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Thursday, 16 May 1985
Page: 2083

Senator MESSNER(3.55) —In winding up the debate for the Opposition on the second reading of the Social Security (Abolition of Assets Test) Bill 1985 (No. 2), which seeks the abolition of the assets test on pensions, I am afraid that I cannot thank those honourable senators who have taken part in the debate for their contributions. I am sure that honourable senators are aghast at that. First of all I would like to deal with some of the remarks made by Senator Haines. She moved an amendment which gives her a way of sliding out of her responsibilities on this matter; it is obviously just a matter of having two bob each way. She based her argument on how the Opposition apparently has been misleading people by claiming that when this Bill passes the Senate the pensions test will be abolished. I suppose that it is only the Australian Democrats who would accept that kind of idea. Indeed, no person I have ever dealt with in the rural community, or in any other respect--

Senator Mason —Why are you carrying out this exercise?

Senator MESSNER —I will come to that. I made this point quite clear to Senator Mason's party in other debates on this matter. Obviously there will not be any magical conclusion to this matter. Our problem is getting the Government to act. That is where the Australian Democrats are not facing up to their responsibilities. They have refused to act in cases brought forward in this chamber and by the media. The Democrats refuse to do anything about it. Twenty-two Government members of parliament have stood up and said that the assets test is wrong. They have taken the matter to their own Caucus and been refused, apparently, any action by the Government. It remains for this Parliament, through the Senate-the only place it can be done-and for the Democrats to support a motion of abolition in such a way as to allow us to force the Government to meet its responsibilities. That is the reason-not the Democrats' puerile thinking. This is the kind of situation which I believe we are obliged to face up to as members of parliament.

This issue is one of very broad and great concern in the community. I hope that even the Democrats can see that. Let me deal with a few of the matters which the Minister for Community Services (Senator Grimes) raised. For instance, he talked about the 12 millionaires caught along with the 70,000 other pensioners in the course of the application of the assets test. He claimed that that was a great achievement. Of course those 12 millionaires will surrender a pension which totals $50,000 extra for the revenue. That would amount to an extra 1.5c each week for every pensioner in Australia, if it were distributed. So much for that argument.

Senator Grimes talked blithely about those people with several hundreds of thousands of dollars, or even millions of dollars sitting in bank accounts. He referred in that context to my speech on the second reading when I made the point that if a small businessman sells his business for $100,000 then because he, in one form or another, receives that $100,000 he is excluded from the pension. The point I make to the Government, the point it consistently refuses to acknowledge, is that when a person sells his farm or business he does not automatically get payment in cash. Payment does not come in the form of money that can be invested in another way or put in a bank account. Most people who sell their businesses or farms have to do so on very long term credit arrangements.

The conversion of a business or a piece of land-which is hard to liquefy; hard to convert into cash-into another form becomes an asset for the purposes of the assets test. It is illiquid and difficult to obtain cash from and consequently leads to the kinds of situations that are so manifest in the community today. People may have very low incomes even though they may have substantial paper assets. For example, sons could owe debts, other members of the family could owe debts resulting from the purchase of a business, or people could be buying a business or farm on credit but, because of their low income, they find themselves unable to stay alive.

Consider the farm situation as an example. This year the average farm income is $9,000. That is less than half of the average weekly earnings available today to a wage earner in Australia. Yet a farmer is expected to pay off the debt on his property, continue to run his business and keep his family alive all on $9,000. That is a situation which this Government refuses to acknowledge and ought to be changed. It will not come good. Senator Haines refers to it as an anomaly. I think it is gross discrimination because it challenges directly the farmer, or small businessman as the case may be, in such a way that his income is reduced substantially by his commitment to his capital asset. That is the core of our argument on this matter. We are not talking about people who are rich in terms of money that they can easily draw upon; we are talking about people who are relatively low income earners but, because of the valuations of properties that this Government applies to land and other assets, they find themselves in a situation where they cannot exist off the level of income that that asset generates. That is the core of the problem. I do not know when the Government will face up to its responsibilities in this matter. Today we had a first class opportunity for the Australian Democrats to join the Opposition in moving to put maximum pressure on the Government to achieve the abolition of the assets test.

