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Wednesday, 22 June 1994
Page: 1841

Senator PATTERSON (11.50 a.m.) —The first measure in the Social Security Legislation Amendment Bill (No. 2) that we are debating this morning is the disability wage supplement. This was a 1993 budget initiative, ostensibly designed to assist people with disabilities to enter the work force. As the Minister for the Environment, Sport and Territories (Senator Faulkner) said in the second reading speech, some people with disabilities are unable to find jobs in the open labour market because their disability prevents them from being able to do the job to the level expected of some people without disabilities and, under the existing award wage system, they have to be paid full award wages.

  The disability wage supplement will be introduced from 1 July 1994 and will provide that disabled persons may be paid less than the award wage based on their productivity compared with a person in the same occupation who does not have such a disability. The disability wage supplement will be available at the same rates applicable to disability support pensioners and will be subject to similar rules, including the income and assets test. As a result, income earned under the supported wage system by a disability wage supplement client will count as income for the purposes of determining a rate of disability wage supplement.

  The coalition will not oppose this provision. However, we are concerned that there is a level of confusion and misunderstanding about the supported wage system on the part of peak disability groups, people with disabilities and the businesses which will employ people with disabilities. These measures will create a substantial saving for the government estimated at $4.49 million over three years from savings to the Department of Social Security. The agenda appears to be not so much concerned with the placement of the disabled in the work force but with improvements to be made in the government's budget. It would also appear that it is not much more than a pilot scheme since it affects only about 1,000 people in 1994-95: there are only 1,000 places available. There are plans to increase the 1,000 placements every fiscal year thereafter, but it would appear that the government has not allocated funds in forward estimates. I would therefore question the ability to fund an ongoing program.

  The disability sector has raised a number of concerns with the coalition, and I would like to outline a couple of those. Many groups working with the employment of people with disabilities have expressed concern regarding the supported wage system. To begin with, this measure increases the distinction between those with disabilities and other workers, and concerns have been raised that a supported wage system is discriminatory in that people with disabilities are subject to an annual assessment for part payment of an award wage while other employees on a full award wage are not subject to similar productivity assessment.

  There is also some anxiety amongst employer groups that those selected for this program will lose their right to self-determination. There is also concern about the need for specific and ongoing training for accredited assessors both within the Commonwealth rehabilitation service and within employment services and the non-government sector. There have also been concerns expressed about the cumbersome and bureaucratic nature of the placing of 1,000 people in supported employment. There will be costs involved with a substantial increase in staff, as well as the cost of employing a team of assessors, some of whom will have to undergo special training.

  In addition, questions have to be raised regarding the efficiency of the program with the Department of Social Security administering the disability wage supplement and the Department of Human Services and Health administering the accreditation assessment and payments to business. Madam Acting Deputy President, you know that recently we spent some time debating the letting of a contract across three departments. The case involved government, employment and advertising and it was not a very happy experience. There was a lack of coordination between departments in that exercise, so we hope they do better this time when there is a need for coordination between departments in the implementation of this program.

  Another concern that has been expressed is that there is no provision to assist employers with regard to the ongoing costs that may be involved. For example, concern has been expressed that there may be ongoing costs—although the government has made provision for initial outlays—in terms of insurance. Some have expressed a concern that there may be insurance implications for businesses due to the possibility of higher premiums associated with the employment of people with some form of disability. In the committee hearing we were assured by people from the Department of Social Security, I think it was, that there would not necessarily be ongoing costs, that this had not been demonstrated in America and there was no Australian evidence to suggest this. We hope that the government will keep a close eye on whether businesses experience increased costs in insurance which may inhibit them or reduce their likelihood of employing people with disabilities.

  There also seems to be some confusion and misunderstanding, we have been told, regarding the level of disability wage supplement. There is concern that the supported wage system will be marketed as a cheap source of labour for business. Concern has also been expressed about the impact and affect it will have on sheltered workshops. Of course, we have to understand that sometimes there is some difficulty with the more able people in a sheltered workshop going into open employment. We would not want to hinder that at all, but the problem is that if it affects the viability of that workshop, and if this program is not successful—we hope that it will be, but if it is not successful for some individuals—there may be a problem as to where these people will be relocated and as to whether there will be a place available for them in the sheltered workshop if the sheltered workshop viability has been threatened. The government ought to watch very closely that the program does not actually backfire and produce a worse situation for those with disabilities.

