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Wednesday, 31 July 1946

With a Liberal Social Security Plan- ^ Without the Means Test!

The Liberal party maintains that the moans test is humiliating, and a penalty for thrift. It contends that social benefits should be enjoyed by all.

When social services are placed on a contributory basis, 'the means test can be abolished.

Pensioners and other people without means will not be asked to contribute when the means test is abolished.

The Liberal party will not reduce, pensions and it will not. curtail the present pension payments! It will not reduce child endowment but will extend this benefit to the first child.

The contributory social security plan of the Liberal party will remove the fear and uncertainty of the future, and provide protection in sickness, unemployment, incapacity, &c. A Liberal government means a better to-morrow for every one.

When we read a fine-sounding advertisement like that, we should examine the background and achievements of those who inserted it. The Liberal party and the Australian Country party have been in power in this Parliament - I say that they have been in power because they had majorities in the House of Representatives and Senate - for approximately 35' years since federation, but they have not done anything to achieve the objectives stated in that advertisement. The Labour party which was iri office for short periods, including the economic depression - and World War II. - the two most tragic periods in our history - has a great record, particularly regarding social services.

To expose the hollow hypocrisy of the advertisement, I refer to the statement of the Minister for Labour and National Service when introducing the bill. He mentioned that the provisions relating to permissable income and the amount of property that a pensioner may own, had not been altered since 1923. What has been the position" since that year5? United Australia partyAus'tralian Country party governments were in power until 194.1. with the exception of the period 1-929-31, when the Seullin Government was in office but not in power. In all those years, honorable members opposite did not make any effort to abolish the means" test. Consequently, my purpose in speaking this evening is to expose the hypocrisy of those members of the Liberal party who were associated with the publication of the advertisement, and' to warn the electors of the type of people who are making these promises in the hope of winning votes, at the forthcoming elections.

On the other side of the ledger, the Labour Government, in its comparatively brief period of office, increased pensions by 50 per cent, in the last five yearsa notable achievement compared with the sorry record of those who inserted the advertisement. Honorable members opposite emphasized the necessity for abolishing the means test. What will happen? Not .once have those honorable members made any practical suggestions for abolishing the means test. When' they make these promises, they- should suggest a practical method of implementing them. Let us examine what the abolition of the means test would entail. I support the principle of the abolition of the means, test from our social services legislation. However, its removal would necessitate the provision of an additional £40,000,000. In passing, I point out that we heard references this evening to child endowment. If child endowment were payable in respect of the first child, an additional £18,000,000 would be required.

Those two alterations would increase the cost of social services by £58,000,000. How would that money he provided ? We cannot print bank notes, for the purpose of meeting the cost of social services. We must have a sound financial approach. I presume from what the Leader of the Opposition has stated, that the money would be. obtained from a form of contributory social services scheme on the lines of the National Health and Pensions Bill. On one occasion, I heard the honorable member for Richmond (Mr. Anthony) refer ' to the outstanding features of the national insurance legist lation which the Lyons Government introduced in 1938 but never dared to implement, so great was the public outcry against it. If honorable members opposite propose to abolish the means test, do they consider that their national insurance scheme should take the form of that proposed in 1938? I shall mention a few features of that scheme in -order to warn the people of what they may expect if the Liberal party gets an opportunity to abolish the means test on that basis. Incidentally, this proposal has been given considerable prominence by honorable members opposite in advocating the abolition of the means test.

The National Health and Pensions Insurance Bill, which was introduced by the then Treasurer, Mr. Casey, excluded various classes such as farmers, shopkeepers, self-employed persons and the unemployed. It did not include unemployment sustenance. There were no health provisions' for wives and families. It was a retrogressive social measure because it ignored the cardinal principle of taxation, namely, that the tax should be paid by those best able to bear the burden. It imposed upon the workers in the lower income group a charge which they could not pass on, as an employer could. The contributory scheme provided that a man should pay ls. 6d. a week for health and old age benefits, ls. for medical treatment for his wife and children, and ls. 6d. to enable his wife to receive a pension when she attained the age of 60 years, a total of 4s. a week. For that payment, the husband was entitled to a pension of £1 a week, and his wife to a pension of 15s. a week.