If there is any doubt that there is very substantial concern in the community about this matter one has to look only at the numbers of signatures on petitions that have been brought into this chamber and the House of Representatives. Petitions are continuing to flow in. Every member of parliament would have received representations from those in the community who are clearly being severely discriminated against and disadvantaged by this legislation. By introducing the assets test there can be no particular group that this Government has singled out for more attention than the rural community. Clearly it is rural people who will suffer most and who are suffering most.

Today Senator Grimes brought forward particular issues and examples. I could counter them by bringing forward examples of the exact opposite, individual cases which would rend his heart, I hope, in the same circumstances in which he sought to rend ours. However, that would not profit the argument much because I know that he appreciates that these cases are prevalent and numerous in the community. So let us look at the Minister's defence as to why he has sought to continue this outrageous, most discriminatory attack on country people. Senator Grimes has said on the one hand: 'We are prepared to consider hardship. We are prepared to consider the case of a person who cannot draw upon his assets, cannot turn them into cash and we will provide a means by which individuals can go to the Department of Social Security and demonstrate that they are in need and so obtain a pension'. That sounds fine. I refer to a Commonwealth Record article of 15-21 October 1984, during the election campaign, in which the Minister so kindly pointed out:

Farmers will not be forced to sell their farms as a result of the assets test. The Government has explicitly recognised the special position of farmers and has included a number of special provisions in the test to ensure that it operates fairly in relation to them.

Let us see how fair that is. Recently in an Estimates committee debate the Minister acknowledged that 1,263 cases were lodged under the hardship provisions of the legislation but only 25 have been granted-25 out of the 1,263. That shows how fairly the Government is looking at cases under the hardship provisions. And is it any wonder? Under the hardship provisions the requirement is that a person can have assets of no more than $5,000. Even a person with a television set, a refrigerator, a stove and a house would have little more that $5,000 so automatically he is scrubbed out of the hardship provisions in this legislation. For that reason this provision is inoperative; it does not help the people in greatest need in rural communities.

The other great joy that farmers have under the assets test is to apply for a pension under the so-called pay as you die scheme or the pension loans scheme. I can report to the Minister that there is very widespread suspicion of this scheme in the rural community. People have an absolute horror of getting themselves involved in those kinds of schemes. Let us look at the provisions of this. Time and again the exact points have been brought to the attention of the Minister and he has refused to acknowledge them. However, let us look at them.

If a person wishes to draw a pension during his retirement years he can do so by signing over a mortgage on the property to the Government. Eventually, upon the death of that person, the Government can sell the property, repay the loan which has accumulated over the period in which the pension has been drawn and charge interest on a compound basis at the rate of 13.5 per cent. If a person retires at, say, age 65 and lives until he is 78, which is about the average life expectancy today, the amount of debt that would have accumulated under the scheme would be about a quarter of a million dollars. If that person lives until he is aged 95 he will owe the Government about $1.97m. The point of the exercise is this: Sooner or later the family farm will have to be sold and the proceeds paid to the Government. The farm will not be transferred to the next generation of that family. The point that has to be made is that under that loan scheme it takes relatively little time for the amount owed to come to a quarter of a million dollars. Of course that would virtually wipe out most of the smaller properties in Australia at present.

Let us look at the other catch-22 situation that exists even with that most generous scheme, as the Government describes it. If between 1 June 1984 and now a farmer decided to transfer the property to his son in his normal way, so that he could continue the business into the next generation and so that the retiring farmer could do some part time work and earn a little extra income, supplemented by the pension, because the property was transferred legally and the transfer registered in the land titles office, the retiring farmer has no legal ownership to the property and, as a result, cannot give a mortgage to the Government to get the pension under the pension loans scheme. The Government refuses to acknowledge that very severe anomaly. It will not even acknowledge that it exists and that it is a particular problem in the rural community. I say to the Government that the very existence of this problem prevents people undertaking the normal operations within their retirement years of transferring their asset to their sons so that they can obtain a little extra income, supplemented by the pension, an asset which the son has taken the greater responsibility for and so keep the asset running into the future. That becomes a very severe problem to that particular group and destroys the basic premise upon which much of Australia has been built over the many generations that we have been going in this country.

