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

Previous Fragment    Next Fragment
Friday, 29 May 1998
Page: 3454

Senator BARTLETT (9:58 AM) —The Senate is currently considering the Social Security and Veterans' Affairs Legislation Amendment (Budget and Other Measures) Bill 1997 and, as with most social security legislation, the Democrats see this bill as a mix of good and bad. As is often the case, we will be supporting some aspects, opposing some others and seeking to improve other bits.

Starting at the beginning, schedule 1 of the bill will, from 1 July this year, extend qualification for the carer payment to those people caring for a profoundly disabled child under the age of 16. Under the current arrangements, the carer payment is paid to those who provide care for a `severely handicapped person' aged 16 or more, which for a single person is at a maximum rate of $354 per fortnight and for couples is at $295 each per fortnight.

With those parents with disabled children under the age of 16, previous governments have taken the view that primary responsibility for their children's care lies with the family. There is, of course, the child disability allowance of $75 per fortnight, which is paid to parents whose disabled children require substantially more care and attention than other children of the same age. But this allowance is really meant to assist only with the additional costs that parents with these disabled children incur: it is not intended, as the carer payment is, to provide an adequate income to live off.

The first schedule of this bill will extend the carer payment to those parents with children under the age of 16 who are `profoundly disabled'. The requirement that the child must be `profoundly disabled' is a much tighter eligibility requirement than applies to the child disability allowance. That reflects the different purposes the government has decided these payments should be designed to meet.

At the outset, I have to say that the Democrats are very pleased to see the government extending the reach of the carer payment. No doubt all senators will have received letters from people caring either for a disabled child or for an adult. They will know from those letters, from personal experience or contact with people in the community, that caring is very often a 24 hour a day activity for these people—an activity which precludes many of them from a level of involvement in society and other types of activity which many of us take for granted.

It should not be forgotten, and it should be emphasised at every opportunity, that carers make an enormous contribution to society as a whole and the community through their caring role. In doing so they not only contribute a social and community benefit but they also effectively save governments very large amounts of money. The Democrats congratulate the government for moving in this direction. So in relation to this measure we would like to communicate waves of positive affirmation and all those encouraging things one should say when the government does good things—because it is a positive thing.

We would, however, have liked to see the government go a little further; that is, we would like to see the eligibility requirements for a profoundly disabled child under this legislation relaxed a little. We do not say this because we feel like making life difficult or spending some more money, but because we feel that under the proposal as put forward by the government there will be some very deserving people who will miss out on the support they so desperately need and who are the type of people whom the Democrats believe this payment is designed to assist. Of the approximate 107,000 disabled children eligible for the child disability allowance, I understand that the parents of about only 450 of them will qualify for the carer payment under this new arrangement. To qualify under the proposed definition a child will have to satisfy three of the conditions set out in section 18A of the bill. I noted the comment in the bills Alert Digest that many of these conditions on their own would ensure that the child needs constant care. It is really the requirement for constant care which is probably the principle that underlies what the carer payment is meant to be about. That is not being adequately recognised in this bill.

This issue has been raised by the Carers Association of Australia in a letter to me, which I imagine they have sent to many other senators. They stated that it was of particular concern to their association that there was a framing of the criterion more in terms of medical conditions and disability than in terms of the need for 24 hour care. They pointed out that constant supervision was not included in any of the qualifying criteria. They were also concerned that under the proposed criteria, children with uncontrolled epilepsy, spina bifida, cystic fibrosis, severe autism or a number of psychiatric illnesses may be excluded from assistance and they would be excluded even where their parents were required to provide round-the-clock care for those children.

To reiterate, the Democrats do congratulate the government for this reform and this improvement, but we would like to see more disabled children eligible for assistance under these arrangements and we would like to see the focus of eligibility criteria shift a little more towards the level of care that is required for those children. We are also concerned that there is no provision for those families who may have more than one disabled child. In circumstances where no one child necessarily meets the requirements for a profoundly disabled child but the care needs of the family are equal to or greater than if they had a single profoundly disabled child, the Democrats feel they should be eligible for the carer payment, again because of the aim and purpose the payment is intended to address. This is a principle which the government recognised late last year in relation to the child disability allowance and we believe it applies equally in this situation.

