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Wednesday, 8 June 1994
Page: 1538


Senator SCHACHT (Minister for Small Business, Customs and Construction) (6.12 p.m.) —The government does not accept the request for an amendment which would have the effect of virtually removing the application of the assets test from Austudy. It is totally extraneous of the subject matter of the bill, which relates to matters such as better benefits control measures on a legislative basis for Abstudy and the assistance for isolated children scheme. The opposition claims to support these measures but is apparently prepared to put them at risk by introducing an additional provision which it knows must be unacceptable to the government—and it certainly is unacceptable to the government.

  The matter of the health care card provision has already been extensively aired both in this chamber and in the House of Representatives. An error in publicity material led some students to obtain Austudy on the strength of their parents or spouse holding a health care card without the application of an assets test. Staff in the department's student assistance centre have been advised of this and the affected clients are being contacted by mail.   Eligible students whose parents have a health care card will be able to receive Austudy until their parents' current card expires. Only then will payments stop where family assets exceed the Austudy limits. This should ensure that students whose parents have health care cards are treated equitably.

  The Attorney-General's Department has been instructed to draft an amendment to the Austudy regulations to ensure that students paid Austudy because a parent or spouse held a health care card and who subsequently will lose their entitlement when an assets test is applied will not have an overpayment raised against them. So we are being extremely generous and fair to those who have the—


Senator Teague —Have you tabled this?


Senator SCHACHT —I am reading it out and putting it in Hansard.


Senator Teague —Have you tabled the new regulation?


Senator SCHACHT —Of course we have not because, as I just said, the regulations are being drafted. On the question of students receiving benefits contrary to the Austudy legislation, legal advice has been given by the Attorney-General's Department that payments made on the strength of a health care card have not been contrary to the Austudy legislation. There is no evidence that any significant numbers of families were expecting to receive benefits and have been disadvantaged. Only a handful of families who received Austudy initially because of holding a health care card have so far had to be assessed on expiry of the card because of their assets. These are families whose assets generally have a net market value in excess of $700,000.

  However, now that the opposition has given the matter a great deal of publicity—aided and abetted of course by the Australian Democrats—if the government were to agree to waiver the assets test for health care cardholders, it could be expected that many asset rich but income poor persons, not necessarily primary producers but other business people with successful tax minimisation strategies, would obtain a health care card for the sole purpose of qualifying for a student assistance payment.  The cost of this has been estimated by the government as being in excess of $10 million a year.

  A couple of political points have been made here that cannot be ignored. Those opposite—not the Democrats—have attacked this government for not reducing the budget deficit as much as they would have liked. They wanted it to be below $10 billion. They are always screaming, `Cut government expenditure, reduce taxation and balance the budget.' That is their economic policy. But in this isolated case they are screaming that they want another $10 million to be spent when, at the macro level, they are arguing that they want the deficit reduced further, they want government spending cut. But they, as a permanent opposition, are never willing to indicate where that expenditure should be cut.

  Those opposite cannot have it both ways. They cannot scream out for fiscal rectitude by reducing the deficit and then, in every individual case in which they see an advantage by providing some political opportunity for a political sectional group in the community, claim that they want to spend more money on that group. One reason why those opposite have been in opposition for 11 years is that they cannot work out the overall macro picture and explain why macro settings have to be right and, in particular, how we can reduce the deficit at the same time as wanting to increase expenditure for every pressure group that turns up to curry favour for themselves.

  The second point is about the health care card itself. As I have just said, there are people out there who will work out a way to what I would call rort it. The health care card is made available to people, as I understand it, whose income during a period of one month reaches a certain low level, and they can get six months benefit from the health care card.


Senator Herron —Thirty per cent of the population is on health care cards.


Senator SCHACHT —Okay. Once people get a health care card, it provides them with financial benefits, such as access to medical benefits, the pharmaceutical scheme and so on. For anyone who gets it, it may add up to a few hundred dollars benefit at the most per annum. But as a result of that health care card, people can get hold of the Austudy allowance—for those who come from rural areas in particular, that includes the living away from home allowance—a $6,000 a year benefit. That will be attractive to some people. They might get their smart accountant to work out a way to minimise their income for one month of the year to get the health care card, knowing that once they get it they can then get an Austudy allowance worth $6,000 a year. That is something a lot of people would find very attractive. We would find that people with incomes and assets way above $700,000 could fix their affairs for one month to get that benefit.