Farmers, of course, are a prime example, but similar arguments apply to those in small business and those who are accumulators of modest savings. This Government is seeking to cheat them out of their savings by removing their eligibility for a pension. Although they have paid their taxes all their working lives, they will be unable to qualify for the pension. If that is not discriminatory, I do not know what is. It is a clear example of how this Government is attacking those in the community who are seeking to do the most for themselves in order to take themselves off the Government pension payroll in the longer run. The point that the Minister continually fails to acknowledge is the basic argument that the Government's scheme of assets testing of pensions makes people more dependent upon the government in the long run, whereas the Opposition's approach to the system of retirement income is to make people independent of government by encouraging them to look after themselves. That is the basis of our argument; it is the core of it, and taking the long run view, it is obviously the only way for any government to approach the problem of social security in the retirement income area. Let us examine that statement. The Government makes great play of its belief that somehow in the year 2015 we are going to have pensioners literally dropping in the streets. They are going to be so thick on the ground that we are not going to be able to look after them adequately and the only way we will be able to look after them adequately is by cutting back on the pension now!

Senator Grimes —I did not say that.

Senator MESSNER —Of course the Minister did. The situation is that the Government has been using it as the basis for its attack on pensions under the assets test since it first introduced it, and Senator Grimes knows that.

Senator Grimes —Quote me once.

Senator MESSNER —It is in the Minister's second reading speech on the original legislation. The point that I would like to make about this is that if the Government is really serious about changing the impact of the cost of retirement income in the future-bear in mind that if we take a benchmark of the year 2015 we still have 30 years to do something about this-what we should be trying to do is to encourage as many people as possible to save for their own futures so that they become independent by the time they are due to retire beyond the year 2015. Is that not the point? Is that not the way that policy should be directed?

Senator Grimes —No.

Senator MESSNER —The Minister is apparently not in favour of occupational superannuation, which is the basis upon which we would develop an alternative system and a matter which this Government apparently refuses to address. Let us turn then to some of the other outstanding anomalies in the legislation which this Bill seeks to abolish. The Government has made much of the fact that there have been savings of, firstly, $50m, then $100m and now I notice we are being quoted $140m, in the pension assets test. I understand that the number of people now affected is over 70,000. That being so, let us just consider that a $140m saving is. The Minister makes the point that some people on supplementary benefits may be assisted, but the Government's chief commitment to the assistance of pensioners, as claimed in the election campaign before the 1983 election and before last year's election, is to build the pension up to 25 per cent of average weekly earnings. The cost of doing that is over $1,200m. For all the strife that the Government has set the people of Australia to over the assets test, we are going to realise, at the very most, only about 10 per cent of that particular figure. It will realise 10 per cent-a minor amount of money-in seeking to achieve that objective. Consequently, we wonder to what extent that is a real figure anyway because when one considers the situation of small farmers-and I am not talking about rich people at all; I am talking about the average small farmer-who may have a property, which cannot be eaten, and which, on paper, is worth $200,000-

Senator Grimes —But the money can be used to eat.

Senator MESSNER —If they sell the property, but the Government said it was not going to force farmers to sell their properties.

Senator Grimes —Why don't they-

Senator MESSNER —Senator Grimes is now advocating that farmers sell their properties.

Senator Grimes —No, why don't they take a loan out on it?

Senator MESSNER —I explained why they cannot because the Government's system in the main prevents people from doing that and following their normal provisions. I only wish the Government would address its mind to the real issues sometimes; it might then understand. As to the amount of money that is going to come in from the assets test, the Minister is apparently not going to meet his obligation towards boosting the pension up to 25 per cent of average weekly earnings. I suppose that we cannot expect that the Government will, in its present state of mind of seeking to reduce the outlays on the Budget.

Senator Grimes —Don't back it in, cobber.

Senator MESSNER —'Don't back it in', the Minister says. I wish he would always be a little bit more on the record about these things so that we could indeed make sure that he does fulfil his promises. The point about it is that those claims by the Government that there would be substantial gains from very rich people are indeed illusory. It is the battlers, the little people who have paper assets who are being hurt the most by this assets test at the present time.

Senator Grimes —I wish I had paper assets of 250,000 smackers.

Senator MESSNER —I can join with the Minister in agreeing with that. I think the Minister with his parliamentary superannuation would be far better off than any farmer with his paper assets.

Senator Grimes —I will get the assets test though.