  Finally, the opposition is concerned that people coming off the disability wage supplement automatically qualify for the disability support pension and do not have to make a new claim for the disability support pension, which could take up to eight weeks because of the medical examination requirement.

  The next measure in this bill involves family payments. As part of the 1993 budget process, the government agreed that from 1 January 1995 the maximum rate of additional family payment payable in respect of children who have not turned 16 should be increased by $1 a week per child. This bill gives effect to that agreement. Approximately 800,000 low income families will benefit from this measure at an estimated cost of $45 million in 1994-95 and $46 million in 1995-96. This will not sufficiently compensate low income earners who will suffer the most from Labor's regressive increases in wholesale sales tax announced in the 1993 budget. Nevertheless, it was part of the budget negotiations which will give some, although limited, benefit to those on low income, and we will not be opposing this measure.

  The next part of the bill provides for amendments to be made to the Social Security Act 1991 to increase the pension age for women from 60 to 65. Currently, women qualify for the age pension at 60, while men qualify at age 65. As announced in the 1993 budget, the increase is to be phased in over a 20-year period starting on 1 July 1995 in recognition of any remaining labour force disadvantages incurred over the years by older women affected by the proposal.

  By 1 July 2013 the women's age pension will be payable at 65. We do not oppose this measure. However, we should remind the public of this government's broken promises and hidden agenda at the last election, and it should be placed on the public record. This measure is part of that hidden agenda. The opposition had the intestinal fortitude to be up-front and to tell the Australian public exactly what it planned to do.

  We had the gumption to tell the public. This government had the measure as part of its had hidden agenda. That is what is so despicable about what is happening in this bill; the government did not tell the public. It is another example of a coalition policy castigated during the 1993 election by the government, only to be adopted by that government within a matter of months.

  It is interesting to look at the government's statements during the last election regarding lifting the women's pension age to 65. On 7 August 1992 the then Minister for Social Security, Dr Blewett, said:

The opposition's move to increase the women's pension age to 65 within five years is premature, ill-considered and unfair. Women who have faced greatly restricted opportunities and discrimination during their lives are being offered last minute equality to save the opposition money. It is the sort of two-card trick you would not expect anyone to play on the elderly. It is just one of a huge range of hidden nasties in the Fightback package.

`Hidden' nasties in the fightback package? We actually told people. This lot on the other side had it so hidden they did not even tell them; it was in their hidden agenda. Dr Blewett went on to say:

The lower pension age for women is due recognition of the fact that many older women devoted most of their lives to families and sacrificed employment, savings and superannuation in the process. When women of pension age have had similar opportunities to their male counterparts, that will be the time to equalise pension ages, not before.

Just months after the election the government adopted part of our policy. It extended it over time. A parliamentary committee had recommended that the pension age be increased over a five-year period. But this government does not tell people; it hides what it is going to do. That ought to be a lesson that everybody remembers before the next election. It is not what the government said; it is what the government meant to say—exactly what Senator Evans said the other day in the chamber: `Read my lips. The tax reductions will be L-A-W.' Then they go off into the never-never. The government does tell you that it is going to increase the pension age for women. That comes afterwards. I will remind people constantly that this government had a hidden agenda and broke promises before the last election. That is the way it operates. The public ought to be reminded of it constantly. This is just another example of it.

  A further measure in the bill relates to managed investments. The government's original motive for bringing down measures that penalise self-funded retirees was based on the usual standard slipshod practice of saving a few dollars at the expense of those people who have been able to build a nest egg for themselves. The government struck a blow against a prudent form of self-provision. We are not talking about people with buckets of money; we are talking about a significant proportion of people who have very modest investments.

  The two measures in this bill are designed, fortunately, to lessen some of the difficulties experienced by 100,000 Australian pensioners. Both measures are beneficial in that they alleviate some of the very worst effects of the legislation. The first measure imposes a cap of 50 per cent on the rate of return for shares and managed investments for ordinary income assessment purposes and acknowledges that high rates of return cannot be justified in assessing pensions.

  The second measure deals with experience arising from the Commonwealth Bank float, where shares were acquired at a price which was considerably higher than the price at which the shares were originally listed. However, the initial list price was the figure used for the 12-month assessment period, resulting in an exaggeration of the true performance of the investment. The amendment will ensure that this will not occur, particularly in cases where there is active trading in shares or units within a short period of time. As Mrs Moylan stated in her speech on this bill in the other place, the Australian Stock Exchange believes that the amendments seem to ameliorate two of the more extreme of the illogical effects of treating unrealised capital gains as income for the purpose of the income and assets test. However, it maintains that the whole system remains fundamentally inequitable. That is the stock exchange saying that this system remains fundamentally inequitable.