Those are a few of the features of the so-called national insurance scheme which, I assume, would be revived by honorable members opposite if they had an opportunity to give effect to their proposals for the abolition of the means test. If the people have only that promise to look forward to, they will have no prospect of getting reasonable benefits for their social services contributions.

If the Opposition does not revive that policy, it might adopt a contributory scheme like that in operation in New Zealand. ' That scheme imposes a contribution of ls. 6d. in. the £1 or part of £1 of income, and Id. in every 10d., plus a. special war tax of 6d., making a general flat rate of 2s. in the £1. To my mind, that is not a sound proposition, because it places on the lower-paid worker the same burden as that which is borne by the more highly paid worker. That basis is not equitable.

If we look further afield, perhaps the Opposition would introduce' a scheme like that in operation in Great Britain. This requires a male to contribute 4s. 7d. for ordinary national insurance, plus 3d. for workers' compensation. The employer contributes 4s. 2d. making a total of 9s. a week. The contributions payable by a woman amount to 3s. 9d. a week, and the employer contributes 3s. 3d., making a total of 7s. a week. These contributions are levied on all persons earning in excess of £1 10s. a week. For those payments, a man is entitled to receive £1 6s. a week when he is unemployed or ill. That scheme is not comparable with the benefits payable under our progressive scheme in Australia.

Those are a few of the proposals which members of the Opposition would have to consider if they had an opportunity, as a Government, to introduce a national insurance scheme and abolish the means test. I say quite frankly that their proposal cannot be adopted, and honorable members opposite are endeavouring to mislead the people by glossing over the actual .and factual approach to the problem. It is a dishonest approach. When considering the increase of £58,000,000 which the complete abolition of the means test would entail, we must bear in mind also that for every ls. by which the rate of pension is increased the pension bill rises by £1,000,000. . That does not take into account the increased number of persons who are eligible for invalid and old age pensions. Honorable members opposite cannot promise to reduce taxation by 40 per cent, and at the same time increase social services by £58,000,000 a year. The explanation of their proposal is that they desire to relieve the budget of all payments for pensions and other social services, and place that burden upon the shoulders of the workers, as they proposed to do under the national insurance scheme in 1938. Obviously, that must occur if the Liberal party has an opportunity to reduce taxation by 40 per cent, and increase social service payments by £58,000,000 a year.

I shall give the actual costs per capita on a contributory basis under any schema which will be necessary to implement proposals contained in the Liberal party's advertisement. The cost of all social services on a contributory basis, judging by the total cost for 1945-46, would be £53,000,000. The additional estimated cost resulting .from the abolition of the means test on invalid and old-age pensions and widows pensions would' be £44,500,000, a total of £97,500,000. At the 30th June last, the total number of bread-winners was 2,920,000. Therefore a total contribution of 13s. a week would be required. Of course, that could not be paid by unemployed persons, pensioners and persons over the age of 65 years. That is what the people may expect if they fall for the gag which is contained in the advertise-1 ment.

In my calculation of a contribution of 13s. a week, I did not take into account two factors, first, the expanding cost of social services, and secondly the expansion of social service plans, including health and various other schemes which the Labour party may have in view. That is a summary of what is offered to the people by those who bitterly criticize the proposals and efforts of this Government to abolish the means test and give the people a comprehensive range of social service benefits.

