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Monday, 10 September 1984
Page: 720


Senator CHANEY (Leader of the Opposition)(5.35) —The Senate is debating the Social Security and Repatriation (Budget Measures and Assets Test) Bill. Of course, principal interest in the Bill focuses on the introduction of an assets test. It is important to remember that we did have an assets test for pensioners until 1976. That assets test was abolished by the Fraser Government and the Hawke Government is not reinstating an assets test into the social security system. That is not what the people of Australia were led to expect would happen. It is quite clear that the Prime Minister (Mr Hawke) went to an election with a clear undertaking that he would not be taking money out of the pensioner's cheque, but one of the effects of this measure is that some pensioners will lose pension. Mr Hawke, when he was a candidate for Prime Minister and not Prime Minister, made this point:

Recovery can only be achieved and sustained by a change to national economic policies which lift and sustain demand. There can be no lift in profits or lift in growth unless there is a lift in demand. And that cannot be done by taking money out of the weekly pay packet or the pensioner's cheque.

It may have been some sort of cruel joke on the part of Mr Hawke, because he says that now he has lifted demand, he can afford to take money out of the pensioner's pay cheque. In any event, it is quite clear that this is yet another breach of an undertaking by the Australian Labor Party Government; yet another broken promise.

One is entitled to ask, given the limited nature of the savings which would be effected, just what the Government is up to. Why is it imposing this assets test ? We are told it is to limit the growth of social security expenditure and to focus assistance more on those in need. I will shortly go through the figures which clearly show that the amount being saved in terms of the totality of social security expenditure is very small, and that that amount is being purchased at a very great administrative cost and at the cost of considerable intrusion into the lives of pensioners. I put on the record early in this debate why the Government is doing this. It is doing it as a sop to the Business Council of Australia and to those who believe that reining in welfare expenditure is one of the key things that must be done. This is a token attempt by the Government to bite the welfare bullet, to show that it is a serious Government which will tackle a problem that has worried many people in the business sector. My contribution to this debate will go into the reality which underlines that claim, and I will deal also with some other aspects of this assets test.

I think it is becoming widely known that the Government's proposal will be expensive. We have had Estimates committee consideration of these matters over the last week or so, and we find that in 1983-84-that is, last year-the Government expended $24.7m in its various departments in planning for this assets test-indeed, planning for the various assets tests that it has proposed, including one initially in the Budget last year and then another after the report of the Gruen Panel of Review of Proposed Income and Assets Test earlier this year. So last year the Government spent $24.7m of taxpayers' money in preparing for the assets test. It saved absolutely nothing because, of course, the test was not in operation. This year it proposes to spend $29.9m and it hopes that by the end of the year it will have reduced pensions by $18m. One does not have to be a genius to know that means that on the figures given to an Estimates committee recently the Government will be more than $20m out of pocket this year-that means, of course, that taxpayers will be $20m out of pocket-and that last year nearly $25m was wasted in this exercise.

All that is apparently made worth while because next year, the Government tells us, it will save $60m in a full year of administration of the assets test and it will cost only $9.7m to administer. The Government is saying: 'It is true that we have spent a lot of money so far. It is true that in these early years of trying to get our act together, getting it wrong, correcting it and coming in with a second proposal that we have spent a lot more than we have been able to save, but the fact is that next year we will save some $50m'.

I think that one needs to perform some sort of assessment of just to what extent the Government is biting the welfare bullet to satisfy the Business Council of Australia and those other organisations, such as the Confederation of Australian Industry, which believe it is a wonderful thing to be doing. If I refer to the Budget Papers I find that this year the Government is spending a total of $18,047m on welfare. That covers social security, veterans' affairs and so on. The total social security and welfare bill this year is around $18,000m. There is no way that that will not go up by more than another billion dollars next year. I make that quite confident prediction, as an ex-Minister for Social Security, knowing how the indexation system works. This year it went up by $1, 608m, which makes my estimate of what it will go up by next year quite conservative. Next year we face a welfare bill of close to $20,000m and the Government will save $50m in net terms by the imposition of the assets test. I suspect that many people out there, particularly the aged people in Australia and their families, will be asking: 'Why is it that in this enormous welfare system it is necessary to introduce an intrusive and often unfair assets test to make such a miniscule change to total spending?'