  I know that the new leadership of the Liberal Party does reflect the squattocracy of Australia with large assets. I am sure that smart accountants for Mr McLachlan, Mr Downer and others could work out a way that for one month of the year no wool, wheat or beef cheque would arrive. They would be able to show that they are eligible for a health care card and could then claim an Austudy allowance of $6,000 a year. If they have three or four kids between the ages eligible for Austudy for education purposes, they may be looking at three or four times $6,000—that is, $18,000 or $24,000 a year. That will be attractive to some people who think it is smart to rort the system and the government and to do other taxpayers in. That is what can happen, and the government is not taking that lightly.


Senator Herron —You are the experts!


Senator SCHACHT —No, we are not taking that lightly.

I know that Senator Herron may have many friends of his ilk in the AMA, doctors who have a primary producing property somewhere in the bush who are still living down near Collins Street or wherever, who would be able to work out a way to minimise their income for one month to get a health care card so that two or three of their kids could get Austudy amounting to several thousands of dollars a year. That is what we are on about, and that is what we are trying to stop.

  We have admitted that a mistake was made in the bureaucracy, and we made that very clear. Minister Free has acknowledged that mistake. It was not in any way related to the decision in the budget; it was an administrative mistake. A number of people got through the loophole or the mistake and they have got the benefit. But what Senator Teague now wants to do is cement that loophole into the structure for ever and a day. This government is not going to be in that, and we will oppose it.

  I have to say that this bill contains a number of provisions that provide benefits elsewhere. If the Senate majority here insists on this, the bill will lapse and it will be on the opposition's head that the other benefits in this bill will not be able to be provided. Those opposite should make up their minds on that. We think we have been extremely reasonable.

  In my short time representing the ministers for schools—Minister Free and Minister Crean—we have always listened to amendments from the opposition, the Democrats and others, and we have amended other bills. We have accepted them in discussions coming out of estimates committees, Senate legislative committees and so on. We have not been unreasonable in accepting decent amendments from the opposition. But this is not one that we can accept, because an unfortunate bureaucratic mistake is being entrenched into legislation to give people, who do not deserve to have the benefit, access to it. I have to say to Senator Teague, who made an impassioned plea, and to others from the National Party—


Senator Teague —You should come and join us over here, Chris.


Senator SCHACHT —that because of my background on the farm many years ago I should have an extra understanding. I do have an extra understanding.


Senator Bell —That's right. The McGauran Pastoral Company.


Senator SCHACHT —That is right. I do have an extra understanding, because I grew up on a very modest farm and on a very modest income, unlike the McGauran Pastoral Company or the squattocracy in the Liberal Party from South Australia. I want to say that most of the farms that I know of where I came from would not be worth $700,000 in net assets, so the farmers on those properties—the soldier settlers—would be eligible. The McGauran Pastoral Company owns many tens of thousands of acres of Gippsland and is not eligible, and should never be eligible, because of the assets that it owns.


Senator Teague —No-one is claiming it is.


Senator SCHACHT —Yes, but under the provision you have provided, if Mr McGauran, the two McGauran brothers and their family—


Senator Teague —That is a long bow.


Senator SCHACHT —No. Senator Teague knows what accountants are like. He knows how they devised all the bottom of the harbour schemes and everything else which the opposition said was a long bow and could never happen, but they worked it out. If they had put as much energy into doing something constructive for Australia in the 1970s and 1980s the economy would have been a lot better off. But it is possible.

  I also want to make the point that there are many people in Australia who live in low income areas in the cities whose net assets—even if they own their modest houses—come nowhere near $700,000. Their income is of the median level within the community, so they would not be eligible for Austudy. They would never be eligible because they do not get a health care card—and they do not have access to smart lawyers and smart accountants. They will not get the benefit of this. A selected few will get the benefit, and the selected few are very wealthy. I do not think that inequity is something that can be tolerated. The government is not going to accept the amendment. We will oppose the amendment, and we will call a division on it.