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Thursday, 26 May 1983
Page: 1059


Mr MILTON(4.12) —I found it very illuminating to hear the honourable member for Franklin (Mr Goodluck). I do not remember him talking very often about pensions in the past two and a half years in which I have been a member of this place. In fact, during that period of two and half years the real level of pensions dropped.


Mr Goodluck —I take a point of order. I think that that remark should be withdrawn because it is completely untrue.


Mr DEPUTY SPEAKER (Hon. Les Johnson) —Order! There is no point order.


Mr Goodluck —But if-


Mr DEPUTY SPEAKER —Order! There is point of order. The honourable member has expressed a view. It is not the prerogative of the Chair to judge the question. There is no point of order.


Mr McVeigh —I take a point of order. The honourable member for La Trobe made very disparaging remarks about the little Australian battler and he should be asked to withdraw them because everyone knows that he is a great fighter for pensioners.


Mr DEPUTY SPEAKER —There is no point of order.


Mr MILTON —It is not surprising that I cannot remember what the honourable member for Franklin had to say because the level of pensions dropped considerably during the past two and a half years and what did he do about that?

In supporting the Social Security and Repatriation Legislation Amendment Bill 1983 I am supporting a measure which is aimed at ensuring that welfare funds are distributed equitably and are available to those pensioners who are most in need . Under the terms of this Bill, pensioners aged 70 years and over will no longer be eligible for age and service pensions free of an income test if, in the case of a single pensioner, their income is over $200 per week or, in the case of a married couple, the combined income is more than $333 per week. Pensions will continue to be paid above those rates but will be reduced by $1 for each $2 in excess. This will mean that the pension will no longer be payable to a single person whose income reaches $303 per week or a married couple whose combined income reaches $505 per week. Very few of such pensioners can be classified as needy and those who may be in financial difficulties through actual illness or other extenuating circumstances can turn to other means of welfare assistance.

It is argued that people who have paid taxes all their lives should be entitled to a pension. I cannot accept that argument because taxes are used by governments as a means of redistributing the wealth of the community from the haves to the have nots. If the pension is to be paid to all regardless of income it must follow that higher taxes will be levied in order to pay for the total pension outlay, or some other essential government service such as education or health must be reduced. There was no doubt that the Federal Government could not continue to provide pensions to all people over the age of 70 years. This would involve some $300m in additional pension payments-money which could be redistributed to pensioners who are in need and require an increase in the base levels of their pension.

The population includes a rapidly increasing proportion of aged people. The number of people over 65 years is expected to increase 58 per cent in the 20 years to 1991 while the age group under 14 years will remain virtually static in number. The significance of our aging population is borne out by the fact that, whereas in 1972 only 54.7 per cent of people of pensionable age received the pension, by 1978 the proportion had grown to 78.2 per cent.


Mr Hodgman —Doesn't it matter to you that you have broken a promise?


Mr MILTON —The honourable member talks about broken promises! What about all the promises broken over the last seven years by the Government which he supported? He ought not to talk to me about broken promises. The previous Government did nothing in the face of the growing cost of the social welfare budget. The Australian Labor Party is committed to the introduction of a national superannuation scheme and all the changes which are being proposed in the areas of both superannuation and pensions are made with the aim of providing all retired people with an income which will enable them to retire in security and comfort. The Fraser Government had seven years in which to do something about a national superannuation scheme but it did nothing. In fact, it took measures which reduced the age pension from 24 per cent of average weekly earnings to a low of 21 per cent. This was the Government which put the people of Australia in the worst economic situation since the great slump of the 1930s.

In such circumstances it was essential that the present Government take measures to arrest the decline in the economy and to provide an economic climate of job creation. The purpose of the recent economic statement, of which the present changes to the over-70 income test were a part, was designed to provide funds for job creation schemes. The long term savings as a result of the proposals indicated in the economic statement will amount to $2,000m. It represents the first step by the new Government to redistribute the wealth of this nation in favour of the have-nots of our society. The previous Government had no sympathy for, or understanding of, the impossible situation in which such people found themselves when, for instance, trying to live in rental accommodation on the pension or on the dole.

It is interesting to note that a proposed national superannuation scheme, which was presented in a report to the Parliament by the Whitlam Government, was shelved by the Fraser Government. It was a two tiered scheme. The first tier consisted of benefits to be supported by the ordinary revenue resources of the Commonwealth Government. The second comprised the additional benefits that would be available as a result of contributions. The primary objective of the scheme was, to quote the report:

To enhance the economic security and living standards of the aged. In the pursuit of this objective we are constrained by the need to avoid imposing unrealistic burdens upon the Australian economy and public finance.

In these terms one can see the direction in which the Government-as the rightful heir of the Whitlam Government, which set in train so many far-reaching reforms- is leading in relation to the Bill before us. The Government must avoid imposing unrealistic burdens upon Australians. In view of the complete irresponsibility of the previous Government in shelving the report of the National Superannuation Committee of Inquiry I want to say more about it. The basic national superannuation pension proposed in the report had three components. One was a universal pension. The second was a purchased pension. The third was supplementation. The universal pension was to be identical for all pensioners and to equal 25 per cent of average weekly earnings. The purchased pension was to depend upon past contributions and would therefore differ as between pensioners. Supplementation was to be paid on a tapered basis to all persons with purchased pensions below 40 per cent of the universal pension, and was to ensure a minimum total pension equal to 30 per cent of average weekly earnings. Ancillary benefits were also proposed in relation to dependent children, pensioners living alone, or dependent spouses who were below the age of 65 years . The payment of certain death benefits was also envisaged. The liability to pay contributions began at 19 years of age and ended at 63 years of age. Contributions amounted to 5 per cent of income, above the exempted amount of 30 per cent of average weekly earnings, and were to be collected with income tax. It was, of course, clear that whilst the recommended scheme would provide for most people incomes sufficient to support living standards similar to those enjoyed before retirement, it would not do so for people with relatively high pre-retirement incomes. Much higher rates of contribution would have been necessary to preserve real income levels in such cases.

The problem presented by having a more ambitious scheme has a twofold aspect. First, it represents the transfer of spending power from the economically active to retired people. Secondly, it involves what one might call the compulsory deferment of spending by those who pay taxes or contributions during their working lives but receive pensions later in life. Either aspect means that the goal of higher pensions must be related to a reduction of living standards for non-pensioners. As the report indicated, there will always be people who attract a low priority to their present living standards and support a generous provision for the aged. However, others such as young wage earners with large families, often cannot afford, and certainly begrudge, a loss of current income.

A national superannuation scheme that has universal application should attempt to reach a compromise between those two conflicting views. It is in the light of such an objective analysis that the Bill before us has been framed. The previous Government had washed its hands of any attempts to provide a proper retirement pension. In fact, it was gradually reducing the real level of existing pensions. It is important to remember that the contributions to the national superannuation scheme, as proposed by the Whitlam Government committee, was not a form of disguised taxation, but was designed to yield to contributors benefits which would be equitably related to the amounts collected. There is no doubt that the present non-contributory flat rate pension does not offer satisfactory provision for the aged and for repatriation beneficiaries such as accord with reasonable expectations under a national superannuation scheme.


Mr Goodluck —And introduce a means test for 70-year-olds!


Mr MILTON —I would like to hear why the honourable member's Government did not take it up. The provisions of the Bill should be fully supported on both sides of the House, as leading towards attainment of the aim of providing an equitable system of retirement incomes for those in greatest need.