A number of Liberal speakers, not least Andrew Peacock, have consistently pointed out how little the Government will save. They have pointed out that if the savings are spread over pensioners they might be able to buy half a Kit-Kat each, or something derisory of that sort. The reality is that the Government will put a great number of people to very considerable inconvenience. It will affect some people quite severely. The Government is doing things which will make little or no real difference to the very real problem-the problem that I acknowledge-of the total cost of social security and welfare in Australia.


Senator Coates —Is that what you would do?


Senator CHANEY —Senator Coates interjects. I will deal with what I would do later in my speech. Before doing so I respond to his interjection by saying that when I was the Minister for Social Security I did not propose to do what the Government is doing here-because of the cost of doing so, because of the limited effect and because of the consistent advice of my Department. Some of the officers who gave me that advice are probably sitting opposite, although I have a more vivid memory of other officers giving that advice. Their advice was, no, that was not a proposition I should put forward. I accepted that advice.

I think that one of the most serious questions that has to be asked about this Government, given its introduction of this assets test, is just what are this Government's priorities. I suggest to honourable senators that any examination of the figures on this test will show that the aged are certainly not this Government's priority. This Government has just introduced its second Budget. The two Budgets which have been brought down by Mr Hawke have averaged an increase in expenditure of over 14 per cent. This year the increase in expenditure is over 13 per cent. The figure is slightly less than it was last year. Overall this Government, which has had a once off great surge of revenue- the greatest lift of revenue which one can imagine, an extra $9 billion to disburse-has utilised most of that surge in revenues to increase government expenditure by more than 13 per cent. When we look at the Government's own figures on what is being done for the aged we find that assistance to the aged is increasing by 8.8 per cent.

I think that any Liberal would have to concede-we are always being lectured on this subject by the Minister for Resources and Energy (Senator Walsh), who is at the table-that if we intend to argue about smaller deficits, less taxation and all the rest, we have to look to our expenditure. I acknowledge the validity of that point. This Government's approach to expenditure has been to increase expenditure by 14 per cent. In the two Budgets which the Government has brought down it has increased expenditure by a total of just under 30 per cent in all, but this year it is increasing expenditure by 13 per cent and expenditure on the aged is going up by 8.8 per cent. I suggest that shows that the aged do not loom very large in the priorities of this Government.

I also find that the Government is very ready to spend amounts of money on administration which are considerably in excess of the sort of money which is involved here. In this one year alone the Government is spending an extra $724m on government administration; that is, on employing public servants, on the bureaucracy. That represents an increase of 16.7 per cent. That tells us something about the Hawke Labor Government and where its interests lie. It is prepared to spend 16.7 per cent more, an extra $724m, on the machinery of government, whereas it increases expenditure on the aged by 8.8 per cent. I think that we have here a government which is shown up yet again to be a sham. It is a government which I believe has simply decided to take the calculated risk that it will lop a few aged tall poppies, and no doubt enthuse some of the left wing members. It can afford to lop a few aged tall poppies-that is the Government's expression, not mine-and at the same time throw money around in a quite profligate way on its own little exercises.

We all know that there is an enormous increase in health expenditure this year because of the costly imposition of Medicare. We know that the Government is utterly careless of the additional costs it is imposing on the Australian people , but by gosh, this Government is prepared to spend nearly $30m this year to collect $18m from pensioners. I think that tells us a lot about the Hawke Government. It also tells us something about the effectiveness, or rather the ineffectiveness, of the Minister for Social Security, Senator Grimes, as a guardian of the interests of Australia's aged. It tells us something about the total illogicalness with which this Government sets about its business. We have the very strange circumstance in which this Government has been utterly loose with respect to certain items of expenditure. It is quite happy to commit itself , for example, to $30m for the defence of the America's Cup. That is a matter about which we might all be terribly proud as Australians but the Government is prepared to spend as much again just to collect $18m from pensioners. I just say to you, Mr Acting Deputy President, that I think that is a pretty funny way of tackling the welfare problem. I believe it is a pretty funny way to treat Australia's aged.

