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Thursday, 28 February 1985
Page: 296


Senator MESSNER(10.06) —by leave-I move:

That the Bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows-

The purpose of this Bill is to abolish the assets test on Social Security and Repatriation pensioners and beneficiaries first announced by the Labor Government in its Budget of 1983-84 and finally enacted in September 1984. This followed a long period of confusion within the Government which brought many changes and counter-changes to the initial scheme, culminating in the establishment of the Gruen Panel in February 1984 to report on the form which an appropriate assets test should take.

This panel reported to the Government in May 1984 and outlined a scheme whose notable feature was the inclusion of the family home with other assets for the purposes of the test. The Government did not adopt this part of the recommendations and announced in June 1984 its so-called 'modified tall poppies' test which is now embodied in the current legislation.

Over the last eighteen months there has been widespread confusion and concern amongst pensioners and beneficiaries at the intrusiveness, many unfair aspects and numerous anomalies contained in the legislation. Many anomalies have been exposed but not corrected by the Government. Nor has there been any apparent attempt by the Government to review these, notwithstanding their being brought to its attention by Opposition members of the Senate and the House of Representatives and by the media.

As late as Friday 22 February 1985, in the course of a debate on a matter of public importance on the assets test, I drew the Minister for Community Services, Senator the Hon. D. J. Grimes' attention to a number of significant problems, particularly the effect on farmers. The Minister totally ignored these cases in his reply and failed to refer to them at all.

Despite the wide-spread dismay in the community and the Prime Minister's and the Minister's undertakings expressed in the course of the last several months, to review anomalies when raised, the Government has failed to take any action before the legislation is due to take effect on 21 March 1985.

Over the long and sorry history of this legislation, the Government has continuously failed to act until pushed to the limit. Australians are now faced with a similar situation. There is less than one month before the commencement of the assets test and yet the legislation has been shown to be shot-through with glaring anomalies. I will detail some of these later in the course of these remarks.

The Opposition has two courses open to it in the face of the Government's intransigence. It can propose legislation to correct the anomalies or it can seek to obtain the passage through both Houses of Parliament of legislation to repeal the assets test upon gaining control of the Parliament.

The decision by the parties to move for repeal has not been taken lightly. The Liberal and National parties are opposed to the assets test in principal because it is designed to encourage people to become more dependent on governments by discouraging them from accumulating assets in order to provide as much as possible for themselves. Our commitment to repeal is thus based. For this reason we have rejected the notion of seeking amendments designed to correct anomalies in the assets test legislation which we believe to be so fundamentally lacking in merit.

This Bill seeks to obtain the repeal of the assets test legislation to render ineffective the legislation for an assets test before it is due to come into effect and so drastically affect such large numbers of the aged.

ANOMALIES

From the outset, we have consistently made the point that the Labor Government's assets test will not catch the really rich whom it claims are taking unfair advantage of the pension system. On the contrary, it is the person who through thrift, modest enterprise and, in some cases, involuntarily built-up moderate levels of savings, who will be most affected. Some examples may spell out more clearly the common types of cases caught in the assets test net:

The widow who receives a legacy from her former spouse, but finds that the married couples' exemption limits of $100,000 has reduced to $70,000 as she is treated as a single person thereafter, but whose income requirements have not fallen commensurately;

the person of advanced age, who having owned and lived in the one house for many years, requires to move to a nursing home or an aged person's cottage, and realises a considerable sum of money in excess of the exemption limits from the sale of the house and because of inexperience and old age, finds it most difficult to handle the investment of the funds;

the small businessman who sells out his business for little more than $100,000;

a person in a similar position who moves to a 'granny flat' to live with the family and finds that it cannot be treated as a principal place of residence for the purposes of the assets test because it technically is owned by the person providing the land upon which the aged person paid for and erected it;

a person who pays rent in an aged person's home compared with one who makes an ''up front'' payment upon entry to the home which is treated as though it were the value of the principal place of residence;

the farmer whose farm property is unable to generate income sufficient to support him and his spouse in retirement and their son or daughter and their family who have been working on the property for little remuneration. The plan is usually that they will take it over to continue the operation but are unable to afford payments to the parents because of the low rate of return on such properties. Because of the deprivation provisions of the legislation the parents are unable to qualify for the pension and legally transfer the farm to the children which is the only practical action to be taken.

The Government provided the infamous 'pension loan scheme' to allow pensioners in this situation, or with other illiquid assets to ''borrow'' the pension with interest at 13.5 per cent during their lifetime against a security charge being applied to the farm. In the best of circumstances, and assuming a life in retirement of 15 years, this could build up to a debt of $400,000 and become a considerable problem for the inheritor to refinance, probably causing the eventual sale of the property and destruction of the intention which was to maintain the family farm operation.

But consider the diabolical bind in which a farmer finds himself if he has transferred the legal ownership of the property to the children. Not only is he caught by the deprivation provisions of the assets test, but because he no longer is able to effect a charge on a property owned by his children, he is unable to qualify for the pension loan scheme as well!

His only resort is to seek a pension under the hardship provisions. However, he finds that should he own assets in excess of $5,000-for instance, a modest savings account, then he will not be eligible under that provision either. There is probably no cleverer three way attack on farmers yet devised by the Government than this.

Because of the extensive, complex and far-reaching nature of these most serious anomalies in the assets test legislation, there can be only one course-to repeal the legislation.

If the Parliament neglects its responsibilities in this regard, it is likely to cause considerable hardship to people who in their declining years are unable to cope with either the rate of change or the details and technicalities of it. In the view of the Liberal and National parties, the Parliament is obliged to act through this Bill, if the Government will not.

I commend this Bill to the Senate.

Debate (on motion by Senator Grimes) adjourned.