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Wednesday, 29 April 1987
Page: 1986

Senator DEVLIN —My question is to the Minister for Veterans' Affairs. The Department of Veterans' Affairs has allegedly changed its policy on the treatment of income and bonuses for friendly societies when assessing pensions under the income and assets test. Can the Minister confirm that changes have taken place? Can he say whether veterans and their dependants are to be seriously and adversely affected by the changes?

Senator GIETZELT —The question of assessment of income is a matter that runs parallel with the procedures adopted by the Department of Social Security and the Department of Veterans' Affairs. There has been no change to the rules, despite some assertions by friendly societies that the rules have been tightened up. The Department has changed the way it assesses some friendly society investments, not because of any real change but because of misleading information previously provided by some friendly societies. The friendly societies have presented the Department of Veterans' Affairs with a picture of their investments that does not match the facts. As a consequence, there is some confusion.

An attempt is being made by some friendly societies to suggest that the Department of Veterans' Affairs is pursuing different policies from those pursued by the Department of Social Security. They like to say that pensioners' funds are tied up for a fixed period and that the income earned is not available until the investment matures. Of course, that is an attempt to get around the assets test legislation which recognises that payments should be based on need. I understand that that concept has general com- munity support.

Investors are told that when the investment matures they can withdraw their money whenever they like. Of course, if they avail themselves of that, the money is regarded as income. It is now clear that friendly society investments are no different from an interest bearing bank account or a whole range of other investments that are commonly available. There is evidence of that in the way in which investment advisers operate in some of the daily newspapers in the various States of the Commonwealth.

The law does not give friendly societies any special privilege under the income and assets test, and to do so would give them an unfair advantage over financial institutions. I stress that there has been no change and that the difficulties that have eventuated are as a result of an attempt by some societies to get around the legislation provided by the Parliament.