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Thursday, 21 March 1985
Page: 588

Senator HAINES(4.31) —I had hoped, from listening to Senator Walters's contribution today, to get a clearer picture, a clearer explanation from the Opposition of exactly what its complaint is about the social security and repatriation assets test legislation and why it wants to repeal it absolutely. Apparently all it boils down to is that the about to be implemented new assets test legislation contains anomalies. I can assume only that behind the Opposition's attitude to the anomalies and its belief that the only way to cure an anomalous system is to repeat the entire legislation lies an assumption that no anomalies existed under the previous system. If we repeal this legislation, we must automatically go back to a system in which income only was being tested. To anybody who in the last few years has received letters from people going into retirement, that was one of the most anomalous, unfair and inequitably spread means testing systems that anyone could devise.

The example raised by Senator Messner and others of problems facing widows and widowers who drop from a married entitlement to a single entitlement was covered by the Minister for Community Services, Senator Grimes, and I do not need to go into it again except to reiterate that that problem existed under the previous system just as it does under this one. I suggest to the Liberal Party of Australia that while it is in opposition it consider exactly how it approached anomalous legislation when it was in government. The answer is certainly not that it repealed it. We all know that there are more anomalies in something like the Income Tax Assessment Act than there are equities. But we do not repeal the entire thing simply because some people manage to avoid paying income tax and others do not.

In her speech Senator Walters complained about the fact that somebody can have a reasonably modest farm and be penalised under this test, yet somebody else living in Canberra in a luxurious home is not penalised. I can assume only from that that she would have preferred to see the family home included in the assets test, in which case of course we would face a more massive anomaly in price differentials between various capital cities.

The previous assets test, the one that existed until it was repealed by a Liberal government, contained a worse anomaly than any that has been mentioned today. I refer to the notional 10 per cent income that was assumed to come from assets. Unfortunately, the current Government originally intended to include that in its assets test but, following the report of the Gruen Assets Test Review Panel, it was excluded. It is probably fair enough that the previous assets test system was repealed because it contained that sort of anomaly, although one presumes that it could have been amended in some other way. However, at that stage that was not ideologically possible in the Liberal Government's camp.

One presumes that by wanting to do away with the amount of money which the Government apparently will save, which is of the order of $100m, the people who are supporting the repeal of the assets test want to see families and individuals on low fixed incomes suffer from not being able to benefit from increased pension entitlements while others can go along blithely ripping off the system as they were able to do under the income-only means test. This presumably is in line with the attitude that some of the Liberals have to the application of an all-encompassing sales tax, including a tax on such things as the necessities of life. I refer to necessities which people on low fixed incomes and pensions have no choice but to buy but which take a significant percentage of their incomes. I do not know of a formula, and I have yet to hear from anybody else who does, which can be implemented to offset the damage of these purchases to people on pensions and low fixed incomes.

There seems to be no real compassion or concern in the minds of some people on this side of the House for the damage that can be done to low income earners when a government cannot afford to raise pensions because people who should not be entitled to a pension and who do not need a pension are in some way able to rip off the system and claim one. This is an attitude which has been expressed by several members of the Liberal Party-this apparent approval of the ripping off of the system. On the other hand, some of their colleagues take strong exception to this. I suggest that Senator Messner and Senator Walters go back and look at what one of their Liberal colleagues in another place said about the implementation of the assets test. The South Australian member for Mayo, Alexander Downer, in a widely reported article in the Australian of 9 June last year, headed 'Assets test ''shows courage'',' said:

The Government is absolutely right in introducing an assets test.

. . .

The Government has had the courage to address that issue.

. . .

This vast growth in the welfare bill by some 22 per cent a year has been a principal, if not the principal, cause of the quite alarming growth in Government outlays as a proportion of GDP and, correspondingly, in taxation as a proportion of GDP.

He went on to say:

If this problem is not addressed, future generations in the workforce will have to meet an ever-growing burden to maintain the current retirement policies.

Quite apart from the question of whether it is equitable for one generation to bear a greater burden for its aged population than earlier generations, we are concerned over the impact of this burden on the development of the Australian economy.