Let us have a quick look at the history of this proposal. It has been handled in a most unprofessional and careless way. After the Liberal Party, under the Prime Ministership of Mr Malcolm Fraser, removed the assets test because of the unfairness which it imposed on some people, such as retired farmers who might have substantial assets but no income on which to live-


Senator Walsh —You caved in to the Country Party, as you always do.


Senator CHANEY —The mention of farmers has woken up Senator Walsh and he immediately starts becoming abusive. The fact of the matter is that the removal of the assets test was recommended by the Henderson Commission of Inquiry into Poverty. After that was done, Mr Hawke made the election promise to which I have referred and which he has subsequently broken. The Government then announced last year that it would introduce an assets test, which was rather akin to the assets test that was removed in 1976. It is very interesting to find that when there was some complaint about that, and when the Opposition said that we thought the Government's proposal was defective, we were subjected to a great deal of abuse from the other side of the chamber. We were very severely criticised, both in this chamber and in the House of Representatives.

We as an Opposition said that we thought there were elements of unfairness and indicated that we were prepared to hold up the legislation the Government had proposed to introduce last year to give the aged of Australia and other interested parties a chance to put their views to the Government. Once that opportunity was provided and the Government put the legislation aside during the last Budget session, it became very obvious that there were defects. Let me say that that is not a partisan comment; that is an admission that was made very clearly by Mr Hawke, Mr Hawke, having complained at our attitude, in addressing the National Press Club in February this year said:

. . . it is clear that there is a considerable degree of misunderstanding . . . and also, let me say, that there is some justifiable concern within what we have suggested, there are some intrinsic anomalies.

On the Mike Walsh Show a little later he said:

there was confusion about the extent of who might be adversely affected and there were some anomalies. So I just decided then that what needed to be done, is that we ought to get a committee in the community to look at what we were talking about--

So the Government admitted that what it was putting forward was wrong. It admitted much of the criticism of the Opposition and it gave itself an opportunity for a second thought through the Gruen committee. The Gruen committee reported, but the Government did not accept the Gruen committee recommendations. I suppose that if one were looking at this from the point of view of fairness and from the point of view of meeting the problems about which Senator Coates was so eloquent-I really think 'eloquent' is perhaps an overgenerous expression; the problems Senator Coates described in his speech-if one really wanted to tackle those things, I suspect Senator Coates would agree that the Gruen recommendations would have gone further down the track towards meeting those difficulties.


Senator Coates —You agree, do you?


Senator CHANEY —I am saying that if that is his primary objective, if he is prepared to legislate for the purpose he outlined in his speech-that we should be concerned merely to put to bed these difficulties-then it is more defensible to adopt the Gruen recommendation. What the Government has done, of course, is to ease the political pain of the recommendations by putting in the exception of the pensioner's home. It has done so for political purposes, but by that means it has left the test open to endless manipulation, if people wish to manipulate it. So the Government has wound up with something which is not of Professor Gruen's making. It is important to note that what the Government is putting forward is not of Professor Gruen's making; it is of the Government's making, of Mr Hawke's making. Any inconvenience which is felt by the aged population of Australia, any unfairness, any intrusion, is something which is being inflicted on them by the Government and not by Professor Gruen.

We have consistently expressed our concern about various elements of what the Government is proposing. We have said that what the Government is proposing will be intrusive; in other words, it is something that will affect pensioners.


Senator Coates —It is not as obtrusive as you say.


Senator CHANEY —Senator Coates says: 'It is not as obtrusive as you say'. I can say only that the Government must make up its mind whether it is fair dinkum about this assets test. On the one hand, the Government says it is imposing an assets test; and at the same time, if there is any suggestion that any pensioner will be inconvenienced, it runs away from it. It suggests: 'You will not have to worry about the fact that the contents of your home are meant to be part of the measured assets. You don't have to worry about that because, after all, $10,000 will be set as the value of your assets unless your assets happen to be more than that, in which case you are supposed to come and tell us about it'. In response both to the sorts of interjections that have been made tonight and to the sorts of statements that have been made by the Government, I say only that it ought to make up its mind. Is it imposing this assets test or is it not? I understand the legislation before us now and which we are opposing to say that an assets test will be imposed and that pensioners will be subject to it. I understand that this Government will be employing several hundred public servants to make sure that it is applied. If that is not so, I suggest the Government should withdraw this legislation.

