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Tuesday, 21 August 1984
Page: 18


Senator ELSTOB —On behalf of the Standing Committee on Social Welfare I present a progress report on retirement income systems.

Ordered that the report be printed.


Senator ELSTOB —by leave-The purpose of this report is to advise the Senate of the progress the Committee has made with the reference on Australia's retirement income systems, to indicate the range and diversity of the issues that have been brought to its attention during the inquiry and to comment generally on the scope of the inquiry. Honourable senators will appreciate that this inquiry involves an examination of the complex relationships between social welfare policies and fiscal policies and the relative roles and responsibilities of the public and private sectors in the provision of income support for the retired and the aged.

On 6 September 1983 the Senate referred the matter of Australia's retirement income systems to the Committee for inquiry and report on, or before, the first sitting day in August 1984. In particular, the Committee was asked to report on any changes that may be necessary to ensure equitable and comprehensive income security for Australians of retirement age. The Committee subsequently formulated detailed terms of reference to clarify the main objectives of the inquiry and to assist those preparing written submissions. These terms of reference, which are outlined in the progress report, also identified particular issues the Committee believed warranted examination, without excluding other issues that might be brought to its attention in the course of the inquiry. I reported these terms of reference to the Senate on 29 November 1983.

During November 1983 the Committee advertised the inquiry in the national Press and invited individuals and organisations to present written submissions outlining their views to the Committee. A closing date for submissions of 31 January 1984 was initially set. However, this proved to be unrealistic as many potential contributors were unable to meet this deadline and sought extensions of time to lodge submissions. Major submissions continued to be received until June this year. A total of 356 submissions has been received together with a large volume of supporting material.

Between March and July 1984 the Committee conducted a series of public hearings as part of the inquiry. On examination of the evidence it became apparent to the Committee that more detailed information was required on certain aspects of the inquiry, particularly detailed costings relating to proposals for changes to existing income retirement arrangements. Additional material was subsequently sought from the Department of Social Security, the Department of the Treasury, the Association of Superannuation Funds of Australia and others. At this stage insufficient supplementary material has been received for the Committee to proceed to the formulation of recommendations.

Further, several major submissions to the inquiry have not yet been received. These include submissions by the State governments of New South Wales, South Australia and Western Australia and also the Northern Territory Government, all of which have indicated their desire to contribute to the inquiry. I should also add that the Queensland and Tasmanian governments have already presented their submissions and the Victorian Government has indicated that it will not be preparing a submission for the inquiry.

In view of the importance and complexity of the inquiry and its far-reaching social and financial ramifications, the Committee resolved recently to seek the agreement of the Senate to allow it more time to obtain the outstanding information and to continue its examination. As part of the inquiry the Committee has taken approximately 3,000 pages of evidence during the past five months. This evidence reflects the views of a wide cross-section of the community, including groups representing the aged and the retired, the Federal and State governments, welfare agencies, trade unions, women's groups, the insurance industry, employers, academics and other organisations and individuals .

The evidence not only reveals growing uncertainty and dissatisfaction within society about the adequacy and effectiveness of present income support arrangements for the aged but also points to genuine public concern to ensure that future reforms provide a more comprehensive, equitable and cost-effective system than presently exists and one that is better integrated with the taxation system and better complements occupational superannuation schemes.

Many organisations and individuals who have contributed to the inquiry have expressed concern at the levels of present pension payments, including the appropriateness of indexation arrangements, the availability of supplementary assistance, the provision of fringe benefits, and the desirability of income or assets testing. More specific areas of concern which have been brought to the Committee's attention include the age of pension entitlement, differential pension rates for single and married pensioners, flexibility of pension take-up, residency qualifications, and aspects of the taxation system including marginal tax rates, the tax threshold, and the rebate system.

Submissions have been received calling for the reform of present occupational superannuation arrangements, especially with regard to provisions concerning vesting, preservation, portability, security of benefits, regulation of funds, range of benefits, and comparability between schemes and between the public and private sectors. The Committee has also been asked to consider the appropriateness of providing subsidies, through taxation concessions, for occupational superannuation scheme participants; the effectiveness of occupational superannuation schemes in terms of coverage; and the Government's role in encouraging other forms of self-provision.

During the inquiry the Committee has heard arguments for and against various options for the future provision of income support. These options fall into five broad categories: Firstly, the retention of the present selective, or means- tested, system; secondly, the introduction of a universal, or non-means-tested, system; thirdly, the adoption of a system of national contributory superannuation, as recommended in 1976 by Professor Hancock and more recently by the Victorian Council on the Ageing; fourthly, the promotion of a guaranteed minimum income scheme, as proposed by Professor Henderson in 1975; and fifthly, the development of a comprehensive system comprising elements of a non-means- tested universal system and a means-tested non-contributory system, as advocated by the Life Insurance Federation of Australia and National Mutual T & G.

Variations to these approaches have been proposed by other groups such as the Australian Council of Trade Unions, the Association of Superannuation Funds of Australia, the Australian Institute of Actuaries, the Confederation of Australian Industry and the Australian Council of Social Service. In examining each of these options, it is necessary to take into account the equity, efficiency and cost of the proposals as well as their effect on incentives for private retirement savings. A focal issue of the debate is the means of financing each option and it is for this reason that the Committee requires the information which remains outstanding. Any proposed change to existing arrangements will be affected by broader considerations and constraints, including commitments arising from people's present arrangements, other priorities within the social welfare area, and limited financial resources.

In conclusion, the Committee emphasises that this is a progress report which provides a brief discussion of some of the issues that have been brought to its attention during the inquiry and highlights the complexity of those issues. While the Committee is conscious of the need to complete its investigations as expeditiously as possible, it is also concerned to give this important topic the detailed consideration it deserves before presenting a final report of its findings and recommendations to the Senate. I commend the progress report to the Senate.