Evidence suggests that retirement policies may end up by diminishing considerably the economic performance of Australia, thereby reducing the overall welfare of all Australians.

If the Government is to opt for assets-based welfare for pensioners, it should be consistent and extend the principle throughout the social welfare area.

. . .

It would be folly, however, to reject the assets test outright, as it is the only avenue which leads to effective control over the spiralling costs of retirement policies.

I suggest that some of his colleagues in the Senate chamber think a little on that. Less than a year ago Mr Downer said:

It would be folly, however, to reject the assets test outright, as it is the only avenue which leads to effective control over the spiralling costs of retirement policies.

His opinion was shared by the Young Liberals who some weeks later slammed the Opposition stand on the assets test plan, saying that the Liberal Party's rejection of the assets test was 'unfortunate' and that 'middle class welfare will have a field day'. If that is not enough, we have the comments from members of the Confederation of Australian Industry and from Mr John Elliott, who praised the assets test in an article which appeared in the Australian Financial Review, in June 1984. I presume that these people are card-carrying members of the Liberal Party and members of the Party whose opinions carry some weight. Certainly John Elliott's do, and I would have thought that the very fact that not all members of the Liberal Party supported the repeal of the assets test was of some concern to members of this chamber.

These people all clearly realise that there are other ways of ending an anomalous situation than by throwing the baby out with the bath water. One way, of course, is simply to make an amendment where an amendment is possible if it is the Act itself which is causing problems. Another is to issue an instruction to departmental officials so that the Government's wishes are complied with rather than some fancy legal opinion that is dug up by enthusiastic members of the Department of Social Security and so that excessive evaluations are not undertaken by members of the Australian Taxation Office. Yet another way is to introduce some kind of review system. Review systems are not unknown. The Administrative Decisions (Judicial Review) Act establishes one such system. The Administrative Appeals Tribunal is another. It is possible to amend the Social Security Act to provide for the establishment of an assets test anomalies tribunal to consider claims for exemptions from the assets test on the basis of the test having an anomalous effect upon the claimant. This need not set a precedent for a whole class of cases. In fact, we have a tribunal in the Veterans' Affairs Department that considers exemptions.

The amendment would establish a tribunal and provide it with guidelines for the consideration of particular cases and for the making of determinations granting exemptions based on the principle, for example, that pensioners should not be deprived of their pensions where their ownership of assets does not confer the benefit such ownership would normally confer. That is an anomaly. That anomaly affects some people who own farmland which is not productive during a certain period. It affects people who reside in cottages for the aged or in nursing homes and who consequently do not have an asset. Those sorts of ways out of an anomalous situation ought to be considered before we leap into repealing an Act which will leave us right back where we started, with a situation that is clearly as anomalous as the previous income-only means test system.

Under the previous system people who had large sums of money could salt them away in non-income bearing deposits of one sort or another, live off the capital, and draw maximum pension and full fringe benefits, while people on fairly low incomes, often low fixed incomes, were not in that position of luxury. However, apparently that sort of anomaly does not concern the Opposition. It would prefer to go back to the old system than to sit with a system which large numbers of members of one of its own parties believe is far more just, far more equitable and far less anomalous than the situation which existed previously. With the sorts of alternatives available to them, I cannot understand how members of the Opposition can justify jeopardising the promised pension increases to all pensioners in order, apparently, to curry favour with a small section of their own constituency.

If members of the Opposition are seriously concerned about the impact of legislation on people, including wealthy people, how can they justify their past two years of support for certain money Bills and taxing measures and for their own Leader's statement that he intends to support capital gains taxes, death duties, wealth taxes and sales taxes in the same way that they supported changes to superannuation taxes and wine taxes simply, apparently, in order to give the current Prime Minister (Mr Hawke) enough rope to hang himself? The fact that it is also likely to financially hang a large number of other people in the community, including the Opposition's natural constituency, seems not to weigh with it. Worse, it would seem that some members of the Opposition would prefer to see millions of pensioners and children in low income families deprived of pension increases in order to get extra money for a few wealthy people who have been able to arrange their assets in order to qualify for a pension when it was income-only tested.

