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Monday, 10 September 1984
Page: 734

Senator CROWLEY(8.20) —Before the debate was interrupted I was directing my remarks to the assets test. I was quoting very interesting support for the assets test from organisations such as the Confederation of Australian Industry and people like Alexander Downer. I have no doubt that people in this place will remind him of his remarks if and when he arrives here. I suppose it is quite likely that he will. One point I want to allude to is the very curious argument mounted by the Opposition, both in this place previously and during the recent debate on this legislation in the House of Representatives, about the way in which pensioners were going to be disadvantaged because of the Government had brought down inflation. It would seem that the honourable member for Mackellar ( Mr Carlton) in particular argued that the higher the rate of inflation the larger would be the consumer price index adjustment for pensions. This argument was put to me in this place by Senator Messner and I find it equally unconvincing on this occasion. In fact, I find such an argument quite remarkable .

A reduction in the consumer price index is, of course, of benefit to everybody in the community and in particular to people who are on fixed incomes because their fixed incomes, of course, can buy more as the rate of inflation falls or as the price of goods relatively is less. The Government appreciated that the artificial or at least the particular effect on inflation due to the introduction of Medicare could seem to disadvantage pensioners. It was with that in mind also that it introduced a particular and special increase in the pension in this Budget session. I find it quite interesting that some members of the House of Representatives are as false in their arguments as are Opposition senators in this place.

Senator Chaney argued that one of his Government's great achievements was the indexation of pensions. In fact, I am reminded that his Government did not introduce indexation but made pension indexation automatic. Indexation of pensions had existed since the time of the previous Government. Senator Chaney said that although indexation was very expensive it was a responsible thing for a government to carry out. I can only agree with the honourable senator; caring for people is expensive. This Government does not withdraw from that. In fact, this legislation quite clearly indicates this Government's commitment to caring for people and meeting the cost of that caring. Of course such items are expensive. But that is exactly what governments have to do sometimes. Governments have to make those expensive commitments. They can do that only in terms of a recovery in the economy. This Government had to address the particular difficulties of a government coming to office with an economy that had bottomed as low as it can go, the highest level of unemployment for many years, massive inflation and a huge deficit. The Government has addressed all of those things. It further addressed some of the priorities that it has as a government. It has done all that in the face of the problems associated with reducing the deficit and encouraging considerable recovery within the economy.

I heard it further argued by Senator Chaney that the assets test is inequitable . I ask the honourable senator to weigh the inequity of the assets test that we have introduced against the inequity of having no assets test at all. Quite clearly, the inequity of having no assets test far outweighs some of the minor inequities that might exist within any assets test and of which, of course, there are a few examples within this assets test. To highlight that kind of problem, Senator Chaney quoted the inequity of a pensioner with a $1m house compared with a pensioner with a $50,000 house. I guess that if the honourable senator wants to make his point he can put that sort of proposition. However, I would doubt whether there would be too many pensioners in Australia with $1m homes. If some do have a home of that value, I hope that they have enough income to maintain all of the payments that go with a $1m home and therefore they will not be eligible for a pension under the assets test. I think that this is a very peculiar and silly example. Senator Chaney would be better to address more substantive matters than quoting examples like that. Of course such an inequity is possible within this assets test; however, it is not usual. It is very important to note that very few pensioners would be affected by any difficulties and inequities of someone down the street having a $1m home, compared to their mere humble abode.

The essential feature of this new assets test is that it will not affect the majority of pensioners. It does exempt from value the pensioner's home. It also exempts a farm house and an adjacent block of land. It will begin to affect the pension only when, in addition to the home, a single pensioner has assets of $70 ,000 or a pensioner couple has assets of $100,000. It should be pointed out that 30 per cent of pensioners do not own their own homes but rent, live with relatives or live in a nursing home. None of them is going to be troubled by massive assets. In fact, when they do not own their own home, there is a special exemption within the assets test of $50,000 to go some way towards addressing that inequity. Further, the figures to be taken account in the assets test will be indexed so that if inflation rises instead of falling, or holding steady, as is the case now, assets will be so assessed upwards. Again, I think that goes a considerable way to addressing another possible inequity within the assets test itself.

Senator Chaney went to great lengths to explain how administratively expensive the assets test would be. On that basis, he is arguing that it was too expensive when he, as Minister, and his Government faced the challenge and so they decided that they would not adopt it. This Government does not resile from taking hard steps. It has gone ahead with introducing the assets test because it judges that the inequity of not having an assets test far outweighs either the administrative costs or the difficulties of having one.

In fact, Senator Chaney went on to argue that the assets test will recoup only $50m next year-that is a year down the line. He seemed to suggest that the $50m is neither here nor there in terms of the whole Budget so who would be bothered collecting it? This Government will be bothered collecting it. We have had some difficulty in collecting money forgone. The difficulties that we have had with taxation legislation in this place highlights this. But no, the Government does not move away from $50m. This amount may, as Senator Chaney says, buy a Kit-Kat for every pensioner. But, again, that is a flippant and silly way to deal with a fairly significant amount of money that will go quite some way towards the Government's priorities in regard to redistribution of wealth.

I think that Alexander Downer very nicely summarised the position in his article in the Australian of 9 June when he said:

Indeed, the previous government abolished the means test in 1976 because it was deemed to be inequitable.

But without an assets test the problem will remain.

The latest version of the assets test proposed by the Government offers a much more equitable formula than has previously been produced, although inevitable questions will remain about its equity.

The challenge ahead must be to ensure the assets test is as equitable as possible.

Indeed, I think the Government has gone a considerable way to addressing those challenges. I am pleased that a person like Alexander Downer, who in this case is acting as the Director of the Australian Chamber of Commerce, sees and judges the Government's assets test proposals in that way. I am sorry that he is not here to vote in support of the Government's legislation. However, I am happy to say that I am delighted to support this Government's legislation.