Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard   

Previous Fragment    Next Fragment
Wednesday, 8 May 1985
Page: 1548


Senator MESSNER(5.03) —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, finally enacted in September 1984 and which came into operation on 21 March 1985.

The introduction of this test followed a long period of confusion within the Government which resulted in many changes and counter-changes to the initial scheme, culminating in the establishment of the Panel of Review into the proposed Incomes and Assets Test-the Gruen Panel-in February 1984 to report on the form which an appropriate assets test should take.

One indication of the Government's approach to this matter was that such a review was undertaken after, rather than before, an initial scheme was publicly announced.

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 purpose 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.

As I said when introducing a similar Bill earlier this year, the last eighteen months has witnessed widespread confusion and concern amongst pensioners and beneficiaries at the intrusiveness many unfair aspects and numerous anomalies contained in the assets test legislation. While many anomalies have been exposed they have not been corrected by the Government. Nor has there been any attempt by the Government to review these, notwithstanding there being brought to its attention by Opposition senators and members of the House of Representatives, by the media and the individuals concerned.

I remind honourable senators opposite that when foreshadowing the establishment of the Gruen Panel in February 1984, Mr Hawke admitted that the original legislation contained errors and anomalies. That legislation would have passed into legislation three months before that admission had it not been for the actions of the Liberal and National Parties.

Over the past two months the rate at which these anomalies-and the hardships and difficulties they have created-have come to public attention has increased markedly. This is especially true with regard to the test's impact on the rural community. Still there has been no response from the Government and in particular the Minister for Social Security, Brian Howe, MP.

Despite the increasing widespead dismay in the community and both the Prime Minister's and the Minister for Social Security's undertakings expressed in the course of the last several months, to review anomalies when raised, the fact of the matter is that the Government failed to take any action before the legislation took effect on 21 March 1985.

The long and sorry history of this legislation indicates that the Government has continuously refused or failed to act until pushed to the limit. Australians are once again faced with a similar situation.

As I outlined in February 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 Parliament.

In February I moved a similar measure to this one in the Senate. It was defeated in this chamber due to the combined vote of the ALP, Australian Democrats and Independent senators. The Opposition has now decided upon a new dual approach at abolishing the assets test.

The decision by the Opposition Parties to move to repeal was not taken lightly. The Liberal and National Parties are opposed to the assets test in principle 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 so 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. We want to remove the assets test legislation which is having such a dramatic effect upon Australian aged, especially those in the rural community.

From the outset, the Opposition has 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 affected. Of late the Government has once again trotted out its 'millionaires' argument in favour of the test. It announced that 12 millionaires have been caught by the test. I simply pose one question: at what price to the taxpayer and to other pensioners and beneficiaries has such satisfaction been gained?

Some examples of anomalies arising out of the operation of the test 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 couple's 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, is required to move to a nursing home or an aged person's cottage, who realises a considerable sum of money in excess of the exemptions 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 principle place of residence for the purpose 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 principle 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. Their plan has usually been that they will take it over to continue the operation but are unable to afford the payments to the parents because of the low rate of return on such properties. Due to 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 of 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. The fact is that this scheme is a defacto system of death duties.

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 the 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.

The extent of the hardship ruse on farmers became clear during the hearings of Senate Estimates Committee B last month. Despite continuing Government claims that the hardship provisions will protect farmers experiencing difficulties and hardship under the test, only 23 applications out of 1260 had been successful by 4 April 1985.

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.

I would like to pay further particular attention to the plight of the farmers and the rural community under the assets test.

Following the release of statistics to the Government's primary industry caucus committee-and their subsequent reporting in the media-the claims by members of the Opposition and farming and rural groups that the test is discriminatory have been substantiated.

Those statistics revealed the effect upon pensioners of the introduction of the assets test throughout the State of Victoria.

Horsham* 8.3 Dandenong 2.1 Hamilton* 6.8 Geelong* 1.9 Wangaratta* 6.1 Oakleigh 1.9 Swan Hill* 5.8 Ringwood 1.9 Camberwell* 5.7 Greensborough 1.8 Warrnambool* 5.5 Werribee 1.8 Sale* 4.9 Cheltenham 1.6 Shepparton* 4.6 Moonee Ponds 1.5 Morwell* 4.4 Boronia 1.4 Bendigo* 4.1 Preston 1.2 Belmont* 4.0 Northcote 1.1 Caulfield 4.0 Coburg 1.0 Prahan 4.0 Lalor 0.9 St Kilda 3.1 Springvale 0.8 Wendouree* 3.0 Footscray 0.8 Box Hill 2.8 Newport 0.8 Mildura* 2.7 Richmond 0.7 Heidelberg 2.4 Glenroy 0.7 Peninsula 2.4 Fitzroy 0.6 Ballarat 2.3 Sunshine 0.4 Knox 2.2 St Albans 0.3

(* indicates rural area)

I draw attention to the fact that the greatest impact has been upon the rural areas. I am concerned that similar figures I have requested for the whole of Australia will show a similar trend. Figures provided last week to the Liberal Member for Flinders (Mr Peter Reith MP) show a variation on impact in his electorate with the greatest effect being upon people living in rural areas of Flinders.