Senator Walters mentioned that the Government, by the assets test, was hurting only those who were most vulnerable and needy. I suggest that, by depriving the three-quarters of a million children who currently are living in families below the poverty line of a much needed increase by attempting to deprive the Government of its $100m savings, the Opposition is affecting an exceedingly vulnerable section of the community. However, the Opposition clearly is not interested in this aspect. I can assume only that is because it believes that it does not get any votes from that section of the community anyhow, so it does not matter.

Senator Messner indicated a concern earlier today in Question Time about what he saw as an unfortunate aspect of the assets test, that is, that access to property may need to be given to tax officials in order that they may value the property at a reasonable level and not put some highly inflated, city-based assessment on it when a quick viewing of the property would indicate that it was not worth that at all. I share much more the attitude of the pensioner groups to this kind of access. Their belief is that, as long as pensioners have the right to approve a request to visit and there is no invasion of privacy, there is nothing wrong with it. Certainly, Senator Messner's apparent outrage contrasts rather strongly with the sort of intrusion into people's homes that took place under the previous Government's income-only testing through what was fondly known then as 'the size 10 thong and bed-sniffing brigade', comprising officials from the Department who wandered into people's homes, particularly those of supporting mothers, to make sure that they were not having some uncalled for male company or getting some uncalled for male support that meant they were ripping off the social welfare system. I remind members of the Opposition that innumerable bounty Acts give rights of inspection that are positively horrendous and about which the Senate Standing Committee for the Scrutiny of Bills regularly complains. So the pensioner groups have a far more realistic and fairer attitude to the need for access, under certain circumstances, by departmental officials of one sort or another than Senator Messner seems to have.

That is not to say that we do not have a long way to go in the welfare sector and in providing assistance to people in need in their retirement, or even prior to it. We could start by looking at lifting the exempt income level. We could go on by having a look at what it really costs to support a child and raising the children's supplement to something nearer the cost that is borne by people in poverty who have children. We could look, a little more rationally and a little more genuinely than we have done at the need to implement a national superannuation scheme.

The fact is that successive governments over the last few decades have not done that at all. They have overlooked the fact that in 1938 legislation was passed and assented to but never proclaimed which would have solved this whole sorry mess if it had been implemented. That legislation went through with the full support of the Liberal Party and was promulgated by the then Senator Wilson, who was the father of one of my South Australian colleagues. Had we proceeded with that legislation, I venture to say that we would not be in the mess we are in now. We would not be arguing about whether means tests should be applied only to income or whether they should be applied to all other assets because a scheme would have been nicely in place whereby we had a universal system operating and those things all would have been irrelevant. The fact is that since the war, governments, Liberal or Labor, have done very little to look seriously at implementing a scheme of that sort.

It is neither my intention nor that of my Party to support the repeal of legislation which corrects serious anomalies which existed under a previous system and which would throw us right back into that anomalous system when there are other avenues of correction available to us. We have the Government's assurance that those anomalies which are brought forward of the sort that Senator Walters brought up today and of the sort that I brought up with the Minister some weeks ago regarding people on properties and people in aged cottages, respectively, will be looked at and corrected. If Senator Walters is correct that some officious departmental official slapped a $20,000 goodwill amount on somebody's property, I am appalled. I imagine that that is something that could be very readily corrected by a rocket to the person concerned. It is clearly not something that was ever intended under the Act. Senator Walters will at least acknowledge that fact. Such action is right outside the intention of the Act. There is no way that goodwill should be applied to something like that.

Senator Walters —Taxation does valuations, often well above government valuations.

Senator HAINES —That is precisely the sort of reason why there should be some opportunity for ministerial discretion or, better still since Ministers of one sort or another cannot always be relied upon, for some kind of tribunal or anomalies commission. That is certainly the way we prefer to go. We do not prefer to go from one reasonably anomaly free situation back to a highly anomalous incomes test only system.