  I have made many statements in this place about the gross inequities inherent in a scheme which counts unrealised capital gains as income for the purpose of assessing income for the pension. I have introduced private members' bills and moved amendments to social security legislation to have that repealed. We now have a so-called independent committee investigating it. While that is going on, letters come in my office that are pathetic, and I use that word in its real sense—letters which are full of pathos. Pensioners, some with $15,000 and some with $20,000 invested, explain to me in absolute detail—and I have no doubt that senators and members on both sides have received similar letters—their financial business. They expose it before you to try to make people understand the difficulties they are facing and the enormous cuts that are occurring in pensions as a result of the fluctuations in the stock market.

  Those pensioners are being severely affected. Their small capital base is being eroded. They are finding it distressing. One general practitioner said to me that he has had pensioners coming in who are ill because they have been worrying about what is happening to their pension as a result of the government's treatment of unrealised capital gains on shares.

  As I have said innumerable times, many of these older Australians who hold shares are not doing it for speculative gains or to build up large capital to pass onto children. They are doing it to build up a nest egg to enable them to pay their private health insurance—and heaven forbid, given the state of the public health system, they need private health insurance—and to protect themselves against unexpected expenses, such as sickness or household maintenance, and in the meantime to receive modest dividend income.

  A paper gain is an absurd premise on which to base a determination of pensioner entitlements. While the coalition supports the amendments, we continue to strenuously oppose a system that treats unrealised capital gains on shares and investment as income for pension income and assets test purposes.

  The next provision in the bill relates to migration law. The amendment in this respect will help to reduce the lag which occurs between changes to migration law and the Social Security Act. Lag occurs because most changes to the migration law are regulatory, whereas social security amendments are not. These amendments are largely technical in nature and not unreasonable and we do not intend to oppose them.

  The next measure in this bill concerns the refusal on the part of an individual to apply for a tax file number. It results from an Administrative Appeals Tribunal decision between the department and Mr John Malloch. Mr Malloch's disability support pension was suspended due to his refusal to provide a tax file number and his refusal to provide authority to request a tax file number from the Australian Taxation Office. The purpose of this amendment is to allow the secretary to the department to refuse assistance payments to individuals who do not have a tax file number or who have no intention of applying for one.

  There is no doubt that there is a high cost of fraud in the social security area, from within and without. However, the coalition has always had doubts that increasing the use of tax file numbers provides the total answer to fraud control. Critical privacy concerns arise from the extension and compulsion creeping into tax file number system. I have debated that innumerable times in this chamber. This was never the intention, as the then Treasurer Keating made clear in a speech. He said that it was not the intention; whether it was the intention needs to be debated, I suppose. When the tax file was debated in 1988 he said:

The amendments the government has agreed to accept are designed to guarantee that the tax file numbering system is completely voluntary. They ensure that taxpayers will in all circumstances retain the right to elect to have tax withheld at source rather than quote their fax file number. The government has always recognised that this is an important element in the set of privacy safeguards which attach to the tax file number system and these amendments will enshrine the principle in legislation.

I suppose we would say `make it L-A-W'. I understand that the Privacy Commissioner has indicated that his preference would have been for the amendment to make clear that the decision as to whether or not an individual provides or applies for a tax file number in full knowledge of the consequences rests with the individual.

  I have always had grave concerns about the effectiveness of the tax file number in reducing fraud, especially when the threat to privacy and liberty are taken into account. We know that the savings that the department predicted when the tax file number was introduced to enable data matching between the Taxation Office and the social security department were absolutely, totally out of kilter with and far more than the real and actual savings. We were duped. The difference between the savings that were indicated and the actual savings that occurred was just absolutely outrageous. The coalition does not oppose this provision but we do note, on departmental advice, that the government will be introducing amendments into the Senate, which the coalition will be closely examining.

  The other aspect of this amendment bill that I want to mention deals with compensation. The coalition supports this provision which is a result of measures which have been endorsed by us. It effectively removes from the definition of compensation the exemption for personal sickness and accident insurance payments where the policy contains an offset clause. The offset clause enables the insurer to be liable to pay the insured person only the amount which would ordinarily be paid under the policy minus the amount of social security payments the person received during the relevant period. This measure is obviously beneficial and the coalition will not oppose it. The other amendments in this bill are minor or technical in nature and we do not intend to oppose any of them.