Another issue raised by the Carers Association—and I believe it is a very valid one—is that, despite the best intentions of legislative drafters, there will always be people who fall through the cracks. That is a hazard of the trade in trying to frame legislation for the social security area in particular. What the Carers Association suggested is some discretion for the department to deem eligible for assistance a family who, while not meeting the prescribed requirements for assistance in terms of the black and white letter which always needs to end up in legislation, are nevertheless in their particular circumstances clearly manifestly deserving of such support. The Democrats would support enabling some discretion for the department to assist people who quite clearly are in need despite the fact that the requirements as outlined in the black and white letter of the law do not necessarily enable them to fit into the appropriate pigeonhole. I indicate now that the issues I have raised in relation to the schedule will be ones that I will pursue in the committee stage.

Finally in relation to the schedule, the Democrats welcome the fact that this bill will allow a person to cease caring for a caree for up to 63 days in any one calendar year and still receive their carer payment. Whilst this is a low budget item in terms of outlays—costing only about $80,000 a year—the benefit this measure will bring to the people affected will be enormous. The Democrats fully support this part of the bill.

On the same theme, I would like to take the opportunity to congratulate the minister for this year's budget announcement that the carer payment will continue to be paid for up to 63 days when the person receiving care is temporarily in hospital. Again, not a terribly big budget item but for those people it is aimed at it will provide much needed relief to carers, who I again wish to acknowledge and emphasise do play a very important role.

The next schedule of the bill I want to comment on is that relating to the introduction of new means testing arrangements for income streams. From 20 September this year the government aims to change the way income streams are means tested. The proposed system will be based on the character istics of the income stream itself rather than, for example, where the income stream was paid from. It is without question that the current means testing of these retirement products is often contradictory and, in some cases, just totally inadequate. It is fairly difficult to understand as well, but these are the things we have to wrestle with in our important role as legislators. The current system is contradictory in the sense that what are effectively very similar products can be subject to very different means testing and subsequently have widely varying effects on the level of payment someone receives from the department. It is inadequate in the sense that some products on the market have been clearly specifically designed by financial institutions and advisers to take advantage of loopholes in the current system.

As an example of this, some time back a financial adviser drew the attention of the Democrats to the fact that some people were making use of rolling annuities to avoid the assets test. That meant that very large sums of money could be placed into these products and, due to the depletion method employed to assess these products, these funds were effectively exempted from the social security assets test. So, by simply rolling over these products every 12 months, people maintained their funds—we are talking about hundreds of thousands of dollars here—and were drawing a pension from the public purse. In the type of targeted social security system that we have very much moved towards, that is something that is clearly a problem.

The explanatory memorandum to this bill lists a number of other mechanisms being used by people, with the assistance of their financial advisers, to circumvent the intention of the current legislation. These types of products dramatically dilute the effectiveness of the income and assets testing regime set out under the legislation. The effect of that is that the Department of Social Security is forced to change the rules to cover those loopholes. That is what we are seeing in this bill before the Senate today. Regrettably, that means that those people who have purchased their retirement products totally in good faith and within the intention of the legislation may be subject to an upheaval in their retirement plans. That is always something that should be avoided if at all possible.

The Democrats acknowledge that the system proposed in the bill before us today is a comprehensive overhaul of the income and assets testing regime applying to retirement income stream products. As I said, we recognise that the way in which the current system is being manipulated is not a situation which could be allowed to continue, particularly because of the targeted nature of the social security system that we have.

The Democrats have always been very reluctant to support legislation which may alter the social security entitlements of those who have already purchased their retirement income products. For the reasons that I have just outlined, however, we accept that basically the government had little option but to introduce changes. We believe the proposed system represents a significant improvement on the way in which retirement income streams are treated under the social security means tests. So, once again, the Democrats indicate positive affirmation of the government's intentions and aims in this area. We will be supporting the introduction of the system proposed in schedule 3 of this bill.

There is, however, one group of social security recipients we believe should be exempted from this system, that is, those who purchased their allocated pensions or annuities prior to 1 July 1992. These people were exempted back in 1994, when the current system was introduced, for the reasons that I have just outlined. We believe they should continue to be exempted. Again, that is a measure that we will revisit in the committee stage of this debate.

The final aspect of the bill that the Democrats would like to mention is the changes proposed in schedule 4 which relate to seasonal workers. The government's stated aim of this schedule is twofold. Firstly, it is to prevent high income seasonal and contract workers from immediately accessing unemployment payments during the off-season or between contracts. This includes such workers as tuna fishers, fruit pickers, shearers, casual teachers and people who perform locum roles in various jobs. Clearly, this will have a significant impact on a number of workers, particularly in rural and regional areas. Secondly, the government's aim is to exclude higher paid casual or contract workers who have their leave entitlements cashed out in their salary from receiving newstart over Christmas shutdowns.

The bill itself provides a fairly broad definition of the type of work that will be caught by this legislation. In addition, it contains a power for the secretary to deem certain work to be seasonal work. The effect of the legislation will be that seasonal workers whose wage in the past six months was greater than average weekly earnings will need to serve a waiting period before qualifying for social security payments. The length of that waiting period will be determined by the amount they earned: the higher the earnings, the longer the wait for payments.

This proposed change is based on the notion that any person earning in excess of average weekly earnings should have put away funds in case of future unemployment or to cover future lack of employment income. In other words, they are expected to undertake some sort of personal unemployment insurance. This premise will apply regardless of any factors which might have prevented the person saving at that time and completely ignores their current financial circumstances.

The Democrats believe that this is just another in a string of enforced poverty measures we have seen over the past few years—indeed, stretching back a number of years now. The aim of many of these measures is to force people to run down any savings they might have before they are able to obtain any assistance from social security. We need to emphasise, when we look at these sorts of measures, that unemployment payments are paid at a rate well below the poverty line and that the average length of unemployment is currently well over 52 weeks. That means that unemployed people really need to be able to maintain some level of savings to see them through until they rejoin the work force, otherwise we really are looking at enforced poverty. The Democrats have great concerns that that will be the impact of this measure on many people.

There is a current system of waiting periods, including a liquid assets test which is fairly tight and fairly stringent. The Democrats believe that these measures are more than sufficient to ensure that only those needing assistance are eligible. Indeed, we would say that, in some instances, the waiting and preclusion periods that exist are too harsh. To add an extra measure—as this schedule of the bill proposes to do—will, we believe, compound the unfairness and injustice that some people will be subject to. It is important to emphasise that the existing liquid assets test imposes a waiting period of up to 13 weeks—that is, three months—on those people who have easy access to any significant level of assets. That already exists under the current legislation.

There has been a lot of talk lately about ways to remove poverty traps that affect many low income earners. To the Democrats, this is a very important issue in the tax debate as a whole and in the social security legislation, yet this measure increases the pressures on unemployed people to run down their savings. It also increases the pressure on people in terms of those poverty traps.

We need to encourage people to try to get out of situations rather than, every time they do get a bit of a chance to build up a few reserves and move out of welfare dependency—and this is constantly identified as a major problem—they are dragged back down again by measures such as this. For those reasons, the Democrats will not be supporting schedule 4 of this bill which tries to introduce that measure.

Nonetheless, in closing, I should re-emphasise, so that I do not finish on a negative note, the support of the Democrats for many of the positive measures that this bill does introduce and indicate our thanks to the government for their work in modifying the social security system to more adequately address the existing needs of people out in the community.