I shall now examine the Labour party's general programme of social services. In some quarters, it is believed that the Government's social services scheme is an additional tax. That is not so. The Australian contributions are levied on incomes progressively, according to ability to pay, from 3d. to a maximum. of ls. 6d. in the £1. The reason for the Government's social service contribution is to ensure that a portion of the total income tax received from personal exertion shall be used exclusively for social service payments. Many thousands of people who enjoy the social service benefits as provided do not make any contribution by way of taxation to the scheme. In fact, there are 1,000,000 bread-winners in Australia who do not pay any direct tax, but all of them are entitled to social services benefits. For the information of honorable members, I cite an example. A man with a wife and two children receiving £300 a year will pay £11 17s. a year, or 4s. 6d. a week. This will be a social service contribution, not income tax. Prior to these reductions by the Government, his payments totalled £17 8s. a year. For his . contribution he receives the benefits of the social service . legislation which, for the year 1945-46, involved an expenditure of £53,000,000, and included maternity allowance, child endowment, free medi-' cine,, unemployment and sickness benefits. Although such a man is required to pay 4s. 6d. a week as social service contribution, he is entitled to 7s. 6d. a week child endowment in respect of his second child under sixteen years of age; so he pays 4s. 6d. a week and receives 7s. 6d., in addition to enjoying the other benefits that I have mentioned, which are costing the' Government £53,000,000 a year. Similarly, for every other child he would receive a further 7s. 6d. a week endowment. The Government should be congratulated on its commendable approach to the whole problem of social services. It is taking steps which will result in. the immediate relaxing, and the ultimate abolition, of the means test in relation to invalid and old-age pensions. Under its long-range plan, the means test will be completely .eliminated from our social service legislation. The chief measures that are being proposed immediately are an increase of permissible income from 12s 6d. to £1 a. week for old-age and invalid pensioners . in general, and from £5 to £5 7s! 6d. a week for blind pensioners; and the lifting of the property bar from £400 to £650. A further measure which will be received with satisfaction is the elimination of certain property, from consideration in connexion . with the assessment of pensions. Another immediate' measure to liberalize pensions is the removal' of the means test in respect" of invalid adult pensioners in relation to the income of parents. That is a highly desirable variation. All of the steps which I have mentioned will be received with satisfaction by the general public, and they indicate that the Government has a well-prepared plan to ensure the removal of the means test as it exists to-day. Personally I regret that it has not been possible for the Government to go further than it has gone, but I am gratified that some substantial advance is assured.

One effect of the Government's immediate programme will be to improve the lot of 42,000 invalid and old-age pensioners, and to bring 88,000 additional persons into the range of pension payments. These measures will involve an additional expenditure of about £4,500,000 a year, which, spread over, so many people in the community, will undoubtedly have a beneficial effect. The Government is. to be complimented upon this progressive policy, and I have no doubt that the people will indicate in no uncertain way their endorsement of what is being done. I emphasize that the ultimate objective of the Government is the complete abolition of the means test by providing for "an increase of permissible income and a progressive lifting of the property bar year by year. I give my enthusiastic and sincere support to this part of the bill.

Before concluding my brief speech, I wish to make some comparison, of 'the social services benefits now available with those in existence at the time this Government assumed, office. In 1941, at the time of the defeat of the Menzies Administration, invalid and old-age pensions, maternity allowances and child endowment only were being 1 provided. The maximum rate of invalid and old-age pension was 21s. 6d., and pensioners in institutions were receiving only 6s. 9d. a .week. ' Considerable increases have been provided since this Government assumed office. The rate of invalid and old-age pension has been increased to 32s. 6d. a week, and the rate for pensioners in institutions to lis. 6d. a week. In addition child endowment and maternity allowance payments have also been substantially increased. In June, 1946, as the result of the generous policy 'of this Government, the following social services were being provided : - Invalid and old-age pensions, allowances to the wife and one child of invalid pensioners, funeral benefits for invalid and 'old-age pensioners, maternity allowances, -child endowment, widows' pensions, and unemployment and sickness benefits. This is no mean achievement after five years of war which made exactins: demands on all the members of the ministry. An increased coverage has been given to many deserving people in the community. The cost of our social services in 1945-46 was more than £53,000,000, and the estimated cost for 1946-47 is £62,310,000.

The Government is to be congratulated upon its progressive approach to this problem. Its various social service benefits are being financed on a sound basis, and the payments being provided will bear comparison with those of any other country in the world. The money that is being expended will relieve the sufferings and poverty of many people in the community. This substantial measure of social security is an instalment of the new order which the Government is gradually introducing. A truly humane measure of relief is now being provided for the most deserving classes in the community. Many of the people who will receive help are, through no fault of their own, unable to help themselves. The Government has a great deal to be proud of, and I believe that it will continue to apply a generous social service policy. In conclusion I bring to the notice of honorable members the following short poem headed " Tory Promises " which has been published in an influential section of the press and presents an excellent summary of the Opposition's approach to the elections and the social security policy: -

How radical the Tories get.

As polling {lay draws near!

They'll promise anything - you bet!-

The cleft hoofs disappear!

They'll cut down taxes, and they'll give

A shorter working week;

They'll guarantee that workers live

In ways they rightly seek.

Their promises are many, but

We give them nought of heed

When these deceivers pose and strut

For well we know the breed!

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