Senator MESSNER —So will they.

Senator Grimes —Tony will abolish it and I'll be rich. I will get the pension too.

Senator MESSNER —But I thought that the Minister's Government had already fixed that by changing the parliamentary superannuation rules. With all the by-play, the point remains-and I want to make this extremely clear, even to the Minister-that it is not the very wealthy people who are being affected. In fact, the people who make up the excess over the 12 millionaires who are included in that total number of 70,000 who are losing pensions or part of them, represent a very wide section of this community, but there can be no doubt that the greatest part of that total are those people from the country areas. That, of course, is where the discrimination occurs. We only have to look at the Social Security Department figures for Victoria to see that in Horsham, for instance, 8.3 per cent of pensioners have lost their pensions. The figure for Wangaratta is 6.1 per cent, for Warrnambool 5.5 per cent and so on. A comparison can be made with those who live in suburbs of Melbourne such as Springvale where 0.8 per cent have lost their pension and Northcote where the figure is 1.1 per cent. This indicates that the burden is falling most heavily on those who live in country areas.

Senator Grimes —What about Toorak? Try Toorak.

Senator MESSNER —The major discrimination resides in the very point the Minister made about Toorak. Under this man's assets test a person can live in the suburb of Toorak with a $1m house and get a pension-

Senator Grimes —How does he pay the rates? How does he pay the maintenance?

Senator MESSNER —If the Minister ever cared to listen to the problems he might understand what the real people are thinking about. The point is that farmers of moderate means cannot get the pension because of the inflated value of their properties, which I point out that they cannot eat. Those properties might be worth a maximum of $200,000, which is only a fifth of the value of properties held by persons living in Toorak. That is where the discrimination lies, and the Minister knows it. Why does he not do something about it? We have been forced to go to the lengths we have to seek to abolish this Bill in order to force the Government to face up to its responsibilities.

I do not know how we can ever force the Australian Democrats to meet their responsibilities because they do not know what the word 'responsibility' means. They are always two bob each way merchants. All they are seeking to do is to ride as best they can on the issue and try to obtain support from little pockets and little groups in the community. They seek to build up their constituency to 10 per cent or thereabouts so that they can somehow put up some kind of fight at the next election. That is all they are doing. But try asking them to take responsibility for their actions. They will never stand up in this place and attack the Government when it really counts. Senator Grimes would cringe from the sharp-pointed-toed shoe of Senator Haines if she ever got going. The point is that if she ever had the courage of her convictions to stand up in this place and support the Opposition and put maximum pressure on the Government we might get somewhere and the Government might take some action to assist the farmers and the small business people in the community who are mostly affected.

I make one final point. There is a very simple issue at stake here. Obviously it is in the best interests of the nation to encourage people to seek, through modest enterprise, to look after themselves during their working lives and to save towards their future by working hard and building up assets in their own names. That is where the Liberal and National parties stand. It is not where the Democrats and the Australian Labor Party stand. It is that section of the community which is being so devastated by this assets test. It is retrospective in its effect because it hits people who have already planned for their futures and have accumulated savings in the way in which we have described. That is what this legislation is all about. It is why the Opposition has taken such a strong stand on this issue. It is why we are seeking to have the Government's legislation withdrawn. If Senator Haines cannot see the logic of why we need to put maximum pressure on the Government, I believe that she should not be in this place. The fact is that she fails to understand how the parliamentary system operates and, indeed, how the political system ought to operate.

I urge honourable senators on all sides, especially those on the Labor Party benches who I know have some spirit within them on this matter and who are very concerned about the future, to support the Opposition. I see that Senator Crowley has come into the chamber to vote with the Opposition on this matter. We need a lot of Labor senators to cross the floor and vote with us because we can no longer rely on the Democrats. I hope that all honourable senators will see the logic of the Opposition's argument and seek to relieve the hardship which is so obvious, not only in the rural community but also certainly throughout the whole of the Australian community, and which is being caused by this Government's heartless action over the assets test.

The DEPUTY PRESIDENT —The question is: That the words proposed to be omitted by Senator Haines's amendment, be omitted.

Question resolved in the affirmative.

The DEPUTY PRESIDENT —The question now is: That the words proposed to be inserted by Senator Haines's amendment be inserted.