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Friday, 12 July 1946


Mr HOLLOWAY (Melbourne PortsMinister for 'Labour and National Service) . - by leave - I move -

That the bill be now read a second time.

It is with considerable pleasure that I move the second reading of this bill, which provides a substantial measure of relaxation of the means test in relation to invalid and old-age pensions payments. I am sure that the Prime Minister (Mr. Chifley) and my other Cabinet colleagues would permit me to say that this bill is the first step in a long-range plan designed to eliminate' completely the means test from our social service legislation.

The chief features of the bill are, first, the raising from 12s. 6d. to. £1 a week of the amount of income which an invalid or old-age pensioner may -have without his pension being affected; in respect of a blind pensioner the permissible income will be increased from £5 to £5 7s. 6d. a week; secondly, the raising of the property bar from £400 to £650; thirdly, the elimination of certain items of property from consideration in the assessment of a pension, and, lastly, though by no means the least the removal of an objectionable feature of the present law, namely, the disqualification for pension benefit of an adult invalid, whose parents are deemed to adequately maintain him. About a year ago the Government decided to eliminate this and several other anomalies by the introduction of a consolidated measure dealing with social services, but circumstances have made its introduction impossible.

When old-age pensions were introduced in June, 1909, the permissible income was 10s. a week; and the maximum rate of pension was also 10s. a week. Although there have since been many increases of the maximum pension, there has been only one increase of the permissible income. That was made in .1923, the increase being from 10s. to 12s. 6d. a week. The maximum pension at that time was 17s. 6d. a week; it is now 32s. 6d. a week. It is anomalous that, whilst the maximum pension has advanced during the past 37 years from 10s. to 32s. 6d. a week, the -permissible income has risen only from 10s. to 12s. 6d. a week.

The effect of the increase of permissible income provided' for in the bill will be that in future income in excess of £1 a week, instead of 12s. 6d. as at present, will be deducted from the pension of 32s. 6d. a week. The amount of income which will preclude payment of any portion of a pension to an unmarried or widowed person will thus become £2 12s. 6d. a week, instead- of £2 5s. In respect of married persons, it will become £5 5s. a week instead of £4 10s. A married couple, both pensioners, will be able to receive income of £2 a week between them, in addition to a maximum pension of 32s. 6d. ,a ,week each, a total of £5 5s. a week. ;T-hey may also own their own home, without.-. any. limit in value, and other property under £120 without their pensions being affected.

The benefit of the increase of 7 s. 6d. a week in the limit of permissible income will also be extended to blind persons. The blind are already in a favoured position in this respect, the amount of income which a blind person may have without reduction of pension being £5 a week. This will be raised to £5 7s. 6d. a week. The effect will be that income in excess of £5 7s. 6d. a week, instead of £5, will be deducted from the pension of 32s. 6d. a week. The amount of income which will disqualify a blind person from receiving a pension will thus become £7, instead of £6 12s. 6d. a week. Where both husband and wife are blind they will be able to have between them an income of £5 7s. 6d. a week, and each may receive the full pension of £1' 12s. 6d. a week, a total of £8 12s. 6d. in lieu of the present amount of £8 5s. a week. Where they have income in excess of £5 7s. 6d. a week, half the amount of excess income will be deducted from each pension.

In 1909, ownership of property to the value of £310 disqualified a claimant for & pension. The progressive scale of ^deductions was the the same as at present, namely, £1 per annum for every complete £10 in excess of £50. These deductions then eliminated, the pension of £26* per annum at £310. There has been only one increase of the property limit. It -was made in 1923, the increase' being from £310 to the. present figure of £400. At that time the maximum pension was " 17s. 6d. a week. The retention of the £400 limit, while the pension has ^advanced from £45 10s. to £84 10s. per. -annum, has resulted in the arbitrary pro- vision that, whereas a person with property, other than a home valued at £400 may receive a pension of £49 10s. per annum, a person with property, other than a home, valued at £401 or more, cannot receive any pension at all. That anomaly will be rectified by the measure before the House.

The effect of the higher property limit provided for in the bill will be that unmarried or widowed persons with property, apart from a home, valued at between £401 and £650, who now receive no pension, will be eligible for a pension ranging from a nominal sum up to £49 10s. per annum. Pension up to the same amount will be payable to married claimants who between them possess property, apart from a home, between £801 and £1,300 in value. It is proposed to retain the present scale of progressive deductions from pension - £1 per annum for every complete £10 above £50- for property up to £400, but £2 per annum will be deducted for every complete £10 of property between £401 and £650, thus eliminating the penton of £84 10s. per annum at £650:

As honorable members are- aware, home in which a pensioner resides does under the present law, the value of a not affect the rate of pension, no matter what its value may be. This exemption has operated since 1912. The bill provides for additional classes of property to be disregarded.. These concessions relate to surrender values of life assurance policies up to a limit of £200, the capital value of any life interest or annuity, the value of any contingent interest and the present value, up to £500, of any reversionary interest. Legacies or shares in estates of deceased persons will also be disregarded until they are actually received by the pensioner.

To my mind it has always been anomalous and somewhat unfair to hold against a pensioner as property the amount which he could obtain by surrendering a small life policy. These policies are usually kept alive by the exercise of the utmost thrift on the part of those pensioners who hold them. A pensioner cannot obtain the surrender value without substantial loss of premiums paid, and it is scarcely just to reduce the pension on account of the policy and thus perhaps force him to suffer that loss.- Where the policy is a fairly substantial one, carrying a surrender value of more than £200, only the excess over £200 will be taken into account, and against this excess may be offset the property exemption of £50.

The present treatment of the capital value of a life interest or an annuity as property is . also a definite anomaly, as the life tennant or annuitant cannot at the same time enjoy his interest or annuity, which is taken into account in the income means test, and derive any benefit from the capital which, nevertheless, is taken into account in the property means, test. The treatment of a contingent interest as property is also anomalous. An example of this is the case in which the pensioner will receive a benefit if he survives another person; if he does not survive neither he nor his estate can benefit from the interest. The bill will remove these anomalies.

A reversionary interest is a more tangible asset. Usually the pensioner is to come into possession of an estate or property upon the death of a life tenant.

If the pensioner pie-decease. the life tenant, the estate or property in due course goes to the pensioner's estate. Nevertheless, a good deal of hardship is caused by treating such interests as property of the pensioner. The type of reversionary interest held by a pensioner is usually not sufficiently attractive to enable him to dispose of it to advantage, and, consequently, the treatment- of such aa interest as property in his hands only deprives him of pension benefit whilst leaving him without present advantage from his reversionary interest. It is, therefore, proposed to disregard £500 of the present value of any reversionary interest. For such an interest to have a present value in excess of £500, the estate or property would need to be fairly substantial, and the period before it is likely to be received by the pensioner relatively short. In such a case only the excess of the present value over £500 will be treated as property of the pensioner, and against this excess may also be offset the previously mentioned exemption of £50.

A legacy or a share in a deceased estate is, of course, property for the purposes of the Act, but it frequently happens that there is considerable delay in realization and distribution of the estate. The legacy or share in the estate vests in the pensioner and forms part of his assets from the date of the testator's death but, in practice, the department takes the bequest into account from the date of grant of probate or letters of administration. However, where the realization and distribution are delayed, hardship is caused by treating the bequest as property of the pensioner before he actually receives anything in respect of it from the estate. It is proposed to remove this cause of hardship by providing that the amount of the pensioner's share or interest shall not to be treated as property until it has actually been received by him. There is adequate power in the act to deal suitably with any case which may possibly arise where a pensioner may seek to take undue advantage of this provision by being party to delay in distribution of the estate.

All the concessions contained in the bill in regard to income and property will apply not only to old-age .and invalid pensions but also to allowances paid to the wives of invalid pensioners. The maximum rate of allowance to the wife of an invalid pensioner is 15s. a week, and the assessment is affected by income and property in exactly the same way as an invalid or old-age pension payable to a married person. Consequently, recipients of such allowances at reduced rates on account of income, or on account of any of the items of property which are to be disregarded, will receive increases as a result of the liberalizations provided in the bill. The additional allowance of 5s. a week paid to the wife of an invalid pensioner in respect of one child under sixteen years of age is not subject to reduction on account of the income or property of' the parents.

I come now to what is known as the adequate maintenance provision of the act. This provision has operated since the inception of invalid pensions in 1910. It specifically disqualifies a claimant, irrespective of age, if his .parents adequately maintain him. Whilst there is justification for this where the claimant is under 21 years of age, the application of this principle to claimants over that age is indefensible. Approximately 400 claims for invalid pensions are rejected annually under this provision, about twothirds being those made by invalids over 21 years of age. In some cases the claimant is between 40 and 50 years of age. There is even an instance of an invalid, 55 years of age, who was refused a pension because he was fully maintained by this widowed mother who derived an income of £3?0 per annum from a farm.- In another case, an invalid 46 years of age was disqualified because he was kept by his father, a widower, whose income as an orchardist was £294 per annum. I doubt if it was ever intended by the Parliament that invalid pensions should be refused in cases such as these, but, while the provision remains as at present; it must be applied to all cases on the facts,, irrespective of the age of the claimant.

The depressing effect on an adult invalid of the realization that he must remain indefinitely a financial burden on his parents can well be imagined. Added to the deprivation of most of the normal enjoyments of life, this-is a heavy penalty for the invalid to carry through life. The payment of a pension to an invalid at the age of 21 years will create a desirable sense of independence and give the invalid an added interest in life, which will not only serve somewhat to mitigate his affliction, but will also strengthen his position as a unit in society.

It is estimated that the concessions provided for in the hill will enable increased payments to be "made to some 42,000 oldage and invalid pensioners, including wives of invalid pensioners, who are now receiving reduced payments. There will be no need for pensioners to make application for the increase. The Department of Social Services will make the necessary reassessments within a very short time after the date on which the bill becomes law, and the increased rates will operate from the first pension pay-day after that date. The concessions will also bring approximately 88,000 additional persons into the old-age and invalid pensions field. The total additional cost in respect of oldage and invalid pensions is estimated not to exceed £4,250,000, raising the annual cost from £29,000,000 to about £33,250,000.

The liberalized conditions in regard to' income and property will also be applied to widows' pensions and to service pensions payable to ex-servicemen in respect of age and invalidity. Separate bills amending the Widows' Pensions Act and the Australian Soldiers' Repatriation Act will be introduced for this purpose and opportunity will then be taken to explain the effect of the liberalizations in relation to such pensioners. I am confident that the bill will have general support from honorable members.

Debate (on motion by Mr. Menzies) adjourned. .







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