We have also said that we think that in many respects the assets test will be ineffective. It is ineffective because on the form of test that has been designed by the Government, it will still be possible to put assets into an exempt form. That might be highly inconvenient, but the history of the last few years suggests to us that if we provide for methods of escaping a test, at least a proportion of the community will be prepared to go to a great deal of trouble and even expense to ensure that they go down the tracks which are demonstrated. Because there are exemptions, routes will be designed by people who will make it their business to do so. The Government has added complexities to an already complex system instead of removing them. Of course, in addition we say that there are elements of unfairness in what is proposed. I do not intend to go into great detail on that, but the simplest illustration is that a pensioner living in a house worth a million dollars and with $100,000 in the bank will be treated in exactly the same way as a pensioner living in a house worth $40,000 with the same amount in the bank. That is just one simple illustration of how what is meant to be a fair test will apply in a quite discriminate way across different circumstances.


Senator Coates —What would you do?


Senator CHANEY —It is no good the few Labor Party senators who have bothered to come into the chamber for this debate interjecting: 'What would you do?' The fact is that we have shown by our actions in government that this is not what we would do. We would not adopt the course the Government is adopting.

Apart from saying that the Opposition is opposed to what we see as being an intrusive, ineffective and unfair imposition on the aged, I want to say something about my own role in this matter. There has been a tendency to refer to me in debate, and it is a tendency that has been followed by Senator Coates in the debate tonight. I believe that there are genuine difficulties for Australia in the size of the bill which is presented to taxpayers in each year and the rate at which that bill is increasing. There are significant reasons why we need to maintain some needs-based application of welfare in this country. As I have said before in debates, if we look at the record of the Fraser Government we find that one of the first things it did in regard to welfare was to index the pension. That happens to be the proposal which I think was branded by Professor Henderson in the Commission of Inquiry into Poverty as the most significant needs-based measure to be taken. It is a long time since I have looked at that report, but the indexation of pensions was the fundamental safeguard provided for those who are most in need-those who are reliant on the basic pension. That very expensive reform of the Fraser Government was a reform undertaken in 1976 and maintained; it was a reform which cost a great deal on an annual basis, and something which we retained. The last of the welfare initiatives of the Fraser Government was the introduction of a family income supplement for low income working families. I suggest that at the first act and at the last act there were the clearest possible indications that the Fraser Government was concerned to provide greater assistance to those in need.

I am sure that every Minister for Social Security, in common with me, has examined the ways in which the Department of Social Security expends money and the measures which can be taken to make the expenditure of those moneys more effective. That was a chore I undertook as Minister and I know that it was undertaken by my predecessor, Senator Dame Margaret Guilfoyle. The conclusion I came to in the period in which I was Minister for Social Security was that the costs and inefficiencies of a return to the assets test were not warranted by the advantages which could be gained. Originally, the Government said to the people of Australia in the Budget before last: 'We will save hundreds of millions of dollars by the imposition of an assets test'. I suppose one might argue that if one is to make savings of hundreds of millions of dollars and redistribute them to the needy in Australia, one might have had a strong moral basis for the argument being put forward. I believe that to come before this Parliament and to say that to impose this assets test-which will have such a negligible effect on outlays-is other than an unnecessary burden on the aged of Australia, is simply false.

I believe that the Government has not established a case for the legislation which is before us this evening. My conclusion was that the measure was one which should not be undertaken. I believe that is the conclusion which we, as an Opposition, have properly come to in deciding to oppose this legislation. I believe the legislation should not come into operation. It is intrusive. In terms of the great problems which face Australia it is totally ineffective, and I believe that to the aged, to whom it will apply, it is unfair.