciously means tested.

The previous Government recognised that and stopped the means-test-free pension for people over the age of 70. It froze it at a base level and put a means test on increases. There was the usual kerfuffle in this place. But it was nothing like the present kerfuffle. Senator Walters got up a meeting with me in Hobart and justified this by saying: 'There are people over 70 who are getting the pension they cannot afford'. When we extend this and put a more generous means test on the over 70s but recognise the fact that we cannot go on with that situation, we have Senator Walters berating us and saying: 'What a terrible thing to do'.


Senator Walters —No, I was correcting you. You stopped it, Whitlam stopped it; we froze it.


Senator GRIMES —Senator Walters says 'what a terrible thing to do'-to go in the same direction as the previous Government was going. So we have in this country a recognition that we have to change direction, and that we have to change direction in the future. There is a necessity for us all to think about where we are going, what we are doing and in what direction we are going. That is what this Government is trying to do. We recognised that we could not proceed, for instance, down the road to a universal superannuation scheme, a contributory pension scheme. We agreed with Asprey, with Hancock and with the Campbell inquiry when they said that we cannot persist with a situation whereby people who can take a lump sum remain in this privileged situation as regards tax deductions for their superannuation and as regards taxation of their lump sum; we cannot proceed down that track and afford to introduce an adequate universal superannuation scheme.


Senator Walters —Why don't you make it your election commitment instead of telling an untruth about it?


Senator GRIMES —We cannot do that; we cannot proceed down that track.


Senator Walters —Why won't you answer that question?


Senator GRIMES —I think that all sensible people-unlike Senator Walters- recognise that that is the case. From the very day in 1976 when the assets element of the income test was removed, largely to deal with farmers but also apparently to deal with what were seen to be administrative difficulties in this country, anyone who reads the Australian Financial Review, the National Times, the Pensioner Weekly, the Australian Pensioner or anything else, found advertisement after advertisement after advertisement-including one in one of the Sunday papers; I cannot remember which one-saying: 'You can be a millionaire and you can still get the full pension and full fringe benefits'. It opened up a whole new industry, a whole new field, through which people could manipulate the system, avoid the income test, and still get the full pension and full fringe benefits. If we do not head down the track of stopping that, the bill in the future will be considerable-not because our population is aging at an impossible rate but because that sort of avoidance is at an impossible rate.


Senator Walters — Do you think you have stopped it?


Senator GRIMES —Senator Walters says: 'Do you think you can stop it?' The difference between Senator Walters and me is that I believe that it should be stopped. I do not intend to stand up here and be the defender of privilege of the type that Senator Walters is. I shall not do that.


Senator Walters —I raise a point of order, Mr Acting Deputy President. If Senator Grimes is going to pick up an interjection incorrectly, that is an abuse of this Parliament. He must pick up the interjection correctly. What I said was: 'Do you think you have stopped it?'-not 'Do you think you can stop it?'.


The ACTING DEPUTY PRESIDENT (Senator Townley) —I am sorry, Senator Walters, but there is no point of order.


Senator GRIMES —I point out to Senator Walters that we have not even passed the assets test legislation; but the fact that it will pass has made people think, including perhaps even some of the entrepreneurs, about where they might go with these schemes in the future.

Debate interrupted.


The ACTING DEPUTY PRESIDENT —Order! The time for general business has expired.