The growing dissatisfaction with this obvious bias has resulted in ALP members representing rural electorates starting to voice their alleged concern. A survey of Government MPs by the Melbourne Herald revealed 22 members wanting changes to the assets test to give a fair deal to pensioners in country areas.

These Government members involved included:

Barry Cunningham-McMillan, Vic. Chairman, Caucus Committee on Primary Industry.

Ted Lindsay-Herbert, Qld.

Steve Martin-Macarthur, N.S.W.

Keith Wright-Capricornia, Qld.

Michael Lee-Dobell, N.S.W.

Eric Fitzgibbon-Hunter, N.S.W.

Peter Cleeland-McEwen, Vic.

John Gayler-Leichhardt, Qld.

John Brumby-Bendigo, Vic.

If those members, purporting to represent rural areas, really had the interests of their constituents at heart why didn't they speak up or act last year before the test was enacted in order to avoid the current hardships and difficulties? It is all too easy for them to come out now, and the question must be posed: what has prompted their sudden conversion, their constituents or their own electoral prospects?

Despite growing unrest-allegedly including Government ranks-the Minister for Social Security remains unmoved. When confronted with the results of the Herald's survey and asked if it revealed an anomaly in the test, Mr Howe is reported to have said: ''I'm not sure I would call it an anomaly.''

When further pressed as to his backbench colleagues' views that the test needed 'fine-tuning', he is reported to have stated:

''The Prime Minister has given a commitment that the assets test will be monitored. In a sense we are still in the early stages. There are still further stages of appeal which have yet to be used, but we would certainly do fine tuning if, in the end, it was clear it was needed.''

Such optimism does not sit well with the history of the Government's-or the Minister's-actions when directly confronted with anomalies.

Mr Howe has been quick to criticise both the media and members of the Opposition who have highlighted the plight of farmers and others under the assets test. But what did he expect? Is he finding the human face of the assets test all so different from the statistical model upon which it was based. If that is the case then the Minister has been naive; that naivety should not prevent him from moving to assist those people who have been caught in the net of this test.

Australia's rural community is angry about the assets test-and rightly so. It has begun to give notice of its concern.

Last month at the small South Australian town of Penola, 600 farmers came together to plan a rally to protest the impact of the assets test on them and their families.

Despite invitations to attend, the Ministers for Social Security, Veterans' Affairs and Primary Industry and the Chairman of Labor's Primary Industry Caucus Committee were notable by their absence.

The main motion passed by that meeting called upon the Hawke Government to reinstate all pensions until the assets test was either made more equitable or scrapped altogether.

A further insight of the Government's approach and attitude to the rural sector-and all the more interesting given his later public statement-was an incident involving Mr Cunningham.

According to the Border Watch newspaper, when Mr Cunningham was approached to attend the Penola meeting in his capacity as Chairman of Labor's Primary Industry Caucus Committee, he launched into what can only be described as a tirade against Australia's farming community.

The article reported Mr Cunningham as saying that if farmers were experiencing difficulties it was their own fault because they did not have their affairs in order. Further he suggested that farmers had been 'diddling' the tax system for years and now expected the Government to pay rent to pensioners on farms which a son operates.

Mr Cunningham subsequently took exception with the report in the other place and wrote to the Border Watch demanding-I use his own wording-an apology. The Border Watch has not done this and Mr Kelly Carter has issued a statutory declaration substantiating his conversation with Mr Cunningham.

I shall lodge a copy of that Statutory declaration in the Records Office this afternoon.

This is the type of attitude that permeates this Government. The rural community feels betrayed by this Government-and Government members-who have such little regard for their interest and their contribution to this nation. This discriminatory attitude exists despite Mr Hawke's claim in 1984 that his would be a Government for all Australians.

If the Parliament once again neglects its responsibilities in this regard, it is condemning to considerable hardship people who, in their declining years, are unable to cope with either the rate of change or the details and technicalities of it. As the Government continues to fail to act, it is the view of the Liberal and National Parties that the Parliament-through this Bill-must initiate action. I commend this Bill to the Senate.

Debate (on motion by Senator Grimes) adjourned.