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Tuesday, 3 May 1994
Page: 64

Senator TROETH —I seek leave to speak on the government response to the report of the Senate Standing Committee on Community Affairs.

Leave granted.

Senator TROETH —I thank the Senate for its indulgence. I am a member of the Senate Standing Committee on Community Affairs which looked at the effects of the proposed treatment of capital gains and losses on listed securities under income tests for pensioners. The committee report made several recommendations, and I would like to comment on the government response. Firstly, the committee recommended that the implementation of this measure be postponed until June 1994. The reason why we made this recommendation was that it was necessary to allow pensioners to settle their affairs.

  The Senate should realise that there have been constant changes, including changes in emphasis, in this legislation and it has been extremely confusing for older people who need to budget carefully for the remaining years of their lives. The last thing they need to do is worry about whether their income will be adjusted according to the movement of their shares. It is important to realise that we are not talking about millionaires; we are talking about those pensioners and part pensioners who derive the other part of their income from shares. It is extremely destabilising for those ill or disabled people who have no-one to help them manage their financial affairs to be subjected to this stress. The government has not accommodated the committee's request that the implementation of this measure be postponed until June 1994. I think it is a great pity that the government has not seen fit to do this.

  In relation to recommendation 2, that the review be undertaken, it is good that the government decided to have the review of the assets and income test. However, I draw the government's attention to the idea of effective accountable administration. That comes from the terms of reference of the pension incomes and assets test strategic review. When the committee looked at the way in which this measure was going to be implemented, we were extremely concerned that a quarterly review of pensioners' incomes would lead to a need for more staff in the department. Ultimately, the need for more staff and the proposed blow-out in the budget could defeat the objective of saving money. So one measure could very well counterbalance the other.

  Recommendation 3 is that the review report its findings to parliament in April 1994. We were advised that it was not possible to report to parliament by April 1994. The review's final report is expected by September 1994. It is a great pity that the report is to be delayed until September 1994. Given that the changes were announced in September 1993, and given the weight of opinion against the change in any case, this delay simply means that there is further confusion and chaos for the pensioners who are involved. I point out that the Senate standing committee received 200 submissions from interested groups, and all of the groups were against the changes in the first place. To impose a further period of delay and uncertainty over the way people's incomes are to be assessed can only cause concern to many people.

  Recommendation 4 is that there is to be a review of the evaluation of the cost-effectiveness of the minor income adjustment. This means that the benefit to the client and the accuracy of assessment will be looked at. As I said, given the fact that there is to be a quarterly review, one can only hope that this is looked at very carefully. However, the coalition's concerns, which were contained in our dissenting report as an addendum to the additional report, still remain. The savings are based on poor quality data and an excessively high rate of return has been calculated which would give an artificial view of the way in which people's incomes would rise or fall. Also there is an assumption that the growth in investments will be maintained.

  At the time that this legislation was mooted, the share market had reached a very high point. To imagine that that growth in investments would be maintained is, in my view, erroneous. The measure is still totally unfair to those older people who have made a genuine attempt to save to provide incomes in the later years of their lives. In the coalition's view, the net result of this measure can only make more citizens dependent on the pension. Therefore, it will defeat the objective of the legislation in the first place.

